Why Medicare appeals are different
A Medicare denial is not governed by ERISA or by state insurance law. It is governed by the Medicare statute (Title XVIII of the Social Security Act), the implementing regulations in Title 42 of the Code of Federal Regulations, and the CMS program manuals that translate those rules into coverage policy. That matters because the appeal you file is, at its core, an argument that the denial violated a federal coverage rule that CMS itself has published. The rules are public, they are specific, and a denial that ignores one of them is vulnerable.
There are also two entirely separate systems. Original (fee-for-service) Medicare pays providers directly under Parts A and B. Medicare Advantage (Part C) pays a private insurer a capitated amount to administer your benefits, and that insurer layers on prior authorization and its own clinical criteria. The appeal ladders, deadlines, and even the decision-makers are different between the two. The first job in any Medicare appeal is to confirm which system you are in, because filing a Medicare Advantage reconsideration into the Original Medicare process (or vice versa) wastes the clock.
Two facts make Medicare appeals unusually winnable. First, KFF's analysis of CMS data has found that the great majority of Medicare Advantage denials that beneficiaries actually appeal are overturned, yet only a small fraction of denials are ever appealed at all. Second, a Medicare Advantage plan is legally prohibited from being more restrictive than Original Medicare for basic benefits, so any denial of care that fee-for-service Medicare would have covered is, by definition, improper.
The five levels of Medicare appeal (Original Medicare)
Original Medicare appeals move through five levels. The deadline to start each level runs from the decision at the level below. Calendar every one of them.
- 1
Level 1: Redetermination
A fresh review by the Medicare Administrative Contractor (MAC) that processed the claim. File within 120 days of the Medicare Summary Notice. The MAC generally decides within 60 days.
- 2
Level 2: Reconsideration by a QIC
An independent review by a Qualified Independent Contractor. File within 180 days of the redetermination decision. The QIC generally decides within 60 days, and this is the stage to make sure every clinical record and coverage citation is in the file.
- 3
Level 3: ALJ hearing
A hearing before an Administrative Law Judge at the Office of Medicare Hearings and Appeals (OMHA). File within 60 days of the reconsideration. A minimum amount-in-controversy applies and is adjusted annually by CMS, so confirm the current threshold before filing.
- 4
Level 4: Medicare Appeals Council
Review by the Departmental Appeals Board's Medicare Appeals Council. File within 60 days of the ALJ decision.
- 5
Level 5: Federal district court
Judicial review in U.S. district court. File within 60 days of the Council decision. A higher amount-in-controversy threshold applies and is also adjusted annually.
Medicare Advantage vs Original Medicare
Medicare Advantage (Part C) plans follow a parallel but distinct appeal ladder, and the early steps differ from Original Medicare in ways that decide whether your appeal is timely.
Original Medicare
Level 1 is a redetermination by the MAC; Level 2 is a QIC reconsideration. You start each appeal yourself. Coverage follows the Medicare statute, 42 CFR, and the CMS manuals with no prior-authorization layer for most Part A and Part B services.
Medicare Advantage (Part C)
Level 1 is a reconsideration by the plan itself (filed within about 60 days of the denial). If the plan upholds the denial, it must automatically forward the case to the Independent Review Entity (the IRE, MAXIMUS Federal Services) for Level 2. Levels 3 to 5 (ALJ, Council, federal court) mirror Original Medicare.
The most important leverage in a Medicare Advantage appeal is the rule that a plan cannot deny coverage that Original Medicare would provide. The HHS Office of Inspector General examined a sample of MA denials and reported in April 2022 (report OEI-09-18-00260) that 13 percent of prior-authorization denials and 18 percent of payment denials by the largest MA plans actually met Medicare coverage rules, meaning the care should have been covered. When you appeal an MA denial, anchor the argument to the specific Medicare coverage rule the plan ignored, and say plainly that Original Medicare would have paid.
For carrier-specific appeal addresses and routing, see the Medicare appeal page and your Medicare Advantage carrier page.
Jimmo v. Sebelius: the improvement-standard myth
For decades, Medicare contractors denied skilled nursing and skilled therapy on the theory that coverage required the patient to be improving. Patients with chronic, progressive, or stable-but-fragile conditions were told they had "plateaued," "reached maximum potential," or were "not making progress," and their care was cut off. That improvement standard was never in the Medicare statute. It was a myth that crept into contractor practice.
The class-action settlement in Jimmo v. Sebelius, approved by the federal district court in 2013, forced CMS to correct it. Under the settlement, CMS confirmed that Medicare covers skilled nursing and skilled therapy when the care is needed to maintain the patient's condition or to prevent or slow decline, so long as the care requires the skills of a qualified professional and all other coverage criteria are met. The patient does not have to be expected to improve. CMS revised the Medicare Benefit Policy Manual - the skilled nursing facility, home health, and outpatient therapy chapters - to remove the improvement-standard language and to add the maintenance-coverage standard.
This is one of the most powerful and most under-used bases for a Medicare appeal. If a denial rests on lack of improvement, plateau, or maximum potential, quote the Jimmo settlement and the manual's maintenance-coverage provisions, and have the treating clinician document why skilled care is needed to maintain function or prevent decline. The denial is then applying a standard CMS has expressly disavowed.
Observation status, the two-midnight rule, and the SNF 3-day rule
Some of the most painful Medicare denials are not denials of treatment at all - they are denials of skilled nursing facility coverage that trace back to how the hospital classified the stay. Three rules interact:
- Inpatient vs observation status. A patient can spend days in a hospital bed yet be classified as "observation," an outpatient status billed under Part B, rather than admitted as an inpatient under Part A. Hospitals must give a Medicare Outpatient Observation Notice (the MOON) when observation runs past 24 hours.
- The two-midnight rule (42 CFR 412.3). An inpatient admission is generally appropriate for Part A payment when the admitting physician expects the medically necessary stay to cross two midnights, based on documented clinical factors. Misapplication of this rule is what pushes patients into observation.
- The SNF 3-day rule (Social Security Act 1861(i); 42 CFR 409.30). Original Medicare pays for a skilled nursing facility stay only after a qualifying inpatient hospital stay of at least 3 consecutive days, not counting the discharge day. Time spent in the emergency department or under observation does not count.
Put together, the trap is this: a patient kept in observation rather than admitted does not accrue the 3 inpatient days, so Medicare refuses to pay for the follow-on SNF stay, leaving the family with a large bill. Note that many Medicare Advantage plans waive the 3-day requirement, and some accountable-care arrangements have CMS waivers, so the rule may not bind your plan. When you appeal, request the MOON and the physician documentation, challenge the observation classification under the two-midnight rule where the records support inpatient care, and check whether a 3-day waiver applies.
Build the record before you file
A Medicare appeal is won on the record. Whether you are at the MAC, the QIC, the IRE, or an ALJ hearing, assemble the following:
- The denial notice or Medicare Summary Notice, and for Medicare Advantage the plan's written denial with its stated reason and the criteria it cited.
- A treating-clinician statement that maps the patient's facts to the specific Medicare coverage rule. For maintenance care, the statement should explain why skilled care is needed to maintain function or slow decline. See our medical necessity letter guide.
- All clinical records: hospital admission and discharge records, physician notes, therapy notes, nursing notes, imaging, and labs.
- The applicable CMS authority quoted directly: the relevant Medicare Benefit Policy Manual chapter, the National or Local Coverage Determination, and the Jimmo maintenance language where lack of improvement is the stated reason.
- For SNF denials, proof of the qualifying inpatient stay (or the argument that observation should have been inpatient under the two-midnight rule), plus any plan-specific 3-day waiver.
- For Medicare Advantage, a statement that Original Medicare would have covered the service, anchored to the same coverage rule.
Common Medicare appeal mistakes
- Accepting an 'improvement' denial. Lack of improvement is not a valid coverage reason after Jimmo. Skilled care to maintain or slow decline is covered.
- Missing the level-specific deadline. 120 days for redetermination, 180 days for QIC reconsideration, 60 days for each level above; about 60 days for a Medicare Advantage Level 1 reconsideration.
- Filing into the wrong system. An MA reconsideration is not a redetermination. Confirm Original Medicare vs Medicare Advantage first.
- Ignoring observation status. Ask for the MOON and challenge observation under the two-midnight rule before it costs you SNF coverage.
- Not invoking the fast track. For hospital discharge or termination of SNF, home health, or rehab services, request expedited BFCC-QIO review before the coverage end date.
- Treating MA criteria as final. A Medicare Advantage plan cannot be more restrictive than Original Medicare for basic benefits.
Sample appeal opening paragraph
"This is a formal appeal of the determination dated [DATE] denying coverage for [SERVICE]. The denial states that the patient is 'not improving.' Under the settlement in Jimmo v. Sebelius and the Medicare Benefit Policy Manual, Medicare covers skilled care needed to maintain the patient's condition or to prevent or slow decline; improvement is not required. The enclosed records and treating-clinician statement establish that skilled care is reasonable and necessary to maintain this patient's function. [For Medicare Advantage: This service is covered under Original Medicare, and the plan may not impose coverage criteria more restrictive than Original Medicare for basic benefits.] I request that the denial be reversed and the service covered."
How Counterclaim helps
Upload the denial notice and the relevant records, and Counterclaim's pipeline identifies whether you are in Original Medicare or Medicare Advantage, finds the controlling CMS coverage rule, applies the Jimmo maintenance standard where lack of improvement is cited, flags observation-status and 3-day-rule issues, and drafts an appeal letter that maps your facts to the rule and is stress-tested by an adversary agent before you send it. You keep control: review, edit, and file it yourself at the correct level and address.
Frequently asked questions
Does Medicare only cover care that makes me improve?
No. This is the single most common reason Medicare skilled-care claims are wrongly denied. The 2013 Jimmo v. Sebelius settlement required CMS to confirm that Medicare covers skilled nursing and skilled therapy when it is needed to maintain a patient's condition or to prevent or slow decline, not only when the patient is expected to improve. CMS revised the Medicare Benefit Policy Manual (the skilled nursing facility, home health, and outpatient therapy chapters) to remove any suggestion of an 'improvement standard.' If a denial says you 'plateaued,' 'reached maximum potential,' or are 'not improving,' cite Jimmo and the manual's maintenance-coverage language directly.
How many levels of appeal does Medicare have?
Original (fee-for-service) Medicare has five levels: (1) redetermination by the Medicare Administrative Contractor, (2) reconsideration by a Qualified Independent Contractor (QIC), (3) a hearing before an Administrative Law Judge (ALJ) at the Office of Medicare Hearings and Appeals, (4) review by the Medicare Appeals Council, and (5) judicial review in federal district court. Medicare Advantage uses a parallel ladder: Level 1 is reconsideration by the plan itself, and if the plan upholds the denial the case is automatically forwarded to an Independent Review Entity (the IRE, currently MAXIMUS Federal Services) for Level 2, then on to the ALJ, Council, and federal court.
What is the deadline to appeal a Medicare denial?
In Original Medicare you have 120 days from the Medicare Summary Notice to request a redetermination (Level 1), 180 days from the redetermination to request a QIC reconsideration (Level 2), and 60 days for each level after that. In Medicare Advantage you generally have 60 days from the plan's denial to request a Level 1 reconsideration (CMS allows good-cause extensions). Always calendar the deadline the day you receive the notice and file in writing with proof of mailing.
Why do Medicare Advantage plans deny care that Original Medicare would cover?
Medicare Advantage plans use prior authorization and proprietary clinical criteria that Original Medicare does not. The HHS Office of Inspector General reviewed a sample of denials and found in its April 2022 report (OEI-09-18-00260) that 13 percent of prior-authorization denials and 18 percent of payment denials by large MA plans met Medicare coverage rules, meaning the care likely would have been covered under Original Medicare. A Medicare Advantage plan cannot be more restrictive than Original Medicare for basic benefits, so a denial of care that fee-for-service Medicare would cover is itself a powerful appeal argument.
What is observation status and why does it matter?
Hospitals classify some patients as 'observation' (an outpatient status under Part B) rather than 'inpatient' (Part A), even when the patient is in a hospital bed for days. Under the two-midnight rule (42 CFR 412.3) an inpatient admission is generally appropriate when the physician expects medically necessary care to cross two midnights. Observation status matters enormously because time spent in observation does not count toward the 3-day inpatient stay that Original Medicare requires before it will pay for a skilled nursing facility. Patients should ask for the Medicare Outpatient Observation Notice (MOON) and, where appropriate, request that the physician document the basis for inpatient admission.
What is the 3-day rule for skilled nursing facility coverage?
For Original Medicare to pay for a skilled nursing facility (SNF) stay under Part A, the patient must first have a qualifying inpatient hospital stay of at least 3 consecutive days, not counting the discharge day and not counting time spent in the emergency department or under observation. This requirement comes from Section 1861(i) of the Social Security Act and 42 CFR 409.30. Many Medicare Advantage plans waive the 3-day rule, and certain accountable-care arrangements have CMS waivers, so check your specific plan before assuming the SNF stay is uncovered.
Can I get an expedited Medicare appeal?
Yes. When waiting for a standard decision could seriously jeopardize your health or, for Medicare Advantage, when a plan is ending coverage for an ongoing hospital, SNF, home health, or rehabilitation service, you can request an expedited (fast-track) review. Hospital-discharge and skilled-service-termination appeals go to the Beneficiary and Family Centered Care Quality Improvement Organization (BFCC-QIO) and are decided quickly, often within 72 hours or before coverage ends. Ask for the detailed notice of discharge or termination and appeal before the stated end date to preserve coverage.
Does an attorney have to handle a Medicare appeal?
No. Beneficiaries, family members, and authorized representatives can file every level of a Medicare appeal themselves. The strength of the appeal depends on the record: the treating physician's statement, the clinical notes, the specific CMS coverage rule or manual provision that applies, and a clear explanation of how the facts meet it. Counterclaim assembles that record and drafts the appeal letter; an attorney becomes useful mainly at the ALJ level for high-dollar disputes or complex coverage questions.
See also: medical necessity letters, external review and IRO mechanics, skilled nursing facility appeals, and the Medicare appeal page.