The Levels of Appeal: Where a Denial Goes Next
When a payer upholds its own decision, the first appeal has usually done its job: it has moved the denial out of the hands of the entity that made the decision and into a defined process with a level above it. Nearly every kind of coverage has that next level, the levels differ in who decides them rather than in how hard you argue, and the point at which a reviewer stops working for the payer is the point where the process changes character.
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Key takeaways
- An upheld appeal is a step, not a verdict. The question it answers is which level comes next, not whether the claim is finished.
- Medicare fee-for-service has five levels and CMS names them: redetermination, reconsideration, a decision from the Office of Medicare Hearings and Appeals, review by the Medicare Appeals Council, and judicial review in federal district court.
- Medicare Advantage runs a different ladder. If the plan upholds its own decision on reconsideration, it must send the case to a CMS-contracted independent entity — nobody has to file again to make that happen.
- Commercial coverage adds an external review decided by someone the plan does not employ, and federal rules require the plan to pay in accordance with that decision.
- The first level is where the evidence belongs. Later levels review a record, and the record is largely what the earliest reviewer was given.
- Escalating is a decision with a cost. Some denials should stop at level one, and stopping deliberately is not the same as letting a window close.
Why there is a level above the first one
The first review of a denial is done by the entity that denied it, or by a contractor acting for it. That is not a criticism of the design — it is the fastest way to fix the large share of denials that are simply mistakes, and it works. But it means the first level cannot be the only level: a process in which the decision-maker is also the sole reviewer of its own decision has no way to correct a policy applied wrongly rather than a fact recorded wrongly.
What the later levels add is independence, in ascending degrees. Somewhere on every ladder there is a level decided by a reviewer with no stake in the outcome, and that is the transition worth understanding, because the argument that works below it and the argument that works above it are not the same. Below, the case is usually that the payer's own rules, correctly applied, produce payment. Above, it can also be that the rule itself was applied to the wrong question.
Levels are not retries
Medicare fee-for-service: five levels, publicly named
Original Medicare is the case where the whole structure is public. CMS publishes the levels, names each one, and names the body that decides it — which makes it the useful reference point even for people who mostly bill commercial plans, because the commercial ladders are variations on the same idea with the details moved into a contract.
| Level | What it is called | Who decides it |
|---|---|---|
| First | Redetermination | The Medicare Administrative Contractor that made the original determination — a different person at the same contractor, not the same one. |
| Second | Reconsideration | A Qualified Independent Contractor: an independent review of the administrative record built so far, including the redetermination. |
| Third | A decision from the Office of Medicare Hearings and Appeals | An administrative law judge — by hearing, or in defined circumstances a review of the record by an ALJ or attorney adjudicator. A minimum amount in controversy applies at this level, and CMS publishes the current figure. |
| Fourth | Review by the Medicare Appeals Council | The Council, within the HHS Departmental Appeals Board — a review of the ALJ decision rather than a fresh look at the claim. |
| Fifth | Judicial review | A federal district court, once the administrative levels are exhausted and the requirements for obtaining judicial review are met. |
The names matter operationally. A payer that asks for a “reconsideration” is not always asking for the second Medicare level, and staff who treat the words as interchangeable file first-level requests into second-level processes. The current timeframes and the amount-in-controversy figure are published by CMS and change, so they are looked up rather than remembered.
A reopening is not an appeal
Medicare Advantage: the case that forwards itself
Medicare Advantage plans run their own appeals process under their own part of the regulations, and it contains a feature nothing else on this page has. The first level is a reconsideration by the plan. If the plan affirms its adverse determination in whole or in part, it does not simply issue a letter and wait: it must send the case file to an independent entity under contract to CMS, which then reviews what remains in dispute.
That forwarding is automatic, and it is the single most useful thing to know about the Medicare Advantage ladder. A practice that assumes an upheld plan reconsideration ends the matter can write off a balance that is, at that moment, already in front of an independent reviewer. Above the independent entity the ladder rejoins a familiar shape: an administrative law judge, the Medicare Appeals Council, then judicial review.
Do not read the Original Medicare ladder onto a Part C plan
Commercial coverage: an internal ladder, then an outside reviewer
Most commercial coverage in the United States is employer-sponsored, and the federal law governing employee benefit plans requires those plans to give a claimant a full and fair review of a denied claim — an internal appeals process, with the plan's own levels and its own procedures. How many internal levels there are is the plan's choice, and it is stated in the plan document or the provider contract rather than in any general rule.
What sits above that internal ladder is external review, and it is a genuinely different thing: the reviewer is not the plan and is not chosen by the plan for the case. Federal regulation requires plans and issuers that are not grandfathered to provide it, and it decides which of two processes applies. Where a state's own external review process meets the minimum consumer protections of the model act the state insurance regulators publish, an insurer follows that state process; a plan that is not subject to an applicable state process follows the federal one instead — which is the usual situation for a self-funded employer plan, because state insurance regulation generally does not reach it.
The external decision is not advisory
One consequence runs straight into the practice's own paperwork: external review is a right that belongs to the covered person, not to the provider. Whether the practice can invoke it in its own name is a question about authority rather than about the merits, and it is answered in who can appeal a denial.
What travels between levels
Levels are connected by a record, and understanding that changes where effort is best spent. The reviewer at the second level reads the determination, the first-level decision, and the material that was in front of it. A document that was never submitted is not part of what is being reviewed, and at the higher levels the opportunity to introduce new evidence narrows rather than widens.
- The determination and its stated reason
- The remittance advice and the notice that carried the decision, with the reason and remark codes that named it. Every level is reviewing an answer to that stated reason. Reading them correctly is reading a denial.
- What the earlier reviewer was given
- The clinical documentation, the authorization reference, the proof of timely filing, the contract language. This is the part that is fully under the practice's control, and only at the first level.
- The reasoning of the level below
- A decision explaining why the argument did not succeed, which the next reviewer can see. It is also the most useful thing in the file, because it says precisely what the next submission has to answer.
Which is why the first level is the one to over-prepare
Deciding whether to go up a level
Having a level available is not a reason to use it. Each one costs staff time on a balance that is already known, and the higher levels cost more per claim than the levels below them. The question is the same one the first appeal answered, asked again with worse odds and a larger investment: is there something specific and documented to say that the reviewer below did not have or did not address?
- Escalate when the level below decided the wrong question — applied a rule to a service it does not govern, or overlooked evidence that was in the file.
- Escalate when the denial is one of a repeating pattern, because the decision then applies to more than one balance and the effort amortizes.
- Stop when the only new argument is emphasis. Nothing above the first level is persuaded by a stronger tone.
- Stop when the amount cannot carry the work — and record that decision as a write-off with a reason, not as an appeal that was never filed.
Whether the escalations are working is measurable rather than a matter of impression. The appeal overturn rate calculator computes the share of appealed denials a payer reversed from a practice's own counts, and it reads in a specific way here: a high rate alongside a high denial rate usually means denials are being produced upstream that never needed appealing, which is the subject of preventing denials. The rest of this cluster, including the ordered steps of working a single appeal, is indexed on the Denials & Appeals pillar.
Common questions
Is a second request to the same payer a second level?
Sometimes, and the payer's own notice is what settles it. Some plans publish two internal levels, so a second request is a defined second level with its own requirements. Others have one, and a second letter is a duplicate that does not restart or extend anything. The distinction matters because a submission filed as a level that does not exist is not preserved as anything else — the window for the level that does exist keeps running while it sits.
Does a Medicare Advantage plan really forward the case without us doing anything?
Yes. Under the regulations governing Medicare Advantage appeals, when the plan reconsiders and affirms its adverse determination in whole or in part, it must send the case file to an independent entity that contracts with CMS, and that entity reviews the issues still in dispute. The practical consequence is a scheduling one: a plan reconsideration that comes back upheld is not the point at which to close the balance, because the case is already moving.
Who decides an external review, and can the plan overrule it?
The reviewer is independent of the plan, and no — not by simply disagreeing. Federal regulation requires the plan or issuer to provide benefits, including paying the claim, in accordance with the final external review decision without delay, whether or not it intends to seek judicial review, unless and until a court decides otherwise. Which external process applies depends on whether the coverage is subject to a state external review process that meets the published minimum protections, or to the federal process instead.
Do we have to use every level before writing a balance off?
No. Exhausting the levels is a precondition for the level above, not an obligation, and stopping is a legitimate decision when the balance cannot support the work or there is no new argument to make. What is worth separating is the deliberate stop from the accidental one. A balance closed because a practice decided the next level was not worth it is a business judgment; a balance closed because nobody noticed the window is a process failure, and only one of the two shows up in a log that records the reason.
Key terms in this article
Defined once, on their own pages.
Continue learning
Where to go next.
Appealing a Denial
Whether to appeal at all, what the appeal has to argue, and what governs the deadline.
Who Can Appeal a Denial
Standing, assignment, and the authority a practice needs to file in its own name.
The Denial Appeal Process
The ordered steps of working one appeal, from receipt to resolution.
Appeal overturn rate calculator
The share of your appealed denials the payer reversed, from your own counts.
Authoritative sources
- Centers for Medicare & Medicaid Services (CMS) (opens in a new tab)
Publishes the Medicare fee-for-service appeals levels, the body that decides each one, and the current timeframes and amount-in-controversy figure.
- HHS Office of Medicare Hearings and Appeals (OMHA) (opens in a new tab)
The office that adjudicates the third level of Medicare appeals, and publishes its own filing requirements and procedures.
- U.S. Department of Labor, Employee Benefits Security Administration (opens in a new tab)
Administers the federal rules on internal claims and appeals and external review for employer-sponsored group health plans.
- Electronic Code of Federal Regulations — internal claims and appeals and external review (opens in a new tab)
The regulation itself: which plans must offer external review, when a state process applies, and the plan's obligation to act on the decision (29 CFR 2590.715-2719).