Appealing Funding Denials

When a request for funding is denied, Medicaid and all private third-party payers must have a mechanism for appealing the decision. While bothersome and time-consuming, filing an appeal can often be successful.
  • Review the denial letter, noting: the deadline date for any appeal, and the reason for denial (beyond the generic "uncovered benefit" statement);
  • Decide if it is appropriate to appeal;
  • Double check that the person is covered on the policy, that the diagnosis or an alternate diagnosis is covered on the policy, and that the requested item is not a clearly stated exclusion;
  • The family should phone the person who signed the denial letter. (In some cases it may be helpful for the case coordinator or clinician to call if the family is unable to get clarification of issues as outlined below.)
    • The individual calling should ask why the funding was denied. If not given a concise answer or if the answer is not logical, the individual should ask to speak to the supervisor for clarification. Have your office staff/helper get the individual on the line if you perceive stall tactics (long hold times, accidental disconnection, etc.).
    • The individual calling should ask for specific examples of what would be needed to qualify for funding for a specific service/item (e.g., use a different diagnosis, indicate impact differently, clarify why current/other equipment would not be adequate for the child's need, a different vendor, etc.).
    • The individual calling should document who was spoken to and what was said.
  • Based on the information gathered, decide if an appeal has a chance at success. If the reason for denial is nebulous, illogical, or keeps changing, these are red flags to move forward with an appeal.
  • Will the requested testing potentially change the treatment and therefore the outcome? If so, state this in the appeal letter.
  • The family should ask the physician and other key individuals (therapists, home care companies) to write an appeal letter referring specifically to the insurance company's contract and definition of medical necessity. Attach to the appeal all initial letters, the denial letter, documentation of phone contacts, and any supporting material (e.g., therapy notes).
  • If the item is denied again:
    • Repeat the above process of information-gathering.
    • The family should decide if they would like to request a hearing on the matter.
    • Identify resources for legal representation.
  • Note on Double Jeopardy: Families with both private insurance and Medicaid may get caught in the middle because a private payer refuses to fund an item/service and Medicaid, who would normally fund such an item, refuses to pay because they feel the private insurance should have paid (Medicaid is always the payer of last resort). In the appeal letter to Medicaid the family should state that they would like Medicaid to pay for the service but that they will allow Medicaid to continue to pursue funding from the private payer (so called "pay and chase").

Authors & Reviewers

Initial publication: February 2009; last update/revision: February 2016
Current Authors and Reviewers:
Author: Medical Home Team