A denial of a Medicare claim can be a confusing experience, leaving beneficiaries uncertain about their financial obligations. A claim denial means Medicare has reviewed the request for payment for a service or item and decided not to cover the cost. Receiving this notice does not automatically mean you must pay the bill in full. Patient liability depends on specific circumstances and whether mandatory notification procedures were followed before the service was rendered.
Determining Patient Liability After a Denial
The question of who pays hinges primarily on whether the provider gave you an Advance Beneficiary Notice of Noncoverage, or ABN, before you received the service. An ABN is a written notice that a provider must give you when they believe Medicare may not pay for a service because it is either not medically necessary or exceeds the frequency limits allowed for that service. By signing this form, you acknowledge that you may be held personally responsible for the cost if Medicare denies the claim.
If you received a valid ABN and Medicare denies the claim for the reason stated on the notice, you are responsible for the payment. If the provider failed to issue a required ABN, the financial liability for the denied service shifts to the provider. Note that an ABN is not required for services Medicare never covers by law, such as routine dental care or cosmetic surgery.
Common Reasons Claims Are Not Covered
Understanding the reason for the denial is the first step in addressing the issue and determining if an appeal is warranted. One frequent cause is a lack of medical necessity, meaning Medicare determined the service or item was not reasonable or necessary for the diagnosis or treatment of your condition. For example, a claim may be denied if the medical documentation does not sufficiently support why a particular test or procedure was needed.
Another common issue involves administrative errors, such as incorrect procedure codes, an invalid patient identification number, or missing information on the claim form. These coding or filing mistakes made by the provider’s billing office can lead to an automated claim rejection. Denials also occur if the service is specifically excluded from coverage by federal law, or if you have exceeded the maximum allowed frequency or duration for a specific covered service.
The Multi-Level Claims Appeal System
If your claim is denied, you have the right to challenge that decision through a formal, five-level appeals process, which begins with the initial determination found on your Medicare Summary Notice (MSN).
The five levels of appeal are:
- Redetermination: This is the first level of appeal, a review performed by the Medicare Administrative Contractor (MAC) that processed the original claim. This request must be filed within 120 days of receiving the MSN, and you should submit any additional medical evidence that supports your case.
- Reconsideration: The second level is a review by a Qualified Independent Contractor (QIC). The deadline for requesting this review is 180 days after receiving the Redetermination decision.
- Hearing before an Administrative Law Judge (ALJ): The third level involves a hearing before an ALJ. To qualify, the dollar amount remaining in controversy must meet a minimum threshold, which changes annually (e.g., $180 for 2024).
- Review by the Medicare Appeals Council: The fourth level must be requested within 60 days of an unfavorable ALJ decision.
- Judicial Review in a Federal District Court: The fifth and final level is only available if the amount in controversy meets a significantly higher threshold (e.g., $1,840 in 2024).
Proactive Measures to Avoid Denials
To minimize the chance of a denial, take proactive steps before a service is received. Always verify coverage for planned services or equipment with your provider or by checking Medicare’s coverage rules. This verification is important for services that might be considered experimental or those with known frequency limitations.
Understanding your rights regarding the Advance Beneficiary Notice is also important. If a provider presents you with an ABN, take time to read and understand the specific reason they believe Medicare will deny payment before you sign it.
Maintain a complete and organized file of all your healthcare documentation, including Medicare Summary Notices and Explanation of Benefits forms. Regularly reviewing these documents helps you quickly identify potential billing errors or denials, allowing you to address issues promptly and preserve your right to appeal.