Medical Appeal Letters: How to Select the Strongest Claims to Appeal and Overturn

According to a new report from benefits administration company Premier published in Becker’s Hospital CFO Report, 60.5 percent of denials from commercial payers that are initially denied get overturned and paid. 

While this statistic implies that filing appeals is worthwhile, readers still need to consider the following caveat:

Because providers appeal just a small percentage of their denials, the high overturn rate mentioned above reveals that providers select their strongest appeals cases. The Office of Inspector General at the U.S. Health and Human Services department shares that, “beneficiaries and providers rarely used the appeals process.” In fact, providers and consumers together appeal less than five percent of denials cases. According to The Kaiser Family Foundation (KFF), consumers themselves appealed just less than two-tenths of one percent of denied in-network claims.

The internet is full of articles explaining how to write a medical appeal letter that has the best chance of overturning a denial. This article covers that as well, but also an important first step: choosing the denials that have the highest chances of winning an appeal.

The current denials and underpayments appeals environment is difficult

In today’s environment, payers are rewarded for delaying appeals and denying as many as possible to preserve their revenue. 

Providers already know that payers keep profits high by denying claims and delaying approved appeals reimbursements. Year after year, payer net profits run into the several billion to tens of billions of dollars. In 2023, United Healthcare’s profit was up 11 percent to 22.4 billion. CVS health reached 8.3 billion, nearly doubling their 2022 profit of 4.3 billion. Elevance was 6 billion and Cigna was 5.2 billion. 

In stark contrast, the operational costs for medical groups still outstrip revenue gains leading to an average loss per physician in medical groups of $249,000. This figure comes from the American Medical Group Association which surveyed 15,000 providers. Despite this imbalance, payers continually resist processing appeals.  

To explore the appeals landscape, veteran ProPublica healthcare reporter spoke with 50 insurance experts, patients, lawyers, physicians, and consumer advocates.

Nearly all of these experts said appeals were difficult to win because payers and regulators have made it so complicated. Given this environment, it’s not surprising that providers and consumers only attempt to appeal the most ironclad cases. Further, each payer has a different appeals process and no state or federal lawmakers have been able to get payers to standardize their methods.  Exceptions and caveats abound. 

In the article, Dr. Barbara McAneny, a former AMA president now in charge of a 6,000-patient oncology practice in Albuquerque, New Mexico, explains that her practice spends $350,000 a year on specialists whose job is just to fight their denials (67 daily). For nearly every denial, the payer first claims to have lost the first batch of records. Convinced that this negligence is by design, she shares that payers’ prime directive is how they can optimize profits and manage to not pay. She adds,

 “We often have to send records two or three times before they finally admit they actually received them. … They play all of these kinds of delaying games.”

Still, pursuing medical appeals is worthwhile

Despite this analysis, provider groups and health systems do pursue appeals. And win. 

You can find many successful denials recovery case studies across the internet and the $365,000 spent by the above oncology center devoted to denials recovery indicates that even a skeptical healthcare leader finds the process worthwhile. 

Consider, too, that in hospitals, the average cost of an overturned denial in the study above was $43.84 per claim, a reasonable amount considering that the average hospital daily inpatient stay amounts to at least $3,025. Even the $118 appeal cost cited in many studies warrants this effort.

Find and recover your underpayments, too 

Your staff is more likely to miss more underpayments than denials. A denial stands out because it arrives with zero payment and provides the  CARC and RARC reason codes. 

Underpayments slide under the radar, however, because typically some amount – even the majority of the payment – arrives. Staff posts these payments without checking whether the actual amount matches the amount listed in the fee schedule. This oversight leads to providers losing an average of one to three percent of their net revenue annually, according to Becker’s Hospital Review.  Other studies assert that payers underpay as much as 11 percent of net revenue. A good portion of our clients and prospects tell us they are losing somewhere from five to seven percent of their net revenue to underpayments. More explain that, overwhelmed with other duties, they have no idea how high their underpayments are. 

 Large practice groups often sweep in millions in net revenue once they begin examining actual versus contracted reimbursements. One case study covers how a 30-location orthopedics group recovered $10 million in underpayments using a contract and underpayments software solution. The potential for recouping this revenue still exists if you’re using spreadsheets to keep track of actual versus contracted payments. 

How to dispute underpayments

Disputing underpayments requires providers to contact their payers, whether through email or another platform. For instance, Blue Cross uses Availity, which lets providers access real-time information and receive instant responses.  

If you are writing to a payer, include as much information as you can. Include a clear explanation comparing the actual reimbursement to the currently contracted rate. Send along snippets of the contract and your estimation of why the underpayment occurred. Payers often make errors when determining:

• Annual escalators
• Bundling
• Carve-Outs
• Combined accounts
• Interest payments when late fees apply 

On top of these, payers are notorious for simple processing errors. 

If your efforts are not fruitful, resort to federal ERISA appeals to recover underpayment revenue.

ERISA stands for the Employee Retirement Income Security Act, a federal statute that regulates employer-funded insurance plans and retirement accounts for employees. Under ERISA, health insurance providers are required by law to resolve any underpayments. 

Therefore, federal ERISA appeals can be utilized to tackle underpayments. Should your initial appeal be rejected, request a copy of the patient's insurance policy and forward it to the insurance company's legal division. Highlighting ERISA in your appeal serves as a reminder to the legal team that the patient's policy falls under the protection of federal law. While this process can get long and protracted, getting these underpayment workflows in place reinforces your practice or physician group revenue long-term. 

How to find the denials most likely to win appeals

Many providers find that using revenue cycle analytics software to find their highest opportunity denials to be most cost-effective. These tools dive into the data to uncover the denials that have won appeals in the past.

It then unleashes predictive analytics and artificial intelligence to assess each denial's appeal viability, allowing healthcare providers to focus their efforts on claims with the strongest likelihood of overturning the insurer's decision. This not only conserves valuable resources but also expedites the recovery of revenue.

Some systems go further. They categorize denials by reason, urgency, and probability for success, enabling providers to strategically approach appeals. This method ensures that efforts are concentrated on high-value claims, thereby maximizing return on investment.

In essence, revenue cycle analytics empower healthcare organizations to adopt a more targeted and efficient approach to managing denials. This technology not only bolsters financial stability but also contributes to the overall efficiency and effectiveness of the healthcare system.

If you don’t have software…

Without software, you can still mimic the above approach. If you are looking at your denials data manually, most often via spreadsheets, you can still analyze and prioritize denials. Follow these steps to navigate this challenge:

1. Capture your denials

You can manually input data related to denied claims into spreadsheets, including reasons for denial, amounts involved, and any patterns in payer behavior. This manual process requires diligent entry and updating but can help in identifying trends like frequent denials from specific payers or for particular services.  By categorizing denials based on common characteristics — such as denial reason codes, service lines, or providers — you can identify which categories are most prevalent and which have the highest financial impact. This categorization highlights areas with the greatest opportunity for revenue recoupment.

2. Prioritize Based on Success Probability and Value 

Prioritize your appeals based on the denial reason and your historical success rates with similar appeals. Target high-value claims or those denied for reasons previously overturned first. 

3. Collaborate

Engaging the entire revenue cycle team, from coding and billing to providers, enhances the identification and appeal of denials. Meet regularly to discuss trends, share successful appeal strategies, and update the team on regulatory changes.

4. Leverage external resources

Stay informed about common denial reasons and effective appeal strategies by remaining up to date on payer and regulatory changes. Publications from HFMA and MGMA, along with policy updates from organizations like the American Medical Association and the American Hospital Association, provide a roadmap to understanding the ever-evolving healthcare landscape. This knowledge not only aids in selecting claims with a higher likelihood of successful appeal but also in preventing future denials.

5. Push continual education and training

Keeping your coding and billing teams current on the latest coding standards, payer policy changes, and appeal procedures preempt denials and refine the appeals process for those that occur.

While working with spreadsheets and manual processes is more labor-intensive and potentially less precise than using dedicated revenue cycle analytics platforms, these methods can work. The key to success lies in data management, team collaboration, and a proactive approach to understanding and addressing denial trends.

Denials cases with poor chances of appeal

While some appeals involve simple code corrections or additional documentation, payers tend to uphold their denials with reason codes stemming from these areas. By setting aside unwinnable appeals, you can focus your efforts on those that are significant and have a potential for reversal. 

Lack of prior authorization

With insurance regulations changing annually, keeping track of necessary pre-authorizations is a constant struggle. Payers are very strict about upholding denials due to missing prior authorization. 

Deadline misses

Timeliness is critical in healthcare, not just for patient care but also for claim submissions to insurers.

If a denial is received because a claim was not submitted within the insurer's deadline, appealing is unlikely to succeed. Despite the frustration of varying submission deadlines among insurers—ranging from 30 days to over a year after the service date—being aware of and adhering to these deadlines is essential.

Proactively monitoring payer deadlines and incorporating them into your claims submission process can prevent these types of denials.

Inadequate documentation 

 If a denial is based on insufficient evidence in the patient records to support the diagnosis or procedure codes claimed, it will be tough to win this appeal.

To avoid these denials, verify that all claims are backed by adequate patient records before submission. If the documentation does not support the codes, adjustments must be made.

Composing the medical appeal letter

Once you have selected the denials for which you can make the strongest cases, you will need a strong medical appeal letter that commands attention for each. 

Start with identifying the appropriate recipient and organizing your points persuasively. Include corroborative evidence and medical records, alongside finding the perfect argument to enhance your letter's effectiveness. 

What is a medical appeal letter? 

A medical appeal letter written by a provider is a formal request for reconsideration sent to an insurance company. The letter challenges the payer’s decision to deny coverage or payment for medical services. It outlines the provider's rationale for disputing the payer’s decision, often including medical records, treatment plans, and any pertinent clinical guidelines to support the appeal. The letter cogently explains why the treatment in question should be considered medically necessary and thus covered under the patient's health plan. This documentation is crucial for the appeal process, as it helps to ensure that patients receive the coverage and care they need, based on the professional judgment of their healthcare providers and established medical standards.

Type of Denials

Broadly speaking, denials from insurance companies fall into two categories: hard denials and soft denials. A hard denial is a definitive rejection from the insurer, refusing to pay the submitted claim. Facing a hard denial, healthcare providers might have to engage in a formal appeal process, though many opt not to pursue this route due to the complexity and potential for unrecovered funds, leading to a loss in revenue.

On the other hand, soft denials occur when the insurer disputes certain details in the claim, indicating a possibility for the healthcare provider to amend and resubmit the claim with corrected or additional information. These often relate to incomplete data or insufficient documentation to justify certain claim elements.

Soft denials are more common and typically result in the establishment of specialized teams by healthcare providers, tasked with reviewing and resubmitting these claims to secure payment.

Components of a Compelling Medical Appeal Letter

To compose a compelling medical appeal letter, include these key components. They will help structure your letter and ensure that you address all the necessary points to support your case.

1. Introduction: Begin your letter by introducing yourself, your insurance policy information, and the denial decision you are appealing. Clearly state the purpose of your letter and briefly summarize the main points you will be addressing.

2. Summary of denial reason: Provide a concise summary of the specific reason for the denial as stated in the insurance company's denial letter. This shows that you have carefully reviewed their decision and understand their concerns.

3. Medical necessity and supporting evidence: Present a detailed explanation of why the requested procedure or treatment is medically necessary. Provide supporting evidence such as medical records, test results, or expert opinions to strengthen your case.

4. Rebuttal of concerns: Address any concerns or misconceptions raised by the insurance company in their denial letter. Clearly and concisely explain why their concerns are unfounded or how you have taken steps to address them.

5. Impact on patient's health and well-being: Emphasize the potential consequences of not receiving the requested procedure or treatment. Explain how it will negatively impact your health, quality of life, and ability to function.

6. Conclusion and request for reconsideration: Summarize your main arguments and restate your request for the insurance company to reconsider their decision. Thank them for their time and consideration.

Structure your arguments effectively

The structure and organization of your appeal letter impact its persuasiveness. Start by clearly stating the purpose of your letter and summarizing the denial you are appealing. Then, present your arguments logically and systematically. Break down each argument into separate paragraphs, providing a clear and concise explanation of why the denial should be overturned. Use bullet points or numbered lists to highlight key points and make your arguments more digestible.

Strike the right tone

The tone of your appeal letter is essential in conveying your message effectively. While it's understandable to feel frustrated or disappointed by the denial, it's important to maintain a professional and respectful tone throughout your letter. Avoid using confrontational or emotional language that may undermine the strength of your arguments. Instead, focus on presenting the facts, highlighting the medical necessity of the treatment, and expressing your desire for a fair reconsideration of the denial.

Proofread and revise

Before submitting your appeal letter, take the time to thoroughly proofread and revise it. Check for any grammatical errors, typos, or inconsistencies that could detract from the overall impact of your letter. Consider seeking a second pair of eyes to ensure that your letter is clear, concise, and free of any unnecessary information. A well-polished appeal letter demonstrates your attention to detail and professionalism, further strengthening your case.

Medical Denial Appeal Letter Examples  

These examples provide clear templates for you to emulate. 

‍

Date

Contact Name

Payer

Payer Address

ATTN: Prior Authorizations/Appeals Re: Coverage of [treatment, product or prescription name]

Patient Name 

Policy Number 

Group Number 

Patient Date of Birth 

Diagnosis: [ICD‐ Code]

Diagnosis written out

Claim or Reference Number: [Claim or Reference Number] 

Submission Date: [Submission Date] Denial 

Date: [Denial Date] 

‍

Dear [find specific representative’s name]

Please review a denial for coverage of [treatment / product / prescription] for [patient]. Your company has denied this claim due to: 

• [Copy CARC codes and reasons] 

[Patient]’s medical history and course of treatment are as follows: describe the patient’s history, including test results, previous and current treatments, products and/or prescriptions. Describe outcomes.

We assert that the use of [treatment / product / prescription] is medically appropriate and necessary for [patient]. I have enclosed a copy of your guidelines for use of treatment / product / prescription]. 

Please review the additional documentation provided and consider overturning your coverage decision regarding [treatment / product / prescription] for [patient]. 

Thank you for your prompt attention to this matter. I look forward to your reconsideration. If I can provide any additional information, please contact me.

 Regards, 

‍

Physician Name

NPI Number

Phone Number

Fax Number 

‍

Consider cc’s to:

• health plan medical director
• medical group medical director
• primary care or treating physician
• patient’s state representative if you expect more denials

Attach to this email: 

• Original prior authorization form, denial letter/explanation of benefits (EOB)
•  full prescribing information, medical literature regarding the use of [treatment / product / prescription] for [ICD‐10‐CM Code]
• diagnosis
• relevant clinical documentation (eg, history and physical, progress notes describing treatment history and outcomes),
• any other supporting documents

Explore these additional strong examples of medical denial appeal letters:

Office of the Insurance Commissioner, Washington State

University of Rochester Medical Center

Patient Advocate Foundation 

North Carolina Department of Insurance  (based on denial due to setting)

Advocate for your patients and your physician group

Writing an effective medical appeal letter is an essential step in securing the needed coverage or treatment. By understanding why the denial occurred, collecting relevant evidence, and sending the letter to the appropriate party, you enhance your likelihood of prevailing. 

Appealing a denial can require time and perseverance. Keep everything in order, adhere to the required procedures, and remain steadfast in your advocacy for your patient. Advocate for your patients' rights and boost your odds of achieving a positive result by assembling an appeal that demands attention.

Advocating for your physician group and your patients involves more than appealing denials, however. Take even more steps to keep payers honest by gaining control of your payer contracts. 

MD Clarity’s RevFind digitizes, and analyzes payer contracts, consolidating them in a single location. It compares every actual payment to contract terms and alerts staff to any discrepancies. Pursuing underpayments can result in millions of dollars in cash recovered and improved margins. By tracking the performance of each contract, it provides the competitive intelligence that helps you negotiate better terms and rates. 

Schedule a demo to see how you can use RevFind to stand up to payer abuses and recoup the net revenue you’ve honestly earned.