# Denials Appeal Process: Levels of Appeal Explained Canonical: https://www.flobotics.io/blog/denials-appeal-explanation Author: Bart Teodorczuk Published: 2026-03-18 Updated: 2026-09-01 --- [Home](https://www.flobotics.io/)/[Articles](https://www.flobotics.io/blog)/Denials Appeal Process: Levels of Appeal Explained [Healthcare](https://www.flobotics.io/blog?category=healthcare)[RCM](https://www.flobotics.io/blog?category=rcm) # Denials Appeal Process: Levels of Appeal Explained [Bart TeodorczukRPA Tech Lead at Flobotics](https://www.flobotics.io/our-editorial-team#teodorczuk) Published March 18, 2026Updated September 1, 2026 On this page - [What Is a Denials Appeal?](#what-is-a-denials-appeal) - [Levels of Appeal](#levels-of-appeal) - [When Is It Used?](#when-is-it-used) - [Why It Matters in RCM](#why-it-matters-in-rcm) Book a callWant to talk about it? 30 minutes with someone who builds automations, not a sales script. [Talk to us →](https://www.flobotics.io/contact) Share [](#)[](#) ## What Is a Denials Appeal? A denials appeal is the formal administrative process by which a healthcare provider contests an insurance company's decision to deny payment for a claim. When a payer issues a denial, providers generally have the right to challenge that decision through one or more levels of review — providing additional documentation, clinical justification, or policy argument to support the claim. Appeals are distinct from claim corrections. A corrected claim addresses an error in the original submission (wrong code, missing auth number, incorrect patient data) and is resubmitted as a new claim. An appeal challenges the payer's adjudication decision itself — arguing that the denial was wrong based on the clinical record, the payer's own coverage policy, or applicable law. ## Levels of Appeal Most payers provide multiple levels of internal review before an external option becomes available: - First-level (internal) appeal: Filed directly with the payer's claims or appeals department. This is the standard first step and should be accompanied by the denial reason code, the original claim, relevant clinical documentation, and a written argument addressing the specific denial reason. - Second-level appeal: If the first-level appeal is denied, many payers offer a second internal review — sometimes by a different reviewer or a medical director. This level is most productive for medical necessity denials where the clinical record is strong but was not reviewed by a physician on first appeal. - External Independent Review (IRO): For fully-insured health plans subject to state insurance law, an external independent review organization can be requested after internal appeals are exhausted. IRO decisions are typically binding on the payer. This option is less available for self-funded ERISA plans. - Medicare and Medicaid administrative appeals: Government program denials have their own formal multi-level appeals process (for Medicare: Redetermination → Reconsideration by a QIC → ALJ Hearing → Medicare Appeals Council → Federal District Court), with strict deadlines at each level. Let’s talk! It’s a 30-minute call. Within the first 15, we’ll know if automation works for you. [Book a call →](https://tidycal.com/team/flobotics/flobotics-intro-call-w) ## When Is It Used? Appeals are initiated when a denial is received and the denial reason is contestable — meaning the service was clinically appropriate, covered under the payer's policy, and properly documented. Not every denial warrants an appeal: - Denials for timely filing failures are rarely overturnable unless the provider has documented proof of original timely submission. - Denials for non-covered services where the patient's policy clearly excludes the benefit are generally not appealable on clinical grounds. - Medical necessity denials, authorization disputes, and coding disagreements are the highest-value targets for appeal — particularly when the clinical record is complete and supports the level of care provided. Speed matters. Most payers impose appeal filing deadlines ranging from 90 to 180 days from the original denial date. Claims that miss these windows are permanently uncollectable through the appeals process. ## Why It Matters in RCM Appeals are one of the highest-ROI activities in the revenue cycle when focused correctly. According to an Advisory Board survey cited by [Becker's Hospital Review](https://www.beckershospitalreview.com/strategy/denial-management-in-healthcare-turning-data-into-action/), the median success rate for commercial plan denial appeals has fallen from 56% to 45% in recent years — meaning nearly half of all well-constructed appeals still result in payment. For a practice with $500,000 in annual denied claims, even a 45% overturn rate represents significant recoverable revenue. The challenge is that appealing takes time and cost. [Premier's 2022 survey, cited by HFMA](https://www.hfma.org/fast-finance/ai-automation-payer-denials-management/), estimates the average denied claim costs $44 to rework, and complex clinical appeals can require physician review time on top of that. This makes prioritization essential: high-dollar medical necessity denials and systemic payer-pattern denials warrant full appeal effort; low-dollar administrative denials may be better corrected and resubmitted or written off depending on the cost-to-recover ratio. Tracking appeal outcomes by payer, denial reason code, and service line is how mature RCM programs identify which denial types are winnable and which payers are systematically denying claims inappropriately — a pattern that may support contract renegotiation or, in egregious cases, a regulatory complaint. Written byBart Teodorczuk RPA Tech Lead at Flobotics. [More from Bart](https://www.flobotics.io/our-editorial-team#teodorczuk) Talk to us ## Show us the process your team is tired of doing manually. Let Karl, our CTO, take a look. It’s 30 minutes with the person who designs the automations, not a sales script. [Book a call with Karl →](https://tidycal.com/team/flobotics/flobotics-intro-call-w)[Send us a message](https://www.flobotics.io/contact) 30-minute callKarl MielnickiCo-founder, CTO Walk me through the process your team does by hand. I’ll tell you whether it’s worth automating and how I’d approach it. Karl Keep reading ## More insight The latest industry news, interviews, technologies, and resources. [ HealthcareRCM ### What Is Denials Management? Process and Benchmarks Denials management tackles denial rates now above 20%, where every reworked claim costs about $44 - and prevention pays off. Karl MielnickiApril 02, 2026 ](https://www.flobotics.io/blog/denials-management-explanation)[ HealthcareRCM ### Initial Denial Rate: How to Measure and Lower It Initial denial rate, explained: what counts as a first-pass claim rejection and how to benchmark and lower yours in 2026. Jędrzej SzymulaMay 18, 2026 ](https://www.flobotics.io/blog/initial-denial-percentage-explanation)[ HealthcareRCM ### Clean Claim Rate (CCR): Definition and Benchmarks Clean Claim Rate (CCR) guide: the foundational RCM metric behind denials, DAR, and collections, with a 98%+ target. Bart TeodorczukJune 01, 2026 ](https://www.flobotics.io/blog/clean-claim-rate-ccr-explanation) [All articles →](https://www.flobotics.io/blog)