Overview: Understanding how Medicare processes claims and what beneficiaries can do when a claim is denied gives agents practical knowledge for advising clients — and tests a straightforward process that the exam covers.

How Claims Are Submitted

Under HIPAA, healthcare providers who participate in Medicare are legally required to submit claims on behalf of beneficiaries. In practice, the beneficiary almost never files a claim themselves. Providers submit claims electronically to Medicare Administrative Contractors (MACs) — private companies that CMS contracts to process Part A and Part B claims in geographic regions. If a provider refuses to file (which is rare for participating providers), the beneficiary can submit a paper claim using Form CMS-1490S.

Clean electronic claims are typically processed within 14 to 30 days. Paper claims take slightly longer, with a 29-day processing floor. After processing, claims appear on the beneficiary's Medicare Summary Notice (MSN), a quarterly statement summarizing what Medicare was billed, what it paid, and what the beneficiary owes.

For Medicare Advantage and Part D plans, claims are processed by the private insurer administering the plan, not by a MAC.

The Five-Level Appeals Process

When a claim is denied, beneficiaries have a structured right of appeal:

Level	Who Reviews	Deadline to File	Dollar Threshold
1. Redetermination	Different examiner at the same MAC	120 days from MSN	None
2. Reconsideration	Independent Qualified Independent Contractor (QIC)	180 days from Level 1 decision	None
3. ALJ Hearing	Administrative Law Judge (Office of Medicare Hearings and Appeals)	60 days from Level 2 decision	$200 (2026)
4. Medicare Appeals Council	Departmental Appeals Board (HHS)	60 days from Level 3 decision	None
5. Federal District Court	Federal judiciary	60 days from Level 4 decision	$1,960 (2026)

The process is sequential — you must exhaust each level before proceeding to the next. The minimum dollar thresholds at Levels 3 and 5 mean that small claims may not be worth pursuing to those stages, though multiple similar denied claims can sometimes be consolidated.