What a Medicaid Managed Care Plan Owes You When It Denies a Service

Answer first: the denial has a regulatory name, and the name starts a clock

Most people on Medicaid are enrolled in a managed care organization rather than in fee-for-service coverage, and the rules for challenging a decision live in subpart F of 42 CFR part 438. The subpart's definitions section, § 438.400(b), defines the thing being challenged. An adverse benefit determination means, in the case of an MCO, a prepaid inpatient health plan or a prepaid ambulatory health plan, any of seven things — including "the denial or limited authorization of a requested service, including determinations based on the type or level of service, requirements for medical necessity, appropriateness, setting, or effectiveness of a covered benefit"; the reduction, suspension or termination of a previously authorized service; the denial in whole or in part of payment for a service; the failure to provide services in a timely manner as defined by the state; the plan's own failure to act within the appeal and grievance timeframes; and the denial of a request to dispute a financial liability, including cost sharing, copayments, premiums, deductibles and coinsurance.

The same section defines the two paths that follow. An appeal is a review by the plan of an adverse benefit determination. A grievance is "an expression of dissatisfaction about any matter other than an adverse benefit determination" — the rule's examples include the quality of care or services and aspects of interpersonal relationships such as rudeness. The distinction matters because the timeframes and rights attached to each are different.

The architecture is deliberately short. Section 438.402(b) provides that each plan "may have only one level of appeal for enrollees." There is no ladder of internal reviews to climb before the state process opens.

Sixty days to appeal, and the request can be oral

Section 438.402(c)(2)(ii) sets the window: following receipt of a notification of an adverse benefit determination, "an enrollee has 60 calendar days from the date on the adverse benefit determination notice in which to file a request for an appeal to the managed care plan." A grievance, by contrast, may be filed at any time.

The procedures are permissive about form. Under paragraph (c)(3), an enrollee may request an appeal either orally or in writing, and may file a grievance orally or in writing. Section 438.406(b)(3) reinforces this from the plan's side: the plan's process must "provide that oral inquiries seeking to appeal an adverse benefit determination are treated as appeals."

Who may file is also defined. Under paragraph (c)(1)(i) an enrollee may file a grievance and request an appeal, and may request a state fair hearing after receiving notice that the determination is upheld. Under paragraph (c)(1)(ii), if state law permits and with the written consent of the enrollee, a provider or an authorized representative may request an appeal, file a grievance, or request a state fair hearing on the enrollee's behalf — with one carve-out the regulation states expressly: providers cannot request continuation of benefits.

The notice has a required contents list

Section 438.404 governs what the plan has to say when it denies. The notice must be timely, adequate and in writing, and paragraph (b) sets out six things it must explain.

It must state the determination the plan has made or intends to make. It must give the reasons, "including the right of the enrollee to be provided upon request and free of charge, reasonable access to and copies of all documents, records, and other information relevant to the enrollee's adverse benefit determination" — and the regulation specifies that such information includes medical necessity criteria and "any processes, strategies, or evidentiary standards used in setting coverage limits." It must state the right to appeal, including information on exhausting the plan's one level of appeal and the right to request a state fair hearing. It must give the procedures for exercising those rights. It must explain the circumstances under which an appeal can be expedited and how to request that. And it must explain the right to have benefits continue pending resolution, how to request continuation, and the circumstances under which the enrollee may be required to pay for those services.

The clause about processes, strategies and evidentiary standards is the one that changes what a person can actually examine. A denial letter that recites a conclusion is not the end of the available record; the criteria behind the conclusion are within the described entitlement, on request and at no charge.

Timing of the notice follows the type of decision. For termination, suspension or reduction of previously authorized Medicaid-covered services, the notice runs on the fee-for-service advance-notice timeframes in §§ 431.211, 431.213 and 431.214. For denial of payment, at the time of any action affecting the claim. For standard service authorization denials, within the § 438.210(d)(1) timeframe. And for authorization decisions not reached within those timeframes — which the rule says constitutes a denial and is thus an adverse benefit determination — on the date the timeframes expire.

The underlying authorization deadlines, and a date that changes them

Section 438.210(d) fixes how long the plan has to decide an authorization request in the first place, and one of the figures moved recently.

For standard authorization decisions the plan must give notice as expeditiously as the enrollee's condition requires and, for rating periods that start before January 1, 2026, within state-established timeframes that may not exceed 14 calendar days after receiving the request. For rating periods that start on or after January 1, 2026, that outer limit becomes 7 calendar days. Either may be extended by up to 14 additional calendar days if the enrollee or the provider requests the extension, or if the plan justifies to the state a need for additional information and how the extension is in the enrollee's interest.

For expedited authorization decisions — where a provider indicates or the plan determines that the standard timeframe could seriously jeopardize the enrollee's life or health or ability to attain, maintain or regain maximum function — notice must come as expeditiously as the condition requires and no later than 72 hours after receipt of the request, extendable by up to 14 calendar days on the same two grounds.

Section 438.210 also constrains what the plan may decide, not only when. The contract must require that any decision to deny an authorization request, or to authorize a service in an amount, duration or scope less than requested, "be made by an individual who has appropriate expertise in addressing the enrollee's medical, behavioral health, or long-term services and supports needs." And the plan may not "arbitrarily deny or reduce the amount, duration, or scope of a required service solely because of diagnosis, type of illness, or condition of the beneficiary."

How the appeal itself must be handled and resolved

Section 438.406 sets conditions on who decides and what they must consider. The decision-makers must be individuals who were neither involved in any previous level of review or decision-making nor a subordinate of any such individual. Where the appeal is of a denial based on lack of medical necessity, or a grievance about denial of expedited resolution, or a grievance or appeal involving clinical issues, they must have appropriate clinical expertise as determined by the state in treating the enrollee's condition or disease. They must take into account all comments, documents, records and other information submitted "without regard to whether such information was submitted or considered in the initial adverse benefit determination."

The same section requires the plan to give the enrollee a reasonable opportunity, in person and in writing, to present evidence and testimony and make legal and factual arguments, and to inform the enrollee of the limited time available for this sufficiently in advance of the resolution deadline. It must provide the enrollee and any representative the case file — including medical records, other documents and records, and any new or additional evidence considered, relied upon or generated in connection with the appeal — free of charge and sufficiently in advance of the resolution deadline.

Section 438.408 sets the outer limits. Standard resolution of a grievance may not exceed 90 calendar days from receipt. Standard resolution of an appeal must be within a state-established timeframe no longer than 30 calendar days from receipt. Expedited resolution of an appeal must be within a state-established timeframe no longer than 72 hours after receipt. Each may be extended by up to 14 calendar days if the enrollee requests it or the plan shows, to the state's satisfaction on request, a need for additional information and how the delay is in the enrollee's interest. Where the plan extends without the enrollee's request, it must make reasonable efforts to give prompt oral notice of the delay and, within 2 calendar days, written notice of the reason and of the right to file a grievance about the extension.

The expedited route has its own protection for the person who requests it. Section 438.410(b) states that the plan "must ensure that punitive action is not taken against a provider who requests an expedited resolution or supports an enrollee's appeal." Where the plan denies a request for expedited resolution, it must transfer the appeal to the standard timeframe and follow the extension-notice requirements.

Deemed exhaustion, the state hearing, and the cost of continued benefits

Two provisions do most of the work when a plan is slow or sloppy. Section 438.402(c)(1)(i)(A) and § 438.408(c)(3) both state that where a plan "fails to adhere to the notice and timing requirements" of § 438.408, the enrollee "is deemed to have exhausted" the plan's appeals process and may initiate a state fair hearing. The internal step is not a gate the plan can hold shut by missing its own deadlines.

Otherwise, the state fair hearing comes after the internal appeal. Section 438.408(f)(1) provides that an enrollee may request one only after receiving notice that the plan is upholding the determination, and (f)(2) sets the window: the enrollee "must have no less than 90 calendar days and no more than 120 calendar days from the date of the MCO's, PIHP's, or PAHP's notice of resolution to request a State fair hearing." The notice of resolution itself must, where the appeal was not resolved wholly in the enrollee's favor, state the right to request that hearing and how to do so, the right to request and receive benefits while the hearing is pending and how to make that request, and that the enrollee may, consistent with state policy, be held liable for the cost of those benefits if the decision upholds the plan.

A state may also offer an external medical review, but only on conditions listed twice in the subpart: it must be at the enrollee's option and must not be required before, or used as a deterrent to, proceeding to the state fair hearing; it must be independent of both the state and the plan; it must be offered without any cost to the enrollee; and it must not extend any of the § 438.408 timeframes or disrupt continuation of benefits.

Continuation of benefits is governed by § 438.420, and its conditions are cumulative. The plan must continue benefits if the enrollee files the appeal timely, the appeal involves the termination, suspension or reduction of previously authorized services, the services were ordered by an authorized provider, the period covered by the original authorization has not expired, and the enrollee timely files for continuation. Timely filing for continuation means on or before the later of 10 calendar days after the plan sends the notice, or the intended effective date of the proposed determination. Benefits continue until the enrollee withdraws, until the enrollee fails to request a state fair hearing and continuation within 10 calendar days after the notice of an adverse appeal resolution, or until a state fair hearing office issues an adverse decision.

The rule then states the consequence plainly. If the final resolution upholds the plan's determination, the plan "may, consistent with the state's usual policy on recoveries under § 431.230(b) of this chapter and as specified in the MCO's, PIHP's, or PAHP's contract, recover the cost of services furnished to the enrollee while the appeal and state fair hearing was pending, to the extent that they were furnished solely because of the requirements of this section." Continued benefits are a right with a stated financial exposure attached, and the notice rules require the plan to say so up front.