Medicaid Claim Denied: How to Appeal and Win Your State Fair Hearing

Medicaid Claim Denied: How to Appeal and Win Your State Fair Hearing

Medicaid covers over 90 million Americans — low-income adults, children, pregnant women, elderly adults, and people with disabilities. Despite covering such a large population, Medicaid claim and service denials happen regularly, and the consequences — loss of medical care, medical debt, delayed treatment — can be severe for people who have few other options.

If Medicaid has denied your claim, prior authorization request, or service, you have powerful federal and state rights to appeal — rights that in many ways exceed those available to commercial insurance policyholders. This guide explains them.

Understanding Medicaid: Fee-for-Service vs. Managed Care

The appeal process depends on how your Medicaid is delivered:

Medicaid Fee-for-Service (FFS): The state Medicaid agency directly pays providers. Denials come directly from the state agency. The state agency's appeal process and state fair hearing rights apply.

Medicaid Managed Care: The state contracts with private managed-care organisations (MCOs) like Molina Healthcare, UnitedHealthcare Community Plan, Centene, Anthem Medicaid, Aetna Medicaid, and others. Denials come from the MCO. You have both the MCO's internal appeal process AND the right to a state fair hearing.

Most Medicaid beneficiaries are in managed care, but the state fair hearing right applies in both situations.

Common Medicaid Denial Reasons

Not medically necessary: The most common denial reason. The state or MCO determines the requested service does not meet Medicaid's medical necessity definition.

Service not covered under your state's Medicaid program: Medicaid benefits vary significantly by state. Some services — dental, vision, non-emergency transportation, personal care services, certain therapies — may not be covered in your state's benefit package.

Prior authorization denied: Medicaid requires prior authorization for many services. Denial of prior authorization means the claim will also be denied.

Eligibility issues: Medicaid may deny a claim if it believes you were not eligible for coverage on the date of service.

Managed care network issues: If you are in Medicaid managed care and received care from a non-network provider without a referral or emergency, the MCO may deny the claim.

EPSDT disputes: Early and Periodic Screening, Diagnostic, and Treatment (EPSDT) is a federal Medicaid requirement for children under 21. EPSDT requires states to cover any service medically necessary for children, even if the service is not otherwise in the state's adult benefit package. Denials of EPSDT-covered services for children are a common wrongful denial that is frequently overturned on appeal.

Benefit exhaustion: Some states impose visit or day limits. Denials based on exceeding these limits may be challengeable under EPSDT (for children) or medical necessity grounds (showing continued treatment is necessary).

Your Medicaid Appeal Rights

Right 1: Notice Before Termination or Reduction of Services

If Medicaid is planning to reduce, suspend, or terminate an ongoing service or benefit, you have the right to advance notice — typically 10 days before the action takes effect. The notice must explain the reason, cite the specific rule, and inform you of your appeal rights.

Right 2: Aid Pending (Continuation of Benefits)

If you appeal a reduction or termination of ongoing services within the notice period (usually 10 days), Medicaid must generally continue your services at their current level while the appeal is pending. This is called aid pending or continuation of benefits. You must explicitly request it when filing your appeal.

Right 3: Internal Appeal (MCO Grievance) — Managed Care Members

If you are in Medicaid managed care:

• File an internal appeal (grievance) with your MCO within 60 days (or the timeframe in your NOA)
• MCO must decide within 30 days (standard) or 72 hours (expedited/urgent)
• You can request an expedited decision if your health requires it

Right 4: State Fair Hearing

This is the most powerful Medicaid appeal right — and it is available regardless of whether you are in fee-for-service or managed care:

• You have the right to a State Fair Hearing — an administrative hearing before an independent hearing officer from your state Medicaid agency
• You can request a state fair hearing at the same time as your MCO internal appeal — you don't have to exhaust the internal appeal first
• Deadlines vary by state, but typically you have 90–120 days from the denial to request a state fair hearing
• State fair hearings are free
• You can bring a representative — a family member, advocate, social worker, or attorney

Why state fair hearings matter: Hearing officers are required to apply federal Medicaid law and regulations — not just the MCO's or state agency's internal policies. This means the hearing officer may find in your favour even if the MCO's internal appeal failed, because your case meets federal Medicaid standards.

Right 5: Medicaid Ombudsman Assistance

Many states have a Medicaid managed care ombudsman or patient advocate — a free, independent resource that can help you understand your rights, navigate the appeal process, and prepare for a state fair hearing. Find your state's ombudsman through your state Medicaid website or by calling 1-800-MEDICARE (for people also on Medicare).

Right 6: Legal Aid

Low-income Medicaid members are typically eligible for free legal representation from legal aid organisations. Legal aid attorneys specialise in Medicaid disputes and can represent you at state fair hearings. Contact your local legal aid society or the national legal aid locator at lawhelp.org.

Step-by-Step: Appealing a Medicaid Denial

Step 1: Read Your Notice of Action (NOA) Immediately

Medicaid must send you a written Notice of Action (NOA) explaining:

• What action is being taken (denial, reduction, termination)
• The specific reason and legal basis
• Your appeal deadline
• How to request a fair hearing

Note the deadline — Medicaid appeal deadlines are strictly enforced.

Step 2: Request Aid Pending (If Applicable)

If the denial involves reduction or termination of ongoing services, call your MCO or state Medicaid office immediately and state: "I am appealing this action and I am requesting that my services continue at their current level while my appeal is pending." Do this within 10 days of the NOA.

Step 3: Gather Medical Evidence

• Physician's letter: Detailed explanation of why the service is medically necessary for your condition; references to clinical guidelines; explanation of why alternatives are insufficient
• Medical records: Supporting the diagnosis and treatment
• For children: Documentation that the service falls within EPSDT (can benefit the child's health even if not standard adult benefit)
• For behavioral health: Documentation of medical necessity and the failure of less restrictive alternatives

Step 4: File the MCO Internal Appeal (Managed Care Members)

Submit a formal appeal to your MCO. Simultaneously, request a state fair hearing from your state Medicaid agency — you do not have to wait for the MCO's decision.

Step 5: Request a State Fair Hearing

Contact your state Medicaid agency directly (not the MCO) to request a state fair hearing. This request is typically made by:

• Calling the number on your NOA
• Mailing/faxing a written request
• In some states, online through the state Medicaid portal

Keep a copy of your request and send it by certified mail if possible.

Step 6: Prepare for the Hearing

• Organise your evidence (medical records, physician letter, clinical guidelines)
• Write a statement explaining your situation
• Contact your local legal aid society for free representation
• Contact your state's Medicaid ombudsman for assistance

Step 7: Attend the State Fair Hearing

Hearings can be held in person, by phone, or by video (policies vary by state). The hearing officer will review your evidence and testimony, and the Medicaid agency or MCO will present its case. You will receive a written decision within the required timeframe (varies by state).

Medicaid-Specific Tips

EPSDT for children: Federal Medicaid law requires states to cover any service that is medically necessary for a child under 21 — including services not in the adult benefit package. If your child's claim was denied because the service is "not covered," request an EPSDT analysis. This is a powerful and frequently successful appeal ground.

Mental health parity (MHPAEA): Applies to Medicaid managed care. MCOs cannot impose more restrictive criteria on mental health services than on comparable medical services.

Continuity of care: If you changed MCOs, you have the right to continue seeing your existing providers for a transitional period.

CHIP: Children's Health Insurance Program (CHIP) beneficiaries have similar appeal rights; check your state's CHIP regulations.

Conclusion

Medicaid denials can feel insurmountable — but you have rights that are often stronger than those available to privately insured patients. The state fair hearing is a particularly powerful tool: an independent hearing officer who applies federal law, not insurer policy. Don't accept a Medicaid denial without requesting both an internal appeal and a state fair hearing. Get free legal help from your state's legal aid society. Use ClaimBack at claimback.app to generate a professional appeal letter for your Medicaid dispute.

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Related Reading:

• Molina Healthcare Claim Denied: How to Appeal
• Medicare Advantage Claim Denied: How to Appeal
• Autism ABA Therapy Denied: How to Appeal
• How to Find Your Insurance Ombudsman