The 7-step appeal process
Whether you have one denied claim or two hundred, the process is the same. Here is exactly how to do it.
Read the ERA / EOB carefully
Start with the Explanation of Benefits (EOB) or your ERA 835 file. Identify the CARC (Claim Adjustment Reason Code) and RARC (Remittance Advice Remark Code). The CARC tells you the broad reason for denial, and the RARC tells you the specific issue. You cannot write an effective appeal without understanding exactly why the claim was denied.
Determine if it's a soft or hard denial
Soft denials (like CO-16 or CO-4) are usually correctable billing errors — you just need to fix the issue and resubmit. Hard denials (like CO-50 or CO-197) require a formal appeal with clinical documentation. This distinction determines your entire approach, so get it right before spending time on a letter.
Check the appeal deadline
Every payer has a deadline for appeals, typically 60 to 180 days from the date on the remittance. Miss this window and you lose the right to appeal entirely. Check your provider contract for the exact timeline. For Medicare, you have 120 days from the initial determination.
Gather your supporting documentation
For soft denials, gather the corrected information (right modifier, correct diagnosis code, missing NPI). For hard denials, compile clinical notes, treatment plans, and any clinical guidelines or payer policies that support your case. The strength of your documentation directly determines your chances of overturning the denial.
Write a targeted appeal letter
Your appeal letter needs to reference the specific denial reason, include the claim details (claim number, DOS, CPT codes, billed amount), explain why the denial should be overturned, and cite relevant guidelines. For medical necessity denials, reference AMA CPT guidelines, applicable LCD/NCD policies, and clinical practice guidelines. Keep it concise — one page is ideal.
Submit through the right channel
Check your payer's preferred submission method. Some accept electronic appeals through their portal, others require fax or mail. Use certified mail or save fax confirmations so you have proof of timely submission. Include a cover sheet with the claim number and 'APPEAL' clearly marked.
Track and follow up
Log the appeal submission date and follow up if you haven't received a response within 30 days. Payers are required to respond within specific timeframes (typically 30-60 days). If the first appeal is denied, you usually have the right to a second-level appeal with additional clinical justification.
Special considerations for behavioral health
The Mental Health Parity Act is your strongest tool
The Mental Health Parity and Addiction Equity Act (MHPAEA) requires health plans to cover mental health and substance use disorder services at the same level as medical and surgical services. If a plan covers unlimited physical therapy visits but caps therapy at 20 sessions, that is a parity violation. Reference MHPAEA in your appeal letter when appropriate — parity-based appeals succeed at significantly higher rates.
Common behavioral health denial codes
The most frequent denial codes in behavioral health are CO-197 (missing prior authorization), CO-50 (medical necessity), CO-16 (missing information), and CO-119 (benefit limit reached). Each requires a different appeal strategy. View our complete CARC code reference for specific appeal strategies and overturn rates.
Prior authorization is the biggest bottleneck
Many payers require prior authorization for ongoing therapy beyond a certain number of sessions. When authorization is missed, you can often get retroactive authorization by demonstrating clinical necessity and showing the treatment was appropriate. Include the treatment plan and progress notes demonstrating improvement.
Document medical necessity in every note
The best defense against future denials is thorough documentation. Every progress note should include: DSM-5 diagnosis with supporting criteria, specific symptoms and their severity, functional impairment, treatment plan with measurable goals, and progress toward those goals. When a denial does come, these notes become your appeal evidence.
Appeal deadlines by payer type
| Payer type | First appeal | Second appeal | External review |
|---|---|---|---|
| Medicare | 120 days | 180 days | 60 days |
| Medicaid | Varies by state | Varies by state | State hearing |
| Commercial | 60-180 days | 60 days | Per state law |
| TRICARE | 90 days | 60 days | N/A |