Nursing Home Insurance Claim Denied: How to Appeal

Nursing home denials are among the most emotionally and financially devastating insurance decisions a family can face. Whether it is Medicare denying a skilled nursing facility (SNF) claim because care is "custodial," Medicaid denying coverage based on a level-of-care assessment, or a private long-term care insurer disputing the necessity of placement, these denials require a structured, well-documented appeal.

The Skilled vs. Custodial Care Distinction

The central issue in most nursing home denials is the difference between skilled care and custodial care:

• Skilled care: requires the professional expertise of a licensed nurse or therapist — wound care, IV antibiotic administration, physical therapy, occupational therapy, speech therapy, complex medication management
• Custodial care: assistance with activities of daily living (ADLs) — bathing, dressing, eating, toileting, ambulation — that do not require licensed professional skills

Medicare covers skilled nursing facility care. Medicare does NOT cover custodial-only care, no matter how necessary it is for the patient's daily functioning. This is a hard statutory limitation.

When an insurer or Medicare denies a nursing home claim, they almost always argue that the care being provided is custodial in nature, even when a skilled professional is delivering it.

Medicare's 100-Day SNF Benefit

For Medicare beneficiaries, the SNF benefit works as follows:

• Days 1–20: Medicare covers 100% (after the qualifying inpatient hospital stay)
• Days 21–100: Medicare covers care after you pay a daily coinsurance (approximately $200/day in 2026)
• Day 101 onward: Medicare covers nothing — the patient is fully responsible

To qualify for SNF coverage at all, you must:

1. Have had a qualifying inpatient hospital stay of at least three consecutive days (not counting the day of discharge)
2. Require skilled nursing or therapy services (not just custodial care)
3. Be admitted to a Medicare-certified SNF within 30 days of your qualifying hospital discharge

The Jimmo Settlement: Maintenance Coverage

A landmark 2013 court settlement, Jimmo v. Sebelius, clarified that Medicare does NOT require a beneficiary to show "improvement potential" to qualify for skilled care coverage. Before Jimmo, insurers routinely denied SNF and home health coverage because the patient was not getting better.

Jimmo established that skilled care needed to maintain a patient's condition or slow decline is also covered by Medicare. If your denial says something like "the patient has plateaued" or "no further improvement expected," cite the Jimmo settlement directly in your appeal.

Appealing a Medicare SNF Denial

Step 1: Request a notice of non-coverage. When Medicare coverage of your SNF stay is about to be terminated, the SNF must provide a written Notice of Medicare Non-Coverage (NOMNC). You must receive this at least two days before coverage is set to end.

Step 2: Request a BFCC-QIO review. The Beneficiary and Family Centered Care Quality Improvement Organization (BFCC-QIO) handles SNF coverage disputes. Contact the QIO by midnight on the last covered day to preserve your rights. While the review is pending, the SNF must continue providing care and Medicare must continue paying.

Step 3: File a formal Medicare appeal. If the QIO confirms the denial, you can file a formal appeal through the Medicare Appeals Council hierarchy:

• Redetermination with the Medicare Administrative Contractor (MAC)
• Reconsideration with a Qualified Independent Contractor (QIC)
• ALJ hearing (if amount exceeds the threshold)
• Medicare Appeals Council review
• Federal district court (for high-value cases)

Level of Care Assessments for Medicaid

Medicaid nursing home coverage requires a Level of Care (LOC) assessment — a formal evaluation of the patient's functional and clinical needs. Each state administers this process differently, using tools like the MDS (Minimum Data Set) or state-specific instruments.

If your LOC assessment determines you do not meet the criteria for Medicaid-funded nursing home care:

• Request a copy of the assessment
• Ask your physician to complete a clinical summary documenting specific functional deficits that the assessment may have underweighted
• Request a hearing before your state's administrative appeals body — each state Medicaid program has a formal appeals process under federal law

Private Long-Term Care Insurance Denials

Private LTC insurance typically requires an "elimination period" (like a deductible measured in days) and a functional or cognitive trigger:

• Unable to perform two or more activities of daily living (ADLs) without assistance, OR
• Substantial cognitive impairment

If denied, request the specific policy language defining the benefit trigger and compare it against your functional assessment. Have your physician, occupational therapist, and any specialist document the specific ADL limitations in clinical terms.

Building Your Appeal

For any nursing home denial, your appeal package should include:

• Current physician letter specifying the skilled services required and why they cannot be safely provided at a lower level of care
• Occupational therapy or nursing assessment of ADL function
• Recent medical records and care plan
• Nursing notes documenting daily skilled care activities
• If citing Jimmo: documentation of what skilled intervention is maintaining or preventing decline

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Related Reading:

• How to Write an Insurance Appeal Letter
• What Is Medical Necessity?
• Internal vs External Insurance Appeal