A Medicare overpayment demand letter starts a clock the practice may not realize is already running. Once a Medicare Administrative Contractor determines that a claim was overpaid, the practice has 120 calendar days to request redetermination, and recoupment of the disputed amount can begin as early as the 41st day after the demand letter if no timely appeal is filed. Five levels of Medicare overpayment appeal stand between that first letter and a final resolution, and the filing deadline and the recoupment rule at each level are different, so a physician who tracks only one clock can lose the case at a level that never reaches its merits.
Redetermination Is the First and Fastest Deadline
The first level, redetermination, asks the Medicare Administrative Contractor (MAC) that issued the overpayment determination to reexamine the claim. Under 42 CFR 405.942, the practice must file the request within 120 calendar days of receipt of the demand letter. A timely, valid redetermination request forces the MAC to cease recoupment under 42 CFR 405.379(d)(1), and recoupment cannot begin at all until the 41st day after the demand letter. If the MAC affirms the overpayment in whole or in part, recoupment can resume on the 60th calendar day after the redetermination notice unless the practice has already filed a timely reconsideration request. Contractors identify these overpayments well before the demand letter arrives, a process covered in The Medicare Audit Process: Contractors, Stages, and Deadlines, and this is the fastest and least costly level of the audit appeal process for a physician to win outright.
Reconsideration Sends the Claim to an Independent Contractor
If the MAC denies redetermination, the second level, reconsideration, moves the claim to a Qualified Independent Contractor (QIC), an entity organizationally separate from the MAC that issued the original determination. The request must be filed within 180 calendar days of receipt of the redetermination notice under 42 CFR 405.962. Filing a timely reconsideration request keeps the recoupment suspension in place: under 42 CFR 405.379(d)(3), the contractor must continue to cease recoupment while the QIC reviews the file. Recoupment resumes only once the QIC affirms the overpayment in whole, dismisses the request, or the practice withdraws it. Reconsideration remains a paper review, but it is the last level before the practice gains the right to a hearing before an adjudicator who never touched the claim.
The Administrative Law Judge Hearing Opens Independent Review
The third level moves the case out of the contractor system entirely. A request for a hearing before an Administrative Law Judge (ALJ) or attorney adjudicator at the Office of Medicare Hearings and Appeals (OMHA) must be filed within 60 calendar days of receipt of the QIC's reconsideration or dismissal notice, under 42 CFR 405.1014. For calendar year 2026, the claim must meet an amount in controversy of at least $200 to qualify. The ALJ or attorney adjudicator must issue a decision within 90 calendar days of the hearing request under 42 CFR 405.1016, though the period can extend for an escalated case or a requested stay. This is the first level decided by an adjudicator with no connection to the contractor that flagged the claim, and the first level where the physician can present live testimony rather than paper alone.
The Administrative Law Judge hearing is the first level of a Medicare overpayment appeal decided by someone who never worked for the contractor that flagged the claim.
Council Review and Federal Court Are the Final Backstops
A party dissatisfied with the ALJ's decision, or facing no decision within the 90-day window, may request review by the Medicare Appeals Council, within the Departmental Appeals Board. That request must be filed within 60 calendar days of receipt of the ALJ's decision or dismissal under 42 CFR 405.1102, and the Council must issue its own decision within 90 calendar days under 42 CFR 405.1100. If the Council's decision does not resolve the matter, the practice may file suit in federal district court within 60 calendar days under 42 CFR 405.1130, provided the amount in controversy meets the CY 2026 threshold of $1,960.
Why Early Legal Counsel Is Critical
It is critical that physicians promptly retain healthcare defense counsel upon receiving a Medicare overpayment demand letter, audit notice, or other government inquiry. Early legal intervention can protect the practice's rights, ensure appropriate responses to contractor and government requests, avoid inadvertent admissions, preserve relevant defenses, and allow counsel to communicate with the MAC, QIC, or OMHA on the practice's behalf. Delaying legal representation can significantly affect the outcome of an overpayment appeal and expose the practice to unnecessary risk.
How Health Law Alliance Can Help
Health Law Alliance's Medicare audit defense team represents physicians at every level of the overpayment appeal process, from the first redetermination letter through federal district court. We build the record at redetermination and reconsideration with the later hearing in mind, and we prepare and argue ALJ, Council, and judicial appeals when a case warrants it. If your practice has received a Medicare overpayment demand, contact us for a free, confidential consultation.
