Introduction

Denial codes refer to specific codes healthcare insurance companies assign to indicate problematic insurance claims. These codes briefly describe the reasons and remark codes that provide insights into why patients’ treatment expenses are unable to be covered under the existing circumstances. These error codes provide descriptions that are causing claim denials. Denial codes are quite crucial from the perspective of patients as well as healthcare service providers. By utilizing denial codes, they can address claim denials and facilitates the process of resubmitting claims. It can be said that Denial codes serve as critical indicators in medical billing. They are effective in highlighting issues regarding insurance claims. As per studies, understanding these codes can significantly cut the cost of addressing denials, which averages around $25 per rework.

Common Denial Codes: Unlocking the Puzzle of Medical Billing

Efficiency

In the complicated world of healthcare reimbursements, the role of denial codes must be addressed. These alphanumeric denial codes act as interpretive keys for unlocking the reasons behind claim denials. These codes also play a vital role in guiding healthcare providers and ensuring accurate reimbursement. Each code represents a distinct cause that needs to be appropriately addressed. By understanding these distinct causes, one can have a substantial impact on revenue optimization and streamlined medical operations.

The Costs of Ignorance

The price of ignorance in dealing with the denial codes is huge. As per statistics, the average cost to rework a denied claim is around $25. The prospect of spending this amount for every claim resubmission is very problematic. To mitigate this financial loss, providers must have a deep understanding of denial codes and must harness their insights to cut down unnecessary rework costs.

Decoding Denial Codes

Denial codes can be considered as communication channels between healthcare providers and insurance companies. They explain the reasons behind claim denials as combinations of letters and numbers. Providers can explore the specific issue that led to the claim denials by interpreting denial codes. It helps in fostering informed decision-making and facilitating subsequent corrective actions. This knowledge empowers healthcare providers to minimize future claim denials by understanding the root causes.

Also Read: Top 5 Medical Billing Denials

Unveiling Common Denial Codes

Although there are different types of denial codes depending upon the state regulations, insurance terms, and care facility. There we have discussed the ten (10) most common types of denial codes.

CO-15 — Missing or Invalid Authorization Number

This denial code appears when an incorrect authorization number is provided for a care service or procedure. Many treatments require prior approval from health plan companies for coverage.  However, Failure to document this authorization number accurately, often found in block 23 of the CMS-1500 form, results in claims being denied. To rectify this, providers must initiate a multidimensional approach. A dialogue with the billing department to verify prior authorization requests can be helpful. Similarly, revisiting block 23 on the claim form for errors and seeking retro authorization can also eliminate these types of denial codes.

CO-16 — Lacks Information Needed for Adjudication

Claim denials under CO 16 appear due to missing or wrong information within claims. This commonly includes errors with modifiers, which provide additional information for the particular procedures. These denials carry all essential financial implications. As per statistics, the average amount denied per claim due to missing modifiers hovers around $690 for inpatient hospital claims, $900 for outpatient claims, and $170 for professional claims. Providers must interpret these remark codes accurately and review medical notes for absent information. Apart from that, he must also consider utilizing a clearinghouse to analyze all claims before submission to rectify CO 16 denials.

CO-18 — Duplicate Claim

Duplicate claims are represented by the CO-18 denial code. This code appears when the same claim is submitted multiple times without proper clarification. On the other hand, Duplicate submissions without proper corrections can also trigger this denial code. This denial scenario can also appear when a claim is submitted to both primary and secondary payers with the hope of dual reimbursement. In all these cases, if the primary insurance provider has already submitted the claim to the secondary payer, the latter denies the claim resulting in the appearance of this denial code. In order to avoid this, Providers need to verify whether the primary provider has already been achieved or not.

CO-22 — Coordination of Benefits

This code appears When patients possess multiple insurance providers. The CO-22 denial occurs when procedures covered by secondary providers are billed to other insurers. To avoid this denial code, Providers must prioritize submitting claims to primary health plan providers first, then bill secondary, and so on. Denials under CO 22 may also result from incorrect coordination of benefits information or failure to update patients’ insurance details. By considering insurance eligibility checks of the patients and updating the coordination of benefits data, such denials can be eliminated.

CO-27 — Expenses Incurred After the Patient’s Insurance Expired

This denial code appears when claims are submitted for services done after a patient’s insurance coverage has ended. To avoid these types of denials, it is imperative to check the patient’s insurance eligibility before appointments. This might stop claim rejections. For eliminating CO 27 denials, a good approach is to communicate with the claims department and patients. If the insurance details are still valid, claims can be resubmitted accordingly.

CO-29 — Limit for Filing Expired

Each insurance carrier adheres to specific claim submission timelines. However, Claims submitted after these deadlines result in CO 29 denials. Different insurance providers enforce different filing windows. for example, Aetna allows hospitals to file claims within 12 months of the service date, while physicians need to submit claim forms within 90 days after the service date. Providers must analyze the initial claim submission date, calculate its timeliness, and file for an appeal with proof. This helps in eliminated such denial codes.

CO-97 — Service Already Adjudicated

Such a denial code appears when multiple procedures are done together. These denials happen because insurance companies pay one combined amount for these grouped procedures. To deal with these denials, healthcare providers need to figure out the category of the procedure and work with coding experts for modifiers. Apart from that, they can also follow the appeals process provided by the claims department.

CO-167 — Diagnoses Not Covered

Insurance companies have specific areas they cover. However, the claims that don’t fill those areas can trigger CO 167 denials. Providers can solve these denials by looking at diagnosis codes (ICD-11). Healthcare providers can also communicate with insurance companies to determine what’s not covered.

CO-04 — Absence of required modifiers:

Insurance companies employ denial code CO-4 to indicate the absence of required modifiers or inconsistencies between procedure codes and used modifiers.

CO-11— Codes don’t match the procedure

It is another common denial code that signifies claims where diagnosis codes don’t match procedures. Diagnosis codes define medical concerns addressed during visits. Inaccurate codes lead to CO-11 denial.

By and large, understanding denial codes is like solving a complex puzzle. These codes show why claims are denied. These codes also guide; how to get paid correctly. Providers should see denial codes as more than labels keys to improving medical billing.

Also Read: Impact of Financial Management In Medical Billing

How to Avoid Claim Denials: A Proactive Approach

Claim denials are a key challenge in the healthcare industry. They are affecting healthcare providers across the globe. In 2021, over 48 million claim denials were reported, which becomes 16.6% of all submitted claims for the year. However, the situation is not as bad as it appears at first glance. The avenue of claim appeals provides hope and offers a pathway to contest and rectify denied claims. These appeals involve resubmitting the denied claim to insurance companies with additional documentation that supports the appeal. To maximize the chances of success, it is imperative to follow the 180-day filing window after receiving the claim denial notice.

The claim appeal process comprises two key steps

Internal Appeal

After submitting the internal appeal, the insurance company is obligated to communicate their decision in writing and reflecting the outcome of their review. If the service is still denied, the next step involves considering an external review that is facilitated by an independent third party. It is important to note that before going for an external review, the initial step of requesting reconsideration must also be completed.

External Review

The external review process involves filing a written request within four months from the date of receiving the claim denial notice. This independent review surpasses the insurer’s final decision, and the outcome can either uphold the insurer’s denial or favor the provider.

Strategies to Mitigate Denials

Education is Key

A crucial element in minimizing claim denials is educating your billing team appropriately. Understanding the meanings of common denial codes empowers staff to anticipate issues and address them proactively. For instance, awareness about the utilization of modifiers 07 and 59 in relation to the CO-18 denial code will certainly help the staff in countering the challenge.

Stay Informed

In a dynamic field like medical billing, staying up-to-date with evolving processes, technologies, and regulations is key to success. While software solutions may promise streamlined management, their efficiency depends on well-trained personnel as well. Updated education ensures that the billing team can deal with the shifting rules and codes effectively.

Choose the Right Partners

Opting advanced technology through clearinghouse partners can significantly enhance the claims management process. For that reason, it is essential for partners to offer claim scrubbing. This aids in identifying errors prior to submission, boosting the accuracy of claims.

Real-Time Eligibility Checks

Instituting real-time eligibility checks also minimizes the chances of denials. This is done by ensuring that rendered services are aligned with patients’ insurance plans. This feature expedites the verification process to a great extent.

Understanding Payer Policies

A deep understanding of the policies of selected common insurance companies is an efficient strategic move. It is essential to possess knowledge of their submission deadlines, requirements for timely filing, and other necessary information.

Audit and Analysis

The implementation of healthy strategies, processes, and regular audits is key in managing high denial rates. Investigating unpaid claims and identifying payer trends can curb denial rates.

Claim Process Tracking

Vigilant tracking of claim submissions and their progress is also vital. Timely follow-ups and monitoring of the claims all each stage of the payment process helps in identifying the errors early on. This strategy can mitigate revenue loss.

Preventing Data Entry Errors

Front-end claim systems are unforgiving towards data entry errors, leading to automatic denials. Stringent verification of patient information and insurance details prior to the appointment and at the time of visit prevents these errors from occurring.

Conclusion

In the complex landscape of medical billing, understanding denial codes, appealing denied claims, and implementing proactive measures are important for optimizing revenue and efficiency. The challenges appearing in the form of denial codes can be tackled by staying informed about changing processes, partnering with the right clearinghouse, implementing real-time eligibility checks, following payer policies, conducting audits, tracking the claim process, and eliminating data entry errors. In the medical industry, these strategies offer a solid initiative for reducing denials and ensuring a seamless revenue cycle.

Frequently Asked Questions (FAQs):

What are the common reasons for claim denials?

Claim denials can occur due to various reasons, such as missing or incorrect patient information, lack of proper documentation, coding errors, timely filing issues, lack of pre-authorization, coordination of benefits problems, and services not covered by the patient’s insurance.

How can healthcare providers reduce claim denials related to coding errors?

Healthcare providers can reduce coding-related denials by ensuring accurate and up-to-date knowledge of medical codes, using certified coders, conducting regular coding audits, and implementing proper training for coding staff.

What is an internal appeal in the claim appeal process?

An internal appeal is the initial step taken by a healthcare provider after a claim has been denied. It involves submitting additional documentation and information to the insurance company to reclaim the denial. The insurance company reviews the appeal and communicates its decision to the provider.

What is an external review in the claim appeal process?

An external review is a process where an independent third-party reviews a denied claim. This step is taken if the internal appeal still needs to be successful. The external reviewer evaluates the claim and determines whether the initial denial was justified or if the claim should be approved.

How can real-time eligibility checks help prevent claim denials?

Real-time eligibility checks involve verification of patient’s insurance coverage and benefits before providing services. This helps healthcare providers ensure that the services they offer are covered by the patient’s insurance plan. This helps in reducing the chances of claim denials due to services needing to be covered.

What role does a clearinghouse play in claim submission?

A clearinghouse is a third-party service that acts as an intermediary between healthcare providers and insurance companies. It helps providers submit claims electronically, checks for errors or missing information before submission, and enhances the accuracy of claims, reducing the likelihood of denials.

How can healthcare providers stay updated with changing payer policies?

Staying updated with changing payer policies involves actively monitoring communication from insurance companies, attending seminars or webinars related to medical billing and coding updates, joining professional associations, and maintaining open communication with insurance representatives to ensure awareness of policy changes.

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