Comprehensive Guide to Common Denial Codes and How to Resolve Them

Denial codes are the keys to understanding why an insurance claim was denied or adjusted. While the prefix indicates the general category of the issue (e.g., CO for Contractual Obligation), the full code provides more specific details about the denial reason. This guide will delve into commonly encountered denial codes, what they mean, and actionable steps to address them.

1. CO (Contractual Obligation) Codes

• CO-11 (Service not covered by the payer):
  • Description: The procedure or service is not covered under the patient’s insurance policy.
  • Example: A cosmetic procedure is billed but is excluded under the patient’s plan.
  • Solution:
    • Verify coverage details with the insurance provider before delivering the service.

    • For incorrect denials, provide supporting documentation (e.g., medical necessity) and request a reconsideration.

      CO-16 (Claim/service lacks information):

  • Description: Essential details such as diagnosis codes or provider NPI are missing or incomplete.
  • Example: A claim is submitted without the patient’s complete insurance details.
  • Solution:
    • Review the Explanation of Benefits (EOB) for missing information.

    • Correct and resubmit the claim with the required details.

      CO-97 (Service included in another service):

  • Description: The billed procedure is bundled into another service.
  • Example: A post-operative follow-up visit is included in the global surgical fee.
  • Solution:
    • Refer to the payer’s bundling guidelines.
    • Rebill with the appropriate modifiers if applicable.

2. PR (Patient Responsibility) Codes

• PR-1 (Deductible Amount):
  • Description: The patient’s insurance policy includes a deductible that has not been met.
  • Example: The first $500 of expenses must be paid out-of-pocket by the patient.
  • Solution:
    • Verify the deductible status with the payer.

    • Inform the patient of their financial responsibility and offer payment options if needed.

      PR-2 (Coinsurance Amount):

  • Description: The patient owes a percentage of the allowed amount as per their plan.
  • Example: A patient is responsible for 20% of the total bill after insurance covers 80%.
  • Solution:
    • Confirm the accuracy of the payer’s calculation.
    • Ensure the patient understands their coinsurance obligation.

3. OA (Other Adjustments) Codes

• OA-18 (Duplicate claim/service):
  • Description: The claim duplicates another one already processed.
  • Example: A provider accidentally submits the same claim twice.
  • Solution:
    • Cross-check submission records to confirm duplicate claims.

    • If the claim was denied in error, contact the payer with evidence.

      OA-23 (Payment adjusted due to an administrative error):

  • Description: Payment was adjusted because of an error in claim processing.
  • Example: A manual processing mistake led to underpayment.
  • Solution:
    • Review the payer’s adjustment notes.
    • Request a formal correction if justified, providing supporting documents.

4. PI (Payer Initiated Reductions) Codes

• PI-204 (Service not covered under the patient’s plan):
  • Description: The service falls outside the benefits outlined in the patient’s plan.
  • Example: A patient’s policy doesn’t cover routine dental cleanings.
  • Solution:
    • Verify coverage before performing services.

    • Appeal with documentation showing the service aligns with the plan, if applicable.

      PI-119 (Benefit maximum exceeded):

  • Description: The patient has surpassed their plan’s maximum allowable benefit for the year.
  • Example: A patient exceeds their $1,000 annual limit for physical therapy.
  • Solution:
    • Inform the patient about their remaining benefits before rendering further services.
    • Recommend alternate payment options for additional care.

How to Resolve Common Denial Issues

1. Understand the EOB (Explanation of Benefits):

   The EOB provides critical details about the denial, including the code, the reason, and what additional information may be required.

   Appeal When Necessary:

   • Most payers allow appeals for denied claims.

   • Prepare a comprehensive appeal letter, including medical records and payer-specific forms.

     Preventative Measures:

   • Insurance Verification: Confirm coverage and eligibility before providing services.
   • Accurate Coding: Use up-to-date codes and modifiers that match payer guidelines.
   • Timely Submissions: Submit claims promptly to avoid denials based on time limits.

2. Track and Analyze Denials:

   Use denial management software to identify patterns and address recurring issues.

Conclusion

Denial codes are a common challenge in medical billing, but understanding their meanings and remedies is the first step in improving claim success rates. By staying proactive and informed, healthcare providers can reduce denials, increase efficiency, and ensure timely reimbursements.