Resubmission of denied claims leads to long, frustrating hours trying to figure out what claim denial and claim adjustment reason codes, and what action to take. Once a practice receives a claim denial, reworking and resubmitting the claim delays cash flow by 45 to 60 days.
Difference Between a Rejected Claim and a Denied Claim
Rejected claim is never been processed by a clearinghouse, insurance payer, or the Centers for Medicare & Medicaid Services (CMS). It is not considered “received” and it did not make it through the adjudication system.
Rejected claim contains one or more errors and does not meet specific formatting, billing and coding criteria, and data requirements. Once errors are fixed, rejected claim can be resubmitted.
Denied claim made it through the adjudication system—the insurance company or third-party payer received and processed the claim. Even a payer denies a claim, it doesn’t mean it’s not payable, and appeal can be submitted for denial.
Payer will send you an Explanation of Benefits (EOB) or Electronic Remittance Advice (ERA) explaining reasons of denial of the claim. Before correcting errors and resubmit the claim, it is crucial to know the reason of denial. Therefore, it is utmost necessary to be update on claim denial and claim adjustment reason codes.
Claim Denial Reasons and Claim Adjustment Codes:
Claim denials are of three categories: administrative, clinical, and policy. The majority of claim denials are due to administrative errors, such as, the procedure code is inconsistent with the modifier used, or the required modifier is missing for the decision process. Once errors are corrected, claim can be resubmitted to the payer.
Claim denial is time-consuming, the longer wait for determining what went wrong, the more likely not to recover maximum amount from the insurance payer. Make sure to stick to the permitted time frame as each insurance company has its own guidelines.
X-Factor Healthcare Solutions LLC specialize in insurance billing, and know the ins and outs of working with clearinghouses and insurance payers.
Claim Adjustment Group Codes have two alpha characters that assign the responsibility of a claim adjustment that reflects in the Explanation of Benefits (EOB) or Electronic Remittance Advice (ERA) as CO, CR, OA, PI, and PR. These group codes include a numeric or alpha-numeric claim adjustment reason code that explains reasons that claim or service line was paid (or not paid) differently than it was billed.
Common claim denial reason codes and actions to improve cash flow in your practice. CO-4: The procedure code is inconsistent with the modifier or a required modifier is missing. Resubmit the claim using an appropriate modifier. CO-15: Payment adjusted because the authorization number is missing, invalid, or does not apply to the billed services or provider. Resubmit the claims with the authorization number/ valid authorization.
CO-45: Charges exceed fee schedule/maximum allowable or contracted/legislated fee arrangement. Use Group Codes PR or CO, depending on the liability. Write off the indicated amount. CO-50: Non-covered services that are not deemed a “medical necessity” by the payer. To avoid coding denials, use a CPT® code, also demonstrate that it is “reasonable and necessary” to diagnose or treat the patient’s medical condition. Medical necessity is based on “evidence-based clinical standards of care.” Check the diagnosis codes or bill the patient. CO-97: The payment was adjusted because the benefit for this service is included in the payment/allowance for another service/procedure that has already been adjudicated. Resubmit the claim with the appropriate modifier or accept the adjustment. CO-167: The diagnosis (es) is (are) not covered. Review the diagnosis codes(s) to determine if another code(s) should have been used instead. Correct the diagnosis code(s) or bill the patient. CO-B16: Payment adjusted because the new patient qualifications were not met. Resubmit the claim with the established patient visit. OA-23: Indicates the impact of prior payers(s) adjudication, including payments and/or adjustments. No action required since the amount listed as OA-23 is the allowed amount by the primary payer. OA-109: Claim not covered by this payer/contractor. Send the claim to the correct payer/contractor. Review coverage and resubmit the claim to the appropriate payer.
PR-1: Deductible amount. Bill to secondary insurance or bill the patient. PR-2: Coinsurance amount. Bill to secondary insurance or bill the patient. PR-3: Copay amount. Bill to secondary insurance or bill the patient. Coding Denial Management Tip:
Create a claim denial reason and adjustment code checklist including Claim Adjustment Group Codes, Reason, and Action for common claim denials.
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