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most commonly used denial codes in medical billing

Common Denial Codes

Medical Billing Denial Codes are standard letters used to provide or describe the information to a patient or medical provider for why an insurance company is denying a claim. This is the standard form that all insurances follow to ease the burden on medical providers.

No one likes to see insurance payers deny claims. A denied claim is a loss or delay in revenue for your eye care practice.

Investigating and resubmitting denial claims can lead to long and frustrating times trying to figure out why the claim was rejected. This is why approximately 65% ​​of rejected claims are never reformulated by the supplier.

Not only should you follow strict state auditing and coding guidelines, but you should also review medical documents and doctor’s notes to ensure claims are not underestimated or inflated. Knowing how to prevent rejection or denial in the first place is the best return on investment (ROI).

The good news is that, on average, 63% of denied claims can be reinstated and about 90% can be avoided. Let’s take a closer look at common reasons for rejection and denial, and how to proactively create solutions to increase business profits.

What are denial codes claims?

Denied Codes claims are claims that go through an arbitration system: received and processed by insurance companies or third-party payers. However, the claim is deemed non-payment for services obtained from a healthcare provider.

The payer will send you an Explanation of Benefits (EOB) or Electronic Remittance Advice (ERA) explaining why the claim was denied. Even if the payer rejects the claim, it does not mean any payment and you cannot appeal the claim. Before you can file a claim again, you must determine why the claim was denied and correct any errors.

Types of Denial codes : (Soft and Hard)

To avoid rejected invoices, it is important to know where the biggest errors are. There are two types of rejections:

 Hard Denial And Soft Denial Codes.

Hard Denial (Extreme rejection) is exactly what its name implies: it is irreversible and often results in lost or cancelled revenue.

In contrast, soft denials are temporary and have the potential to be reversed if the provider corrects the claim or provides additional information.

Common denial codes with reasoning

Diagnosis is not compatible with the insurance – CO 11

This denial code generally occurs when the diagnosis is inconsistent with the procedure as long as the procedure code shows an inappropriate diagnostic code.

The Payer Does Not Cover The Service – CO 129

An error occurred in the above processing information. At least one retention code must be provided (it can contain an NCPDP rejection reason code or a push notification retention code that is not an alert).

Missing information: Coordination of Interests- CO 22

The CO 27 code usually appears when estimates of returns are missing. Other insurances are called primary insurance. The member has not updated their additional insurance information with the insurance company.

The Service Has Been Granted CO 27

The CO 27 code appears when a patient’s coverage ends when an expense is incurred, which means that your clinic provides health care services to a patient after the patient’s insurance policy expires.

The Filing Limit Has Expired – CO 29

If a claim is not submitted within this time period, a claim submitted after the expiration of the period using rejection code CO 29 will be rejected.

Other Common Denial Codes That Can Occur Are: 

CO-4: The action code is inconsistent with the rate used or lacks the rate required for judgement (decision). Use an appropriate rate during this process.

CO-15: Payment has been modified because the authorization number provided is missing, invalid, or not applicable to the billing service or provider. However, resubmit the claim with a valid authorization or authorization number.

CO-50: Non-covered services that the payer believes are not “medically necessary.” To avoid refusal to code, when using CPT codes, you must also demonstrate that it is “reasonable and necessary” to diagnose or treat a patient’s medical condition.

CO-97: This denial code 97 usually occurs when payment has been revised. It is because benefits for this service are included in payment/service allowance/other procedures that have been refereed. Moreover, resubmit the statement with the appropriate modifiers or accept the changes.

CO-167: Diagnosis not included. Review diagnostic codes to determine if other codes should be used. However, correct diagnosis code or patient bill.

CO-222: Exceeds the maximum contract hours, days, and units allowed by the supplier during this period.

CO-236: This procedure or action/modifier combination is incompatible with other procedures or action/modifier combinations offered on the same day as required by the National Coding Initiative (NCCI) or state regulations/workers’ compensation rates. Payment for this service is part of another service that you pay for on the same date as the service.

CO-B16: Payment revised for not meeting “new patient” requirement. Resubmit the claim at the scheduled patient visit.

OA-109: Claims not covered by this payer/contractor. You must submit your claim to the correct payer/contractor. Review coverage and resubmit the claim to the appropriate insurance company.

PI-204: This service/device/drug is not covered under the current patient benefit plan. Patient bills.

PR-1: Deductible. Secondary insurance bill or patient bill.

Final Thoughts

Corrections of inpatient medical denial coding accounted for 81% of denied claims. However, there is nothing in this world that is without a solution. With thorough research, proper patient data collection, and reliance on the best monitoring software, your practice can easily join the ranks of those who are truly successful in claims management. 

I-Med Claims offers complete medical billing services for physicians that can help you avoid bill denials. If you’re looking for more information on medical billing software, medical transcription, or revenue cycle management, please feel free to call us anytime, or simply write a query to us. We will get back to you asap.

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