Mastering Claim Denial Reason Codes Expedites Cash Flow

Researching and resubmitting denied claims can lead to long, frustrating hours trying to figure out what claim denial and claim adjustment reason codes mean, and what action to take. Once an eye care practice receives a claim denial, reworking and resubmitting the claim can delay cash flow by 45 to 60 days.

On average, the claim denial rate in the healthcare industry is 5–10% and about two-thirds of denials are recoverable. Nearly 65% of denied claims are never reworked or resubmitted to payers. The good news is that almost 90% of claim denials are avoidable with a proactive revenue cycle management and optometric billing solution.

What’s the Difference Between a Rejected Claim and a Denied Claim?

A rejected claim has never been processed by a clearinghouse, insurance payer, or the Centers for Medicare & Medicaid Services (CMS)—it’s not considered “received” and it did not make it through the adjudication (decision process) system.

A rejected claim contains one or more errors and fails to meet specific formatting, optometry billing and coding criteria, and data requirements. Once you fix the errors, you can resubmit the rejected claim.

A denied claim is a claim that has made it through the adjudication system—the insurance company or third-party payer received and processed the claim. However, even though a payer denies a claim, you can still appeal the claim as that doesn’t mean it’s not payable.

Payers will send you an Explanation of Benefits (EOB) or Electronic Remittance Advice (ERA) that explains why they denied the claim. Before you can correct the errors and resubmit the claim, you must determine why the claim was denied. That’s why it’s critical to brush up on claim denial and claim adjustment reason codes.

Common Claim Denial Reasons and Claim Adjustment Codes

Claim denials fall into three categories: administrative, clinical, and policy—a majority of claim denials are due to administrative errors. For example, the procedure code is inconsistent with the modifier you used, or the required modifier is missing for the decision process. Once you correct the errors, you can resubmit the claim to the insurance payer.

While tracking down why the insurance payer denied the claim in the first place is time-consuming, the longer you wait for determining what went wrong, the more likely you won’t recover the maximum amount (or any) from the insurance payer. Pay close attention to the permitted time frame as each insurance carrier has its own guidelines.

Fast Pay Health optometric billing consultants specialize in eye care insurance billing, and we know the ins and outs of working with medical clearinghouses and insurance payers.

Claim Adjustment Group Codes include two alpha characters that assign the responsibility of a claim adjustment that appears in the Explanation of Benefits (EOB) or Electronic Remittance Advice (ERA): CO, CR, OA, PI, and PR. These group codes include a numeric or alpha-numeric claim adjustment reason code that indicates why a claim or service line was paid (or not paid) differently than it was billed.

Let’s take a closer look at common claim denial reason codes and actions you can take to improve your cash flow in your eye care practice.

CO-4: The procedure code is inconsistent with the modifier used or a required modifier is missing. Resubmit the claim using an appropriate modifier for the procedure.

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 or 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, when you use a CPT® code, you must 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. You must send the claim to the correct payer/contractor. Review coverage and resubmit the claim to the appropriate carrier.

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 Pro Tip: Create a claim denial reason and adjustment code at-a-glance checklist that includes the Claim Adjustment Group Codes, Reason, and Action for common claim denials.

Claim Denial Reason Codes Resources

Review Reason Codes and Statements: If your office submits claims to multiple CMS contractors, it’s crucial to stay on top of denial codes and statements.

Claim Adjustment Reason Codes (CARCs): Reason codes tell you why the payment was adjusted and describe why the claim or service line was paid differently than it was billed.

Remittance Advice Remark Codes (RARCs): Remark codes are used to provide an additional explanation for an adjustment already described by a Claim Adjustment Reason Code or to convey information about processing remittance.

Collaborative Denial Management Captures Lost Revenue

Fast Pay Health optometric billing consultants identified a pattern of denied claims for a new client—a three-doctor, one location optometry practice in California. Here’s a snapshot of the case challenge and ROI solution Fast Pay Health put in place to expedite reimbursement for denied claims from 45–60 days to 15 days.

Practice Case Challenge

The CPT® procedure code submitted on the claim was denied because of an invalid diagnosis code. For example, the practice often performs a Scanning Computerized Ophthalmic Diagnostic Imaging (SCODI) for evaluating and treating patients with retinal disease or macular abnormalities.

In this patient case, a specific set of ICD-10-CM diagnosis codes can be used with the CPT® code 92133. However, the claim was denied because the diagnosis code was not within the predefined diagnosis code set that was issued under the LCD guidelines.

To ensure your eye care claims are coded correctly, keep up-to-date with the Medicare Administrative Contractors (MAC) in your region. MACs will often issue Local Coverage Determination (LCD) and National Coverage Determination (NCD) if a particular item or service is covered.

ROI Solution

The Fast Pay Health certified coders reviewed the patient’s electronic health record and all CPT® codes for the denied claims. The Fast Pay Health account manager corrected and resubmitted the denied claims, which resulted in collecting $6,500 in lost revenue.

Fast Pay Health also created a list of allowed diagnosis code sets for the doctor’s office so they could use the list to avoid future claim denials.

Invest in a Solid, Proactive Claims Denial Management Solution

The best revenue cycle management solutions pay close attention to credentialing, eligibility verification, charge entry, coding, and claim submission requirements before you push the “Send” button. Our approach is to triple-check everything so that you see a consistent return on your investment.

Request a free practice analysis today and start enjoying the advantages of cleaner claims that focus on improving your eye care practice’s financial health.

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