The Top 9 Medical Billing Denial Codes and Reasons

Medical billing denial codes are one of the most frustrating parts of running a medical practice. Not only do they mean lost money; they also often mean that you’re going to have to waste your time either fighting the denial or trying to collect from the patient.

Know the Top Reasons for Claim Denials

Understanding the most common medical billing denial codes and reasons can help you address billing issues at your practice, fight unfair denials, and be paid for more of the services you provide. Here are some of the most common reasons claims are denied:

1. Missing Information

An incomplete claim will almost always be denied. Even when a claim form is filled out in its entirety, however, it may still lack information. Insurers construct complex requirements for their insureds and the doctors who serve them. You might need to document that a patient received a referral for a service, that another treatment was tried first, or that the patient underwent testing for a specific medical condition. Without specific documentation showing that the treatment is medically necessary and covered under the plan, it could be denied.

2. Transcription Errors

A typo can cost a lot of money. Doctors’ handwriting is notoriously bad, so when that information is entered into a medical claim, the claim may contain an error. When the patient’s name is misspelled, date of birth is entered incorrectly, or the billing code claim is incorrect, the claim will likely be denied.

3. Billing the Wrong Company

In the era of Obamacare, many consumers change health insurers every year, as rates change and new providers enter or leave the marketplace. So it’s increasingly common for bills to go to the wrong company. The insurance a patient had last year might not be the insurer they use this year. Check coverage and service dates carefully to ensure the bill goes to the right company.

4. Patient Obligation

When a denial is coded as a patient obligation, it can mean many things. In most cases, the denial should specify which specific contractual issue gave rise to the denial. Some of the most common include:

  • The patient has not met their deductible.
  • The patient was required to seek a referral.
  • The service is not covered.
  • The claim lacks the information necessary to determine whether it was covered.
  • The care is covered by another insurer. Check with the patient to see if they have another plan.

5. Contractual Obligation

Providers have their own contracts with health insurance companies. When you agree to these terms, you agree to meet certain billing requirements. Denial due to a contractual obligation means that you’ve failed to jump through one of the insurer’s hoops. Some common issues include:

  • Not filing the claim in a timely fashion.
  • The claim was already paid.
  • The submitted claim does not support the necessity of the service, or the provider provided too many services. For instance, doing too many unnecessary diagnostic tests may result in a claim denial or adjustment.
  • The provider wasn’t certified to provide the covered service at the time it was provided.

6. Duplicate Billing

Duplicate billing is incredibly common, especially as medical practices switch to payment automation services that automatically generate bills. For example, if you see a patient for a consultation and bill for this, but then your billing software automatically generates a consultation fee associated with a service you provided, this is duplicate billing for which you can’t be paid. In other cases, a duplicate bill might appear to be a duplicate when it’s actually not. These billing issues can be tough to untangle, so insurers simply reject bills when there’s any doubt.

7. Overlapping Claims

An overlapping claim is when the service period for one claim appears to overlap with another. Distinct from duplicate billing, these denials sometimes occur when a patient seeks care from multiple providers. For instance, a person who sees two doctors for a dementia consultation without asking for a second opinion referral may have a claim denial because the two consultations overlap. The denial should provide clear information about why there is overlap. You may be able to fight it.

8. Noncovered or Excluded Charges

Most insurers specifically include certain procedures. No, use another example.Infertility treatment, for example, is a common exclusion. But with the advent of the Affordable Care Act, these denials are becoming less common. Insurers are required to cover certain basic care, and can’t deny service. So if a claim is denied for one of the Affordable Care Act’s 10 Essential Health Benefits, you can fight the denial. In many cases, the charge is denied because it was billed or coded wrong–not because the service is really excluded.

9. Coding Issue

If a bill isn’t correctly coded, it won’t be paid. Long strings of numbers, however, can easily be transposed. Consider how the code 87621, for an abnormal pap smear that suggests the need for further testing, can become irrelevant nonsense if the numbers shift locations. Other coding issues include:

  • Not including a code.
  • Including the wrong code.
  • Using the wrong coding system for the insurer.
  • Not following the standard of care associated with the included codes.

Many coding issues are simple errors that can easily be fixed–and compensated–with a bit of detective work. Yet the process can be a frustrating one that wastes lots of time you might otherwise spend with patients.

Stop Wasting Revenue on Rejections

Claim denials cost providers billions of dollars each year. That’s money that could go toward better patient care, discounted services for needy patients, better staff benefits, and more. Don’t dismiss denials as a cost of doing business. You can prevent and fight these denials, and you don’t have to do it alone. Precision Medical Billing reduces your denials, helps you detect problematic trends in denials, and negotiates with insurers on your behalf. Call us today to learn how we can give you more time and more money!