Understanding Denial Reason Codes: What They Mean for Your Medical Practice

denial reason codes

Do you ever feel frustrated by claim denials? Most healthcare providers do. Understanding why denials in medical billing occur can mitigate that frustration. 

PracticeForces specializes in helping medical practices identify better ways to manage their billing struggles. These experts decode denial reason codes and how they affect your practice below.

 

What Are Denial Reason Codes? 

When you make insurance claims for services a patient may need, you must wait for the provider to accept the claims before they provide a reimbursement. Sometimes, a provider denies those claims. They will then communicate with the practice using denial reason codes so that you are clear about why the denial occurred. 

Although the denials cause payment delays, their accompanying codes can help you determine how to improve your process for filing claims. Understanding these codes also helps your practice determine the next steps to get your revenue back on track.

 

Why Do Denials Occur?

Insurance providers deny healthcare claims for myriad reasons, such as:

  • The provided information isn’t enough to justify approval. 
  • The provider already received a similar claim. 
  • The provider doesn’t cover the service.
  • Your practice already received payment. 
  • You need to file at a later time due to payment date expirations. 

A code accompanies each claim denial, typically as two to four letters and a number. For example, CO-11 indicates a diagnosis input that doesn’t relate to the prescribed medical service. You might receive a CO-27 when you administer and charge for a service after the patient loses coverage. 

 

How Should You Handle a Denial Code?

Denial reason codes can help you implement practice changes that improve your healthcare reimbursement rate and account management strategy. When you receive a denial, check the accompanying code and compare it with your claim. 

Did your claim contain accurate information with zero errors? If so, resubmit your claim through the appeal process. 

If the insurance provider insists on denial, they’ll provide a written statement regarding the claim denial. You can then send the appeal for external review, which can take a few months. However, since they involve a third party’s final decision, the insurance provider must comply if that outside party affirms you have a valid claim.

 

How to Prevent Denials

Can you prevent denials from inconveniencing your patients and staff in the first place? You certainly can! 

The following tips might improve your claims approval rate:

  • Improve your revenue cycle management to closely reflect those within insured services. 
  • Update your staff’s training and understanding of claim denials.
  • Partner with reputable clearing houses. 
  • Double-check a patient’s insurance plan for service eligibility. 
  • Know how your insurance providers operate. 
  • Troubleshoot and audit your practice’s payment processes and cycles. 
  • Leverage medical billing solutions and services to streamline your claims processes. 

 

Avoid Denial Reason Codes with Solutions Designed by PracticeForces

Various discrepancies, like duplicate claims or inaccurate information, can lead to denied claims and denial reason codes. The experts at PracticeForces can help you avoid recurring denials with streamlined and secure medical billing solutions. Call 727-202-5429 to learn more about our solutions and request a quote for your practice.

Parul Garg, CEO and co-founder of PracticeForces, has significantly contributed to the growth of over 1,000 U.S. medical practices through her expertise in medical billing and coding since the company’s inception in 2003. With a background in Computer Science and an MBA in Human Resources, her leadership and AAPC-certified coding skills have been pivotal in managing the company’s operations effectively.

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