Common Denial Codes

What are Denial Codes?

Denial codes are sort of like the last piece of that puzzle you’ve been working on. You know, like that 1,000-piece puzzle you thought would be fun to do but 10 minutes into it you regret it.

Healthcare insurance companies assign these codes to claims that are unable to process. Receiving a denial code will help you understand your next steps in being able to get that claim processed correctly. This includes what a claim might be missing, or what information it didn’t need in the first place.

Denial codes explain why insurance cannot cover a patient’s treatment costs so medical billers can resolve and resubmit the claim. This not only benefits the patient, but it benefits the provider as well.

Without being able to process claims, you don’t get paid.

So where can you find a denial code? It’s good practice to start with electronic remittance advice (ERA). ERAs contain a lot of different codes that cover a variety of statuses for claims. And of course, I wouldn’t be mentioning ERAs if they didn’t cover denial codes. 

ERAs are an explanation from the insurance provider about how they adjust claim charges based on aspects like:

• Contract agreements
• Secondary payers
• Benefit coverage
• And more

What are ERAs also good for? For getting more information on claim denials, of course! You can find more denial code information by thoroughly reading the ERA. This information might include claim adjustment group codes (CAGR), claim adjustment reason codes (CARC), and remittance advice remark codes (RARC). Let’s go over what each of these are!

CLAIM ADJUSTMENT GROUP CODE

Claim adjustment group codes help to determine who’s financially responsible for an unpaid amount of the claim balance. Claim adjustment group codes contain two alpha characters to represent who’s responsible in combination with claim adjustment reason codes (CARC). 

Here are the five claim adjustment group codes:

• Contractual Obligation (CO): This code refers to the amount between what the practice/provider bills and the amount allowed by the payer. This is of course when you are in-network with them. This amount is what the provider must adjust from the claim and the patient is not responsible for this amount.
• Corrections and Reversal (CR): This code marks that payers corrected or reworked a formerly adjudicated claim. You can use the CR code with CO, PR or OA to note revised information.
• Other Adjustment (OA): Billing professionals use this code when CO nor PR apply. In other words, this applies when there is no contractual obligation or patient responsibility on the claim. The claim is fully paid.
• Payer Initiated Reductions (PI): A payer may use this code when they believe the adjustment is not the responsibility of the patient. Check the reason code for additional information about this code.
• Patient Responsibility (PR): This code helps patients understand which portion of the bill they are responsible for. These may include copays, deductibles, and coinsurance amounts. You will also see this code if the patient does not have coverage on the date of service.

PR = Patient Responsibility, This is used to identify the responsibility of the patient.  Including deductibles, copays, coinsurance amounts, and certain denials. 

NOTE: PR denials typically become GREEN claims in ChiroSpring as they have Patient Responsibility due.

CO = Contractual Obligation, This is the amount that the provider is contractually obligated to adjust from the claim.   The patient is not responsible for this amount.

NOTE: ChiroSpring Will Auto Write Off 4 CO Denial Codes:

• CO    45: Charge exceeds fee schedule/maximum allowable or contracted/legislated fee arrangement. 
• CO    137: Regulatory Surcharges, Assessments, Allowances or Health Related Taxes.
• CO    237: Legislated/Regulatory Penalty. At least one Remark Code must be provided 
• CO    253: Sequestration - reduction in federal payment

CO Denial codes will typically be a YELLOW Claim status; however if the claim has multiple denial codes, including a PR denial, it can turn GREEN to represent there is Patient Responsibility to collect on this claim.

OA = Other Adjustments, This is used when the claim is paid in full and there is no contractual obligation or patient responsibility on the claim.