According to Change Healthcare, 86% of all healthcare claim denials are avoidable.
In other words, a lot of the revenue loss that healthcare organizations experience is also avoidable.
So I’m sure you are asking yourself, “Okay so how do I avoid these claim denials and get them to process faster?”
Knowing what denial codes stand for and when they should be applied is the most important thing when it comes to installing a claim denial management system. Fortunately for you, there are clearinghouses who’s entire job is to do that for you! But before we get into that, let’s talk about what claim denial codes even are.
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Medical billing and coding can be a source of anxiety for even the most senior billers. The profession takes quick thinking, decision-making, and resilience.
Why is it so stressful? Dealing with claim denials would be many billers' top complaint.
Denial of a claim is the refusal of an insurance company or carrier to honor a request by an individual or their provider to pay for health care services obtained from a healthcare professional.
The claim may violate the terms of the payer-patient contract, or may just contain some error that was only caught after processing.
Fortunately, insurance organizations will tell you why they denied a claim by sending back denials on an Explanation of Benefits or Electronic Remittance Advice (ERA).
First the denial code will include the Claim Adjustment Group Code. This determines who is responsible for the unpaid amount of the claim balance.
These codes are:
Contractual Obligation (CO), Corrections and Reversal (CR), Other Adjustment (OA), Payer Initiated Reductions (PI), Patient Responsibility (PR).
Health plan companies will then use this in conjunction with Claim Adjustment Reason Codes(CARC), which explain the financial adjustment that is required.
Let’s get even more specific while we are at it.
Speaking of CARC, any additional information on the adjustment that this code describes can be explained even further by a Remittance Advice Remark Code (RARC). A RARC can also convey information about remittance processing. There are two types of RARCs:
Supplemental: Insurance providers refer to these as RARCs without further distinction. They provide an explanation for already described CARCs.
& Informational: Health plan companies preface these as alerts to convey details about remittance processing.
Unfortunately, there are hundreds of denial codes and they all mean different things. But like I mentioned at the beginning of this video, there are third party companies such as clearinghouses that can help you navigate through the world of claim denials and rejections. Since Etactics is a clearinghouse with over 20 years of experience…it’s safe to say that we know a thing or two about billing codes and the struggles that can go with them. Consider investing in a clearinghouse to better streamline not only your workflow, but your revenue cycle as well!
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