Streamlining the claim denial process in your practice
Claim denials are a reality for every dermatology practice. It is wise to be proactive and understand what you need to do when you receive a claim denial. Streamlining your claim denial process requires understanding the meaning behind each denial on the explanation of benefits (EOB) and the appropriate action you need to take.
A majority of private payers and the Medicare Administrative Contractors (MACs) use the American National Standard Institute (ANSI) codes to identify a post-initial adjudication adjustment.
Within the ANSI codes, there are 2 distinct code sets that help understand why a claim was denied. They are the Claim Adjustment Reason Codes (CARCs) and the Remittance Advice Remark Codes (RARCs).
The CARCs explain the reason a claim or service line was adjudicated differently than billed. If there is no adjustment to a claim line, no adjustment reason code is listed.
The RARCs provide additional explanation for an adjustment already described by a CARC or convey information about the adjudication process.
The chart below shows the most frequent CARCs and RARCs, as seen on dermatology claim EOBs, and the appropriate actions you can take to remedy the claim denial.
| Claim Adjustment Reason Codes (CARCs) | Remittance Advice Remark Codes (RARCs) | Description | Explanation | Resolution |
|---|---|---|---|---|
1 |
PR |
Deductible amount |
The patient is financially liable for the unpaid amount. |
N/A |
2 |
PR |
Co-insurance amount |
The patient is financially liable for the unpaid amount. |
N/A |
3 |
PR |
Co-payment amount |
The patient is financially liable for the unpaid amount. |
N/A |
4 |
N519 |
The procedure code is inconsistent with the modifier used or a required modifier is missing. |
Review the modifier usage and correct the claim. |
Submit a corrected claim with an appropriate modifier. |
5 |
OA |
The procedure code is inconsistent with the place of service. |
Other Adjustment (no financial liability) Service not covered — patient not liable for the unpaid amount. |
Review and resubmit correct CPT code and/or POS. |
6 |
OA |
The procedure/revenue code is inconsistent with the patient's age. |
Other Adjustment (no financial liability) Service not covered — patient not liable for the unpaid amount. |
Review the medical record and resubmit corrected claim. |
7 |
OA |
The procedure/revenue code is inconsistent with the patient’s gender. |
Other Adjustment (no financial liability) Service not covered — patient not liable for the unpaid amount. |
Review the medical record and resubmit corrected claim. |
9 |
OA |
The diagnosis code is inconsistent with the patient’s age. |
Other Adjustment (no financial liability) Service not covered — patient not liable for the unpaid amount. |
Review the medical record and resubmit corrected claim. |
10 |
OA |
The diagnosis code is inconsistent with the patient’s gender. |
Other Adjustment (no financial liability) Service not covered — patient not liable for the unpaid amount. |
Review the medical record and resubmit corrected claim. |
11 |
OA |
The diagnosis code is inconsistent with the procedure. |
Other Adjustment (no financial liability) Service not covered — patient not liable for the unpaid amount. |
Review the medical record and resubmit corrected claim. |
16 |
MA13 MA27 N264 N276 N382 |
Claim/service lacks information or has submission/billing error(s). Missing/incomplete/invalid ordering provider primary identifier. Missing/incomplete/invalid other payer purchased service provider identifier. |
Review claim for missing information or submission error. |
Submit a corrected claim. |
18 |
N522 |
Duplicate claim/service |
The claim was previously submitted and adjudicated. |
No action is required. |
45 |
CO |
Charge exceeds fee schedule/maximum allowable or contracted/legislated fee arrangement. |
Practice fee schedule exceeds payer fee schedule Contractual Obligation, Provider is financially liable for the unpaid amount |
Adjust the balance of the claim line. |
50 |
M127 N115 N130 N180 |
Non-covered because service has not been deemed a medical necessity by the payer. Documentation requested was not received or was not received timely. Item billed may require a specific diagnosis or modifier code based on related Local Coverage Determination (LCD). |
Service does not meet the medical necessity requirements. |
After the physician reviews the medical record documentation for medical necessity, submit a request for Redetermination/Appeal. |
55 56 |
OA |
Procedure/treatment/drug deemed experimental/investigational by the payer. |
Other Adjustment (no financial liability Service not covered — patient not liable for the unpaid amount. |
Adjust the balance of the claim line. |
58 |
Treatment was deemed by the payer to have been rendered in an inappropriate or invalid place of service. |
Service not approved/valued to be performed in the place of service reported on the claim. The claim will not be paid. |
Review coverage criteria, correct with appropriate code and resubmit corrected claim. |
|
59 |
Claim processed based on multiple procedure rules. |
Review NCCI guidelines. |
Resubmit corrected claim with appropriate modifier(s). |
|
96 |
N245 |
Non-covered charge(s) |
Service is statutorily excluded. |
The patient is financially liable for the unpaid amount. |
97 |
M15 N390 |
The benefit for this service is included in the payment/allowance for another service/procedure that has already been adjudicated. Separately billed services/tests have been bundled as they are considered components of the same procedure. Separate payment is not allowed. |
Review the National Correct Code Initiative Edits (NCCI). |
Resubmit corrected claim with appropriate modifier(s) to indicate service was performed independently of other services on the same DOS. |
100 |
Payment made to patient/insured/responsible party. |
N/A |
Bill patient for the unpaid amount. |
|
107 |
Related or qualifying claim/service not identified on this claim. |
The claim is missing primary procedure information. |
Resubmit corrected claim with the primary procedure listed. |
|
109 |
N130 |
Claim/service not covered by this payer. |
Review patient plan information. |
Submit the claim to the correct payer. |
144 |
N807 |
Incentive adjustment Payment adjustment based on the Merit-based Incentive Payment System. (MIPS) |
Positive MIPS Payment Adjustments |
N/A |
140 |
Patient/insured health identification number and name do not match. |
Check patient insurance card for the correct identification number. |
Resubmit claim with corrected insurance identification information. |
|
150 |
OA |
Payer deems the information submitted does not support this level of service. |
Other Adjustment (no financial liability) Service not covered — patient not liable for the unpaid amount. |
After the physician reviews the medical record documentation for medical necessity, submit a request for Redetermination/Appeal. |
151 |
N115 N362 |
Payment adjusted because the payer deems the information submitted exceeds this many/frequency of service. |
Review the MUEs allowed for the procedure and adjust the quantity or code(s). |
Correct the claim with the appropriate number of units. Report excess units on a separate line of the claim form. |
155 |
OA |
The patient refused the service/procedure |
Other Adjustment (no financial liability) Service not covered – patient not liable for the unpaid amount. |
After the physician reviews the medical record documentation for proof of service, submit a request for redetermination/appeal. |
163 |
Attachment/other documentation references on the claim were not received. |
Review encounter medical record documentation for medical necessity and completeness |
After the physician reviews the medical record documentation for medical necessity, submit a request for redetermination/appeal. |
|
167 |
Diagnosis(es) is not covered. |
Review coverage criteria exclusions to confirm diagnosis coverage. |
Ensure ABN was completed and on file, resubmit the claim with an appropriate modifier for re-adjudication. Private payer exclusion, the patient is responsible for unpaid service. |
|
181 |
Procedure code was invalid on the date of service. |
Review Dermatology Coding and Billing Manual |
Correct CPT code and resubmit corrected claim. |
|
183 |
The referring provider is not eligible to refer the service billed. |
Contact the referring provider for valid billing privilege criteria. |
||
184 |
The prescribing/ordering provider is not eligible to prescribe/order the service billed. |
Review ordering provider billing privilege criteria |
Update provider enrollment status in PECOS to avoid future claim denials. |
|
189 |
NOS or Unlisted procedure code billed when there is a specific procedure code the service. |
Review Dermatology Coding and Billing Manual for more specific procedure code |
Resubmit corrected claim. |
|
193 |
The original payment decision is being maintained. This claim was processed properly the first time. |
Review documentation, proceed with the appeals process. |
||
197 |
Payment adjusted for the absence of recertification/authorization. |
Pre-authorization not obtained for service rendered. |
Contact payer or primary care provider to obtain pre-authorization. |
|
236 |
Procedure/modifier combination is not compatible with another procedure/modifier provided on the same day. |
Review NCCI Edit guidelines. |
Correct modifier use and resubmit corrected claim. |
|
237 |
N807 |
Incentive adjustment Payment adjustment based on the Merit-based Incentive Payment System (MIPS). |
Negative MIPS Payment Adjustments |
N/A |
252 |
An attachment/other documentation is required to adjudicate this claim/service. |
Review missing information to support claim submission. |
Submit missing information to the payer. |
|
253 |
Sequestration reduction (Mandatory Payment Reduction of 2%) |
N/A |
N/A |
|
OA |
Other Adjustment (no financial liability |
Service not covered — patient not liable for the unpaid amount. |
Adjust the balance of the claim line. |
Frequently asked questions
Q1. Why are there two different types of denial codes on the EOB? What do they mean?
A1. Claim Adjustment Reason Codes (CARCs) explain why a claim or service line was paid differently than it was billed. If there is no adjustment to a claim/line, then there is no adjustment reason code. The Remittance Advice Remark Codes (RARCs) provide additional information for an adjustment already described by a CARC or to convey information about remittance processing.
Q2. We have a denied claim for CPT code 21552 done in the office, the payer’s denial code is 58 — treatment was deemed by the payer to have been rendered in an inappropriate or invalid place of service. We’ve tried to appeal but have been unsuccessful, is there anything we can do to get this overturned?
A2. Denial code 58 is a denial that indicates that procedure code 21552 is a service routinely performed and valued for the facility setting and not in the office setting. Typically this denial cannot be overturned. To prevent this, obtain pre-authorization or pre-determination from the patient’s insurance plan before the service is provided.
Q3. We constantly receive claims with reduced payment and denial code CO45 — Charge exceeds fee schedule/maximum allowable or contracted/legislated fee arrangement. Can we balance bill the patient so we can collect the total fee in our fee schedule?
A3. Denial code CO 45 indicates that the service charges exceed the contracted fee schedule with the payer and should be written-off.
Additional Academy resources
The AAD provides resources that may help with correct coding to avoid inadvertent claim denials.
