Top denials and reason codes

Gaining insight into the procedures that are most commonly denied by payers and evaluating the reason codes that accompany the denials can help suppliers modify their clinical documentation and billing practices to prevent denials, reduce claims rework, and improve their cash flow.

Below are the top five most commonly denied procedures for HME and DME suppliers during the time period between May 28, 2012, and Aug. 27, 2012. The data was compiled from the RemitDATA database that houses 25% of all national outpatient remittances.

•    E0431 — Portable gaseous oxygen system, rental; includes portable container, regulatory, flowmeter, humidifier, cannula or mask, and tubing
•    E1390 — Oxygen concentrator, single delivery port, capable of delivering 85 percent or greater oxygen concentration at the prescribed flow rate
•    A4253 — Blood glucose test or reagent strips for home blood glucose monitor, per 50 strips
•    A4259 — Lancets, per box of 100
•    E0601 — Continuous airway pressure (CPAP) device

Additionally, below are the top five most common denial reason codes, as compiled by RemitDATA during the same time period:

•    CO-50 — These are non-covered services because this is not deemed a "medical necessity" by the payer
•    CO-18 — Duplicate claim/service
•    CO-176 — Prescription is not current
•    CO-109 — Claim not covered by this payer/contractor
•    CO-A1 — Claim/services denied

An obvious trend emerges when evaluating the top five most commonly denied procedures. The procedures fall into three categories:

1.    Oxygen-related equipment
2.    Diabetes-related supplies
3.    CPAP equipment

Oxygen-related equipment

Both Recovery Audit Contractors (RACs) and Medicare Administrative Contractors (MACs) are taking a more critical look at oxygen-related procedure claims for various reasons. Topping the list of denial reason codes is failing to meet medical necessity criteria (reason code CO-50), which is often cited as the reason for E0431 or E1390 code denials. Organizations that do not have properly completed certificates of medical necessity for these codes will fail medical necessity claim edits.

Other common issues that cause denials for E0431 and E1390 codes include:

•    Being unresponsive to an audit request from a contractor, or not responding by the deadline
•    Face-to-face notes between providers and patients may not be detailed enough
•    Recertification of patient oxygen use is required each year, and failing to recertify will result in a claim denial (reason code CO-176)

Diabetes-related supplies

Perhaps the biggest issue causing claim denials for diabetes-related supplies is duplicate claims and overutilization. Diabetes patients who change suppliers, or reorder supplies, before they are eligible for more supplies, may result in a claim denial with a reason code of “CO-18 — Duplicate claim/service.” Fortunately, the DME MAC in Jurisdiction C has implemented an interactive voice response (IVR) system that allows providers to call and receive information about when patients are eligible for more supplies. Other MACs are considering the addition of this capability within their jurisdictions.

Another issue causing claim denials for diabetes-related supplies is failing to meet medical necessity criteria. In many situations, a modifier indicating whether the patient is or is not using insulin was excluded from the claim, which causes the denial.

CPAP equipment

With CPAP products, there are several situations that may cause denials, including:

•    A duplicate claim/service code (CO-18) can result when patients receive new CPAP equipment before they are eligible, or when there are payment backlogs where prior payments are not posted, or prior medical necessity denials are not appealed timely.
•    Medical necessity denials (CO-50) often occur when providers do not verify that the patient has an ongoing need for the CPAP equipment. Additionally, missing modifiers may cause medical necessity denials.

Other denial reason codes

Reason code “CO-109 — Claim not covered by this payer/contractor” can occur for many reasons, which providers must determine by evaluating the accompanying remark codes. In many situations, the denial is the result of missing supplemental patient information, such as the patient's permanent address, or when a patient's coverage has changed and they are in a skilled nursing facility or have opted out of Medicare fee for service.

Like reason code CO-109, reason code “CO-A1 — Claim/service denied” must be investigated by evaluating accompanying remark codes to resolve the issue.

Evaluating denials and reason codes

HME companies that take the time to evaluate their denials and reason codes have an opportunity to prevent future situations that may result in denials. Avoiding these situations helps organizations improve their efficiency and cash flow, making the effort a worthwhile investment.