A Primer on Denials

Categorization Of Pediatric Denial Types 

By Denise Wilson, MS, RN, RRT

Insurance carriers issue denials or underpayments for many reasons. The major denial or underpayment classifications are generally technical/administrative, coding/billing, medical necessity (including level-of-care or medical necessity of a procedure or service), and clinical validation. Payers can issue denials pre-service such as when the payer refuses to authorize coverage of a requested service or inpatient admission, concurrently (during the time services are being provided), post-service pre-payment (through a claim and medical record review prior to payment), or post-service post-payment (retrospectively through a claim and medical record review).

Technical Denials

Technical denials are typically denials related to the payer receiving incorrect or incomplete information with the claim or the provider not following payer payment rules when administering or billing medical services. Examples would be the wrong patient name or missing data on the claim, such as billing for cataract surgery without specifying which eye was involved. Resubmission of a corrected claim can often resolve these types of denials. They do not require an appeal. Failure to obtain authorization for services that require pre-authorization per payer rules are technical denials. Lack of authorization denials may be issued because authorization was not sought or not sought appropriately (with all supporting documentation). These denials result from failure to follow payer rules rather than the medical necessity of the requested services. Lack of authorization denials issued due to failure to obtain authorization often can be resolved through resubmission of supporting documentation before or during the time services are being provided.

Administrative Denials 

Administrative denials are typically related to insurance claim processing and are not related to medical necessity issues. Examples would be the patient who provided the wrong insurance information or received medical services explicitly excluded by the payer plan. These types of denials cannot be resolved through an appeals process. Most often, these types of denials have no option for resolution and represent lost dollars to the provider.

Billing Denials 

Billing denials occur when the payer identifies a potential line item error on the claim, such as billing more units of a drug than what would typically be the highest medically appropriate dose. Resolution may require submitting an appeal to support the medically necessary need for the higher than usual dose of the medication administered.

Coding Denials 

Coding denials are typically related to any aspect of the coding of the outpatient or inpatient claim. Clinical validation denials, where the payer challenges the validity of a diagnosis based on the documentation in the medical record of the patient's clinical presentation, is generally considered to fall under the coding umbrella even though the denial reason and the appeal argument are mostly clinically based. Coding denials can include submitting an incorrect principal diagnosis, inappropriate coding of a secondary diagnosis, wrong procedure codes, submission of codes not supported by the medical record, and various other issues related to coding guidelines. These denials are typically resolved through the appeals process.

Medical Necessity Denials

Medical necessity denials are typically related to any assessment by the payer that the medical services provided to the patient were not medically necessary to diagnose or treat a medical condition. Payers define medically necessary services through provider manuals and articles such as clinical practice guidelines (commercial payers) or local coverage determinations (traditional Medicare) that describe when medical services are covered. Payers also expect medical services to be provided in the appropriate setting, such as inpatient versus outpatient hospital services. Denials related to the level-of-care, or setting, where services were provided also fall under the umbrella of medical necessity denials. Readmission denials are generally considered medical necessity issues. Medical necessity denials can be issued pre-service, post-service pre-payment, concurrently, or retrospectively. Lack of authorization denials are medical necessity denials when the provider appropriately requests authorization, but the payer denies authorization of services based on medical necessity requirements.

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