DENIAL CODES

Denial code M27

Remark code M27 indicates the provider is liable for charges waived due to services not being necessary or custodial care, with appeal rights.

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What is Denial Code M27

Remark code M27 indicates that the patient is not responsible for payment for the specified items and services due to the limitation of liability provision in the law. The provider is responsible for the patient's waived charges, including any coinsurance, because the items or services provided were deemed not reasonable and necessary or were considered custodial care. Furthermore, it is implied that the provider knew or should have known that these services were not covered. The provider has the right to appeal this decision and must do so within 120 days of receiving this notice. Appeals must be processed through the issuing office, and they can address both the coverage determination and the question of whether the provider exercised due care.

Common Causes of RARC M27

Common causes of code M27 are:

1. Provision of services that are not deemed reasonable and necessary according to Medicare standards.

2. Delivery of custodial care services, which are typically not covered because they are not considered medical in nature.

3. Failure of the provider to recognize and adhere to Medicare coverage limitations, resulting in services being rendered that are known, or should be known, to be excluded from coverage.

4. Inadequate documentation or justification for the medical necessity of the services provided to the patient.

5. Lack of proper pre-authorization or verification of coverage for the services rendered, leading to a denial based on coverage criteria.

6. Errors in coding or billing practices that incorrectly suggest the services should be covered when they are not.

7. Misinterpretation of Medicare policy by the provider, leading to the assumption that the provided services would be covered.

8. Insufficient communication with the patient regarding their coverage limitations, resulting in services being provided that the patient is not financially responsible for under the limitation of liability provision.

Ways to Mitigate Denial Code M27

Ways to mitigate code M27 include implementing a robust pre-service insurance verification process to ensure that services provided are covered by the patient's insurance plan. This process should include checking the medical necessity of the services against the payer's coverage guidelines. Additionally, staff should be trained to understand the limitations of liability provisions and to identify services that may be considered custodial care, which is typically not covered.

To further prevent this code, it's crucial to establish a system for regular updates on payer policies and coverage changes. Providers should also have a clear and documented process for obtaining prior authorizations for services that may be questionable in terms of medical necessity.

Moreover, providers should maintain thorough and accurate documentation to support the medical necessity of services rendered. This documentation can be critical if an appeal is necessary. In cases where there is uncertainty about coverage, providers should consider discussing the potential financial liability with the patient upfront and obtaining an Advance Beneficiary Notice (ABN) when appropriate.

Lastly, conducting internal audits to identify and address any patterns that may lead to the application of code M27 can help providers take corrective actions proactively and ensure compliance with payer requirements.

How to Address Denial Code M27

The steps to address code M27 involve a multi-faceted approach to resolve the issue of liability for non-covered services. First, review the patient's medical records and the services provided to confirm whether they were indeed non-covered due to being not reasonable, necessary, or custodial in nature. If the services were appropriately provided, gather all supporting documentation that justifies the medical necessity and reasonableness of the services.

Next, prepare a detailed written appeal that includes the medical records, any supporting clinical evidence, and a clear explanation of why the services were considered necessary and should not be subject to the limitation of liability. Ensure that the appeal is submitted within the 120-day timeframe from the date of the notice.

Additionally, examine your internal processes to determine how the non-covered services were not identified prior to billing. Implement corrective measures to prevent similar issues in the future, such as enhanced staff training on coverage criteria and the use of pre-authorization tools.

If the services were indeed non-covered and the provider was aware or should have been aware, then the provider must accept the liability. In this case, adjust the patient's account to remove any patient responsibility for the charges and update your billing records to reflect the provider's liability.

Lastly, consider consulting with a healthcare attorney or a revenue cycle management expert to assist with the appeal process and to ensure compliance with all regulatory requirements.

CARCs Associated to RARC M27

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