Denial code 106 means that the patient's chosen payment option or election is not currently in effect. This could indicate that the patient has not made a payment arrangement or has not selected a specific payment method for their healthcare services. As a result, the claim for reimbursement has been denied.
Common causes of code 106 are:
1. Lack of patient communication: The patient may not have been informed about the available payment options or may not have elected a specific payment option. This could be due to poor communication between the healthcare provider and the patient.
2. Incomplete or missing documentation: The healthcare provider may have failed to document the patient's payment option or election properly, leading to the denial code. This could be a result of administrative errors or oversight.
3. Failure to verify insurance coverage: If the healthcare provider did not verify the patient's insurance coverage or eligibility before providing services, it could result in a denial code. Without proper insurance verification, the patient's payment option may not be in effect.
4. Out-of-network services: If the healthcare provider is out-of-network for the patient's insurance plan, it may result in the denial code. In such cases, the patient's payment option may not be applicable, leading to the denial.
5. Non-compliance with payment terms: The patient may have failed to comply with the agreed-upon payment terms, such as missing payments or not adhering to a payment plan. This could result in the denial code if the patient's payment option is not in effect due to non-compliance.
6. Changes in insurance coverage: If the patient's insurance coverage has changed, and the healthcare provider is not aware of the updated information, it may result in the denial code. This can happen when the patient switches insurance plans or if there are changes in their policy.
7. Billing errors: Mistakes in billing, such as incorrect coding or inaccurate patient information, can lead to the denial code. These errors can prevent the patient's payment option from being in effect.
8. Lack of authorization: Certain medical procedures or services may require prior authorization from the insurance company. If the healthcare provider did not obtain the necessary authorization, it could result in the denial code and the patient's payment option not being in effect.
9. Timely filing limits: Insurance companies have specific timeframes within which claims must be submitted. If the healthcare provider fails to submit the claim within the designated timeframe, it may result in the denial code. In such cases, the patient's payment option may not be applicable.
10. Denial due to policy limitations: Some insurance policies may have limitations or exclusions that prevent certain services or procedures from being covered. If the patient's payment option is not applicable due to these policy limitations, it can result in the denial code.
Ways to mitigate code 106 include:
- Educate patients: Provide clear and concise information to patients about their payment options and the importance of making an election. This can be done through brochures, website content, or in-person discussions.
- Streamline the payment process: Implement user-friendly payment systems that allow patients to easily make their payment elections. This can include online portals, mobile apps, or automated phone systems.
- Offer multiple payment options: Provide patients with a variety of payment options to choose from, such as credit/debit cards, electronic funds transfer (EFT), or payment plans. This ensures that patients can select the option that best suits their financial situation.
- Communicate payment policies: Clearly communicate your organization's payment policies to patients, including any deadlines or consequences for not making a payment election. This can be done through written materials, signage, or verbal reminders during appointments.
- Provide financial counseling: Offer financial counseling services to patients who may be struggling to make a payment election. This can help them understand their options and develop a plan to meet their financial obligations.
- Utilize technology: Leverage technology solutions, such as revenue cycle management software, to automate payment reminders and follow-ups. This can help ensure that patients are aware of their payment responsibilities and prompt them to make their election in a timely manner.
- Train staff: Provide comprehensive training to your staff on the importance of obtaining patient payment elections and how to effectively communicate payment options to patients. This will help ensure consistency and accuracy in the process.
- Monitor and analyze data: Regularly monitor and analyze data related to patient payment elections to identify any trends or patterns. This can help you proactively address any issues and refine your strategies to prevent code 106.
By implementing these strategies, healthcare providers can mitigate code 106 and improve their revenue cycle management processes.
The steps to address code 106 are as follows:
- Review the patient's financial records: Start by reviewing the patient's financial records to ensure that their payment option or election is accurately documented. This includes verifying if the patient has chosen a specific payment plan or if they have made any payment elections.
- Contact the patient: Reach out to the patient directly to discuss their payment options and clarify any confusion or misunderstanding. It is important to provide clear explanations and guidance on how they can establish a payment plan or make the necessary payment elections.
- Update the patient's financial information: If the patient has not yet chosen a payment option or made any payment elections, update their financial information accordingly. This may involve updating their account with the chosen payment plan or recording their payment elections accurately.
- Communicate with the billing department: Inform the billing department about the code 106 denial and the steps taken to address it. Provide them with any necessary documentation or information related to the patient's payment option or election.
- Resubmit the claim: Once the patient's financial records have been updated and the necessary communication has taken place, resubmit the claim with the corrected information. Ensure that all relevant details are accurately documented to avoid any further denials.
- Monitor and follow up: Keep track of the resubmitted claim and monitor its progress. Follow up with the insurance company to ensure that the claim is being processed correctly and that the code 106 denial has been resolved.
By following these steps, healthcare providers can effectively address code 106 and work towards resolving any payment option or election issues with their patients.