Denial code 256 is used when a healthcare service is deemed not payable according to the terms and conditions outlined in a managed care contract. This means that the insurance provider has determined that the specific service in question is not covered or reimbursable under the terms of the contract between the healthcare provider and the insurance company. As a result, the claim for that particular service is denied and the healthcare provider may need to explore alternative options for reimbursement or appeal the denial if they believe it was made in error.
Common causes of code 256 are:
1. Lack of pre-authorization: The service provided may require pre-authorization from the managed care contract, and if this step is skipped or not completed correctly, the claim may be denied with code 256.
2. Out-of-network provider: If the healthcare provider is not part of the managed care network specified in the contract, the service may not be payable, resulting in a denial with code 256.
3. Service not covered: Certain services may not be covered under the managed care contract, and if the provider submits a claim for such services, it will be denied with code 256.
4. Exceeded benefit limits: Managed care contracts often have specific benefit limits for certain services. If the provider exceeds these limits, the claim may be denied with code 256.
5. Incorrect coding: If the service provided is not coded correctly or if there are coding errors in the claim, it may result in a denial with code 256.
6. Missing or incomplete documentation: Inadequate or missing documentation to support the medical necessity of the service can lead to a denial with code 256.
7. Timely filing limits: Managed care contracts usually have specific timeframes within which claims must be submitted. If the claim is not filed within the specified timeframe, it may be denied with code 256.
8. Non-compliance with contract terms: Failure to comply with the terms and conditions outlined in the managed care contract, such as submitting claims in the required format or following specific billing guidelines, can result in a denial with code 256.
9. Billing errors: Any errors in the billing process, such as incorrect patient information, incorrect provider information, or incorrect billing codes, can lead to a denial with code 256.
10. Lack of medical necessity: If the managed care contract requires services to be medically necessary, and the provider fails to demonstrate the medical necessity of the service, the claim may be denied with code 256.
Ways to mitigate code 256 include:
1. Verify eligibility: Before providing any services, it is crucial to verify the patient's eligibility with their insurance provider. This will help ensure that the services rendered are covered under the managed care contract.
2. Obtain prior authorization: Certain services may require prior authorization from the insurance company. It is essential to obtain this authorization before providing the service to avoid denials based on contractual limitations.
3. Review managed care contracts: Familiarize yourself with the terms and conditions of the managed care contracts. Understanding the specific services that are not payable under the contract will help you avoid providing services that will be denied.
4. Communicate with patients: Educate patients about the services that may not be covered under their managed care contract. Clearly explain any potential out-of-pocket expenses they may incur, allowing them to make informed decisions about their healthcare.
5. Accurate coding and documentation: Ensure that the services provided are accurately coded and documented. This includes using the appropriate CPT codes and providing detailed documentation that supports medical necessity. By doing so, you can minimize the risk of denials based on contractual limitations.
6. Appeal denied claims: If a claim is denied based on code 256, it is important to review the denial reason and determine if it is valid. If you believe the denial is incorrect, file an appeal with the necessary supporting documentation to demonstrate that the service should be payable under the managed care contract.
7. Stay updated with contract changes: Managed care contracts can undergo changes over time. It is crucial to stay updated with any modifications to the contract terms and conditions. Regularly review and communicate these changes to your billing and coding team to ensure compliance and prevent denials based on outdated information.
By implementing these strategies, healthcare providers can mitigate code 256 and reduce the risk of denials related to services not being payable per managed care contracts.
The steps to address code 256, which indicates that the service is not payable per the managed care contract, are as follows:
1. Review the managed care contract: Carefully examine the contract between your healthcare organization and the managed care payer. Look for any specific clauses or provisions that may explain why the service is not payable. Pay attention to any restrictions, limitations, or exclusions mentioned in the contract.
2. Verify the accuracy of the claim: Double-check the details of the claim submitted to ensure that all the information is accurate. Confirm that the service provided aligns with the services covered under the managed care contract. Look for any errors or discrepancies that may have led to the denial.
3. Investigate the reason for denial: Dig deeper into the specific reason for the denial. It could be due to incorrect coding, lack of medical necessity, or missing documentation. Identify the root cause of the denial to determine the appropriate course of action.
4. Gather supporting documentation: If the denial is due to missing or insufficient documentation, gather all the necessary supporting documents to substantiate the claim. This may include medical records, test results, physician notes, and any other relevant information that can demonstrate the medical necessity of the service provided.
5. Appeal the denial: If you believe that the denial is unjustified or there has been an error, initiate the appeals process. Follow the specific guidelines provided by the managed care payer for submitting an appeal. Include a detailed explanation of why you believe the service should be payable based on the terms of the contract and any supporting documentation.
6. Monitor and track the appeal: Keep a record of all communication and documentation related to the appeal. Follow up with the managed care payer regularly to ensure that the appeal is being processed and reviewed in a timely manner. Be prepared to provide any additional information or clarification that may be requested during the appeal process.
7. Evaluate contract negotiations: If denials related to this specific code are recurring, consider evaluating the terms of the managed care contract. Determine if there is a need to renegotiate or update the contract to address any gaps or limitations that may be causing repeated denials. Engage in proactive discussions with the payer to find mutually beneficial solutions.
Remember, addressing denial codes requires a systematic approach that involves understanding the contract, verifying claim accuracy, investigating denials, providing supporting documentation, appealing when necessary, and evaluating contract negotiations. By following these steps, healthcare providers can effectively address code 256 and improve their revenue cycle management.