Look for standard use of remittance advice codes in 2014

September 6th, 2013 - Scott Kraft   
Categories:   Billing   Denials & Denial Management  
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Confusion over how to respond to electronic remittance advice (ERA) will hopefully decline in 2014, thanks to efforts from the Council for Affordable Quality Healthcare (CAQH) to streamline and standardize how payers use ERA codes to convey why your claims are being denied or rejected.

These standardization efforts were driven by the Affordable Care Act (ACA). Remittance codes will be divided into these four categories:
1. Additional Information Required – Missing/Invalid/Incomplete Documentation
2. Additional Information Required – Missing/Invalid/Incomplete Data from Submitted Claim
3. Billed Service Not Covered by Health Plan
4. Benefit for Billed Services Not Payable

The efforts at standardization are designed to head off confusion from how different payers are deciding to use electronic remittance advice on claims. The benefit to physician practices is the ability to better understand how to quickly determine the best response to claims denials and rejections.

Underneath the four core reasons why claims aren’t being paid, the CAQH standardization breaks down the remittance advice codes in a standardized way. The changes will be implemented by CMS by Jan. 6, 2014.

For an example of how it works, let’s look at the first scenario from above, Additional Information Required – Missing/Incomplete/Invalid Documentation.

In the first scenario, you’ll see an initial code, in this case Claim Adjustment Reason Code 16: Claim/service lacks information which is needed for adjudication. At least one Remark Code must be provided (may be comprised of either the NCPDP Reject Reason Code, or Remittance Advice Remark Code that is not an ALERT).

The presence of that code limits the remittance advice remark codes (RARCs) that should accompany the claims denial because you are now focused on only denials or claims rejections caused by missing information.

Two examples of RARCs you might see are M47 (Missing/incomplete/invalid internal or document control number, or M51 (Missing/incomplete/invalid procedure). But you wouldn’t see either of those two codes without seeing an initial denial or rejection claim type to help frame your response.

The denial code infrastructure being established by CAQH is a HIPAA standard code set, which should make it easier to determine how to more quickly and effectively address denials in 2014.


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