Medical claim denials can significantly impact medical practices’ revenue growth. When an insurance payer denies a medical claim, it returns the claim form to the provider and explains the reasons for the denial. These reasons are usually indicated shortly in the form of codes, which are usually known as denial codes in medical billing.
Healthcare providers must understand these codes and know how to translate them to identify why the payor rejected the claim. Finally, the physician can handle and fix the claims rejected by the payor.
In this blog, we will uncover the notable reasons for denial code 256 and provide practical solutions to tackle this denial.
What is Denial Code 256?
Before proceeding to the reasons and solutions for denial code 256, let’s see what denial code 256 is.
Denial code 256 indicates a service or procedure not payable according to the terms and conditions outlined in a managed care contract.
Denial Code 256 is a standard rejection by insurers. It severely affects your practice’s revenue cycle. This denial code generally indicates the patient’s eligibility or insurance coverage difficulties.
While these denials are frustrating and can cause reimbursement delays, tackling them can help medical providers ensure more straightforward billing procedures and speedier payments.
Denial Code 256: Reasons and Solutions
Let’s explore the common reasons for Denial Code 256 and how they impact the claims process.
Inaccurate or Missing Patient Insurance Information
A common reason for Denial Code 256 is inaccurate or missing insurance information. It can include incorrect insurance numbers, outdated patient IDs, or expired coverage. Insurance companies require accurate details to process claims efficiently, and if the information provided does not match their records, they may deny the claim using this code.
How to Avoid: Inaccurate information can cause reimbursement issues for healthcare providers. Missing patient insurance information can cause claim denials and reimbursement delays.
To ensure a smooth reimbursement process, the provider must go through these several points
- Verify insurance information at every visit to ensure accuracy.
- Check for any changes in coverage and update accordingly.
- Use a dual verification process.
- Follow up with patients to obtain missing information.
Insurance Coverage for Services
Another common reason physicians may face Denial Code 256 is because the patient’s insurance policy does not cover the services provided. The insurance policy may exclude the procedure or treatment.
How to Avoid: Medical practice owners must confirm the patient’s coverage and ensure that their insurance policy covers the procedure before providing a service. Providers can employ pre-authorization or benefit verification to determine whether specific treatments or services are covered.
To avoid the insurance coverage issues, the providers must:
- Communicate clearly with patients.
- Provide an estimate of costs.
- Familiarize yourself with the insurance plans.
- Avoid surprise billing.
Incorrect Billing Codes
Incorrect billing codes (CPT, HCPCS, or ICD-10) can trigger Denial Code 256. These errors may cause the insurance company to reject the claim because they may not recognize the service or diagnosis.
How to Avoid: Incorrect medical codes may leave practices unpaid because the payor rejects the claims. This leads to unnecessary checks and audits, which may become time-consuming and result in revenue loss as well
Physicians must ensure that they apply the correct medical codes to services and procedures to avoid denials and instability in the RCM process.
To ensure accurate medical codes, the providers should:
- Stay up to date with coding guidelines and updates.
- Use the most appropriate codes like ICD or CPT
- Provide regular staff training.
- Use coding software effectively.
Eligibility Issues
Eligibility issues arise when a patient’s insurance coverage lapses or expires, often due to failure to renew the policy or delays in updating coverage status. It can result in Denial Code 256.
How to Avoid: Eligibility issues can cause delays in the reimbursement process, leading to frustration and burden for healthcare providers and patients.
To avoid and overcome eligibility issues, here are some tips for the provider:
- Check the patient’s eligibility before the appointment.
- Cross-check information.
- Stay updated on policy changes
- Use of online tools
Failure to Renew Insurance
A failure to renew insurance coverage can lead to Denial Code 256. A patient failing to renew their insurance policy may result in claim denials.
How to Avoid: To avoid issues related to failure to renew insurance requirements, healthcare providers need to implement a proactive approach to manage patient coverage.
Setting up automated reminders or follow-up systems can help patients stay active on their insurance renewal date.
Here are some tips that can be helpful for the provider
- Provide pre-renewal reminders
- Offer flexible payment plans
- Verify that the patient’s insurance is active and up-to-date
- Notify your office of any changes
Out-of-Network Provider
If a healthcare provider is out of network for the patient’s insurance, this may lead to Denial Code 256. Insurance plans frequently include specified networks of healthcare providers, and services provided outside the network may not be paid or require additional documentation for approval.
How to Avoid: Being an out-of-network provider, you may be unable to entertain your patient thoroughly. The patient may be charged out-of-pocket costs.
If you are not on the patient’s insurance panel, you must:
- Educate patients about in-network and out-of-network care.
- Try to become an in-network with the patient’s insurance plan
- Ensure clear communication with patients to avoid misconceptions
- Provide additional documentation for the services to the insurer
Failure to Submit Pre-Authorization
Some insurance companies require pre-authorization or prior approval before providing specific treatments. Failure to receive this approval before service delivery may result in Denial Code 256.
How to Avoid: Failure to submit Pre-Authorization can lead to treatment delays, claim denials, and unexpected out-of-pocket expenses.
Recognizing the importance of submitting pre-authorization requests on time and with accurate information is essential.
The practice owner and physicians must:
- Verify pre-authorization requirements.
- Keep records and collaborate with the provider.
- Ask questions when unsure about authorization.
- Use technology to streamline pre-authorization processes
- Confirm your practice is in-network with the patient’s insurance plan
Coordination of Benefits (COB) Issues
When a patient has multiple insurance policies, insurers may become confused about which one to use, leading to Denial Code 256. It’s important to clarify which plan is the primary payer and which is the secondary one. You may deny the claim if you do not handle benefit coordination properly.
How to Avoid: Coordination of Benefits issues arise when multiple insurance plans get involved.
It is essential to ensure the accurate and timely reopening of all insurance coverage details to the primary and secondary insurers.
Here’s how you can tackle COB issues:
- Ensure accurate insurance verification.
- Utilize technology and EHR software.
- Train healthcare staff in billing and coding.
- Standardized medical documentation.
- Ensure accurate reporting of the patient’s primary and secondary insurance details
Conclusion
Denial Code 256 can be a significant hurdle in the reimbursement process. However, healthcare providers can minimize delays and improve cash flow by understanding its typical causes and implementing proactive measures to prevent them.
Always ensure that patient insurance information is accurate, verify eligibility, use the correct coding, and follow all prior authorization processes. By consistently following the steps outlined above, you can reduce the risk of claim denials and streamline your billing process.
Are You Facing Claim Denials from Insurance Providers?
It can be frustrating and time-consuming, but Medix Revenue Group simplifies outsourcing your billing process with a dedicated team that stays informed about payer contracts, pre-authorization requirements, denial management, and efficient claim processing.
It enables you to focus more on patient care rather than administrative tasks. Don’t let these denials drain your practice’s revenue.
Contact us today to minimize claim denials and maximize revenue collections.