CARC 272 Denial Code | Everything You Need to Know

Are you unable to figure out CARC 272 denials? This blog has got your back as we have covered all the major reasons for insurers to deny claims with that code. We will also explain key strategies that you can implement to avoid those denials.

Also, our specialized denial management services focus on reducing claim denials. Let us help you navigate complex billing issues with our expert denial analysis.

CARC 272 Denial Code Descriptions

CARC 272 is a claim adjustment reason code. CARC is a category of denial codes that explains the reasons for claim denials and adjustments. It also justifies the payment difference between the billed amount and the amount paid.

Insurance companies use CARC 272 to indicate that they denied specific claims because their services did not follow the set coverage guidelines. This means that those claims did not meet the reimbursement criteria outlined by those insurers.

Common Reasons for the CARC 272 Denial Code

There can be various reasons as to why insurance companies deny claims with the CARC 272 code. Let’s take a look at them in detail:

• Service Pre-authorization

Insurance companies often require prior authorizations for medical services before they are performed. In some cases, the healthcare provider may not obtain this authorization. It may also be not valid at the time of service. As a result, insurers are likely to deny such claims.

The procedure code listed on the authorization may also not match the code billed on the claim. This is another discrepancy that can result in a denial. Pre-authorization approvals usually have an expiration date. A claim is also denied if the service is provided after that expiration date.

• Medical Necessity and Documentation

Insurance payers review claims submitted by healthcare providers. This is done to ensure that hospitals only provide medically necessary services to patients. Insurers deny those claims if they deem those services as unnecessary. Claims must be supported with adequate documentation by hospitals.

Those documents can be used to justify the medical necessity of medical services. Claims can also be denied in case of lacking or incomplete documentation. Diagnosis codes must also match the services provided to support their necessity. Incorrect or mismatched diagnosis codes can lead to denials as well.

• Coverage and Benefits

Each insurance plan has specific healthcare procedures it covers. A claim may be denied if it is submitted for a service not included in the patient’s coverage plan. Insurance plans often have limits on the number of times certain services can be provided within a specific period.

Exceeding these limits can also lead to claim denials. Services performed at a location not approved by the insurance plan result in denials as well. These locations are usually called out-of-network facilities. 

• Coding and Billing Errors

Using incorrect or outdated procedure codes on the claim can lead to denial. Accurate coding is essential for proper claim processing. Modifiers are used to provide additional information about the service performed. Incorrect or missing modifiers can also result in claim denials.

Errors in the billing information can cause insurers to deny claims as well. This information usually includes incorrect patient or provider details. Therefore, accurate and complete billing information is critical.

• Multiple Insurances and Non-compliance

Some patients also have multiple insurance plans. For them, coordination of benefits is necessary to determine their primary payer. Errors in this process or discrepancies in provided information can lead to denials.

Insurance plans often have specific guidelines and requirements that have to be followed. Their non-compliance is another major reason for CARC 272 claim denials.

How to Avoid CARC 272 Denial Code?

Healthcare providers can implement various strategies to avoid CARC 272 denials. We have covered the main ones in detail below:

• Understand Payer Guidelines

It is essential to familiarize yourself with the specific coverage guidelines of each insurance payer. You should know which providers are in-network and covered by the insurance plan. Identify which services need pre-authorization and the criteria for obtaining it. Understand what services and procedures are covered under the patient’s plan.

Be aware of the documentation needed to support claims. Ensure that you assign correct codes and follow billing guidelines. Regularly review payer guidelines as well for any changes or updates. Insurance policies and procedures change frequently and staying informed helps maintain compliance.

• Accurate and Complete Documentation

Maintain comprehensive patient records and document all relevant patient history and symptoms. They are important to justify the medical necessity of services. Include results from tests as well to support that necessity.

Clearly outline treatment plans and any changes made. Regularly update progress notes to show ongoing medical necessity. Summarize the patient’s condition and treatment at discharge. The patient’s condition should align with the treatments given to them.

• Obtain Necessary Authorizations

Determine which services require pre-authorization from insurance companies. You should also ensure that you understand their criteria. Submit pre-authorization requests well in advance of the service to avoid delays.

Provide complete and accurate information on the pre-authorization form to prevent issues. If necessary, follow up on the status of their requests. This way, you can ensure if they will be approved before the service is provided.

• Correct Coding and Billing

Use the correct procedure and diagnosis codes for the services provided. This ensures the claims accurately reflects those services. Apply appropriate modifiers when necessary to provide additional information about a service.

Double-check patient information, provider information, and claim details for accuracy. This way, you can prevent simple errors that could lead to denials. Follow payer-specific billing guidelines and requirements as well. This practice ensures that your claims are processed smoothly.

• Timely Claim Submission

Submit claims within the payer’s specified timeframe. This way, you can avoid denials due to late submission. Ensure all required information is included on the claim form. Missing information can lead to delays or denials. If a claim is not paid within a reasonable time, initiate a follow-up process to check on its status and address any issues promptly.

• Verify Eligibility

Verify the patient’s eligibility for coverage before providing any healthcare services. This can be done by contacting the insurance company directly. You can also use an online eligibility verification tool. Ensuring that the patient meets the coverage guidelines can prevent denials related to code 272.

• Conduct Internal Audits

Regularly conduct internal audits to identify potential issues in your revenue cycle management. Audits help in spotting patterns or trends that may lead to denials. Addressing those patterns and trends proactively can prevent future denials.

How Health Quest Billing Helps Prevent Claim Denials?

Health Quest Billing plays a crucial role in preventing claim denials. We utilize a comprehensive approach to medical billing. It starts with accurate data collection of patients. We ensure that all their information, diagnostic codes, and treatment details are valid.

Our billers use advanced software tools that help in identifying any discrepancies or errors. This is done before claims submission to reduce the chances of invalid claims. Additionally, we stay updated with the latest billing regulations and insurance policies.

Our knowledge ensures that our claims are compliant and are less likely to get denied. This is how we actively focus on accuracy and compliance. Health Quest Billing effectively prevents claim denials to ensure a smooth revenue cycle.

These practices not only enhance the financial stability of healthcare providers. It also enables them to focus more on patient care instead of administrative matters.

The Bottom Line

The CARC 272 code indicates that claims are denied as they did not follow the set coverage guidelines. There can be various issues with pre-authorizations, medical necessity, benefits, and other aspects.

You can avoid those issues through internal audits, timely claims submission, and other strategies. Contact Health Quest Billing to ensure that you never have to deal with CARC 272 denials again.