By Ken Bradley
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As your practice adjusts to using the newly implemented 5010 electronic transaction standards, it’s important to be aware of an important change to the claims status codes on your payers’ remit transactions. While subtle, this change can impact how your practice monitors and responds to denials.
First, some background: There are ten claims status codes used on payers’ remit transactions that explain how a payer has processed a particular claim. As a result of 5010, the definition of the code value “4” has changed.
What’s changed: Under version 4010 of the electronic transaction standards, payers could use status code “4” to indicate a claim was denied for any reason. This particular status code didn’t have a standardized definition, so when a payer didn’t make payment on a claim for any number of reasons it could indicate the fact with status code “4.”
With 5010, however, status code “4” has a clear definition. Payers can use this code now only when the subscriber or patient on the claim is not known to them. In other words, payers now can use this code only if they’ve denied a claim because the subscriber or patient is ineligible.
What this means to you: If your practice tracks denials by running reports associated with claims status code “4,” you may see dramatic decline. That may lead you to falsely assume your denials are going down. In actuality, the code no longer represents a complete denial rate since it only includes those patients considered unknown to the payer. In fact, although the new definition of code “4” no longer adequately reveals denial trends, it can show whether your practice has an eligibility verification issue. Since code “4” effectively quantifies claims where the patient is unfamiliar to the payer, practices may want to use this change to trigger an examination of the eligibility verification process.
Meanwhile, to avoid any confusion when tracking your denial rates, make sure you monitor denials by looking at payment amounts so you get a true picture of their number—and the reasons behind them.
