Are you tired of constant claim denials and looking for a way out? Well, the first step towards resolving a denial is understanding its root cause. And most healthcare providers face these denials because they are unaware of the payer’s general and contractual policies.
Being unaware of the contractual policies is the exact cause of the CO 256 denial code. Before resolving a denial, it is crucial to identify the primary reasons.
Let us guide you personally through the most common causes, how to avoid them, and how to resolve the denial code CO 256. This guide will help you mitigate operational delays and ensure that your claims are paid as required.
CO 256 Denial Code – Description
The payer may reject your claim with the CO 256 denial code when you bill a service that is not payable according to the terms and conditions defined in the managed care contract. This contract is legally binding between the healthcare provider and the insurance payer.
In simple terms, if the insurance payer has indicated in the contract that it will not cover a particular procedure or service, the healthcare provider cannot bill that service. Consequently, the claim for that specific service will be rejected by the payer with the denial code 256.
What Causes the CO 256 Denial Code?
Healthcare providers must understand the exact reasons behind the CO 256 denial code to reclaim their reimbursements. Let’s explore a few common reasons for this denial code.
Uncovered Services
Every insurance plan has its own defined coverage for certain services. If you, as a biller, submit a claim for a service that is not included in the managed care contract, then the payer will deny your claim with a CO 256 denial code.
These non-covered services may include elective procedures, experimental treatments, or treatments not considered medically necessary by the payer. Therefore, reimbursement will not be released for these uncovered services.
Lack of Prior Authorization
If the conducted care service required a pre-authorization in accordance with the managed care contract, but you failed to obtain it, a CO 256 denial will occur.
Think about a patient who has been diagnosed with a chronic illness. To guarantee the cost-effectiveness and medical necessity of the recommended treatment in such circumstances, several payers require prior authorization. A denial could happen if you omit this step.
Policy Changes
Contracts for managed care and insurance policies frequently undergo unforeseen changes, such as the inclusion or removal of treatments that were previously covered but are now no longer reimbursed. Providers may submit claims for services or procedures that were previously covered but are no longer reimbursed under the new rules and regulations, resulting in a denial code 256.
Therefore, it is crucial for providers to stay informed about contract updates to avoid denials.
Contract Exclusions
Services may still be prohibited via a contract between the provider and the payer, even if the providers are in-network. For example, general office visits are frequently covered by managed care agreements, but some diagnoses and treatments are not.
To ensure that the services they provide are covered under their agreement with the payer, providers must carefully examine these contracts. If this isn’t done, contractually banned services may result in CO 256 denial codes.
How to Prevent CO 256 Denial Code?
What could be more advantageous than avoiding the CO 256 denial code entirely? In light of the intense competition in the healthcare industry, why not talk about some mitigation techniques that can help your practice avoid financial setbacks and aim for success? So, here is how you can prevent denial CO 256.
Verify Patient’s Coverage
The first step is to confirm the exact insurance coverage in the managed care contract before rendering services. Check if the plan covers the procedures you intend to perform. This will help you identify any exclusions or limitations, protecting you from claim denials due to non-covered services or out-of-network limitations.
So, we highly recommend you verify the patient’s coverage and review specific benefits covered under the patient’s plan. This will ensure you receive reimbursements rightfully for the rendered services.
Obtain Pre-Authorization
Some care services, which are usually expensive or are elective procedures, require prior authorization from the insurance payer. Hence, for such services, if you fail to acquire prior approval, you will be denied reimbursement. Thus, getting the payer’s permission before rendering the procedure is one way to minimize the risk of the CO 256 denial code.
Stay Informed
Insurance payers keep updating their payment plans and managed care contracts by adding or removing services from coverage. Hence, if you are not aware of the latest changes to current contracts with payers, you may mistakenly bill uncovered services.
Hence, before billing, you must verify that the specific services are payable under the new contract and policies, as it will help you avoid providing services that will be denied.
How to Resolve Denial Code 256?
Now that we are aware of the reasons behind the CO 256 denial code and preventive measures, we must proceed to its resolution. The following actions can help you deal with this type of denial:
Check the Care Contract
If a claim is sent back with a denial code 256, it means you have billed an uncovered service according to the managed care contract. So, the first step is to carefully re-read the contract, its covered and non-covered services. Carefully examine its terms to see whether the denial was justified. If the service is designated as non-payable, the denial may have been appropriate, but if it is covered under the agreement, there may be grounds to contest the denial.
Obtain Prior Authorization
Confirm that pre-authorization was obtained before providing the service (if it was necessary). If this weren’t the case, denial might still be applicable, but you could try to appeal it by stating why pre-authorization was not obtained and, if necessary, requesting a retroactive evaluation of medical necessity.
Correct and Resubmit the Claim
Rework the claim if there was a mistake in the initial submission (such as improper coding or missing details). Make sure all information is in line with contract terms and patient coverage plans. A revised claim is a faster method of denial resolution compared to an official appeal.
Final Word
Hopefully, the information we have shared in our blog, covering potential causes and some preventative measures, will assist you in resolving the CO 256 denial code. However, consider opting for expert denial management services if you are unable to keep your denial rate to a safe limit. Outsourcing your billing process will give you access to a dedicated team that stays informed on payer contracts and pre-authorization requirements, allowing you to focus more on patient care than administration.
