Denial Code 102 (CARC) means that a claim has been denied due to a major medical adjustment. Below you can find the description, common reasons for denial code 102, next steps, how to avoid it, and examples.
2. Description
Denial Code 102 is a Claim Adjustment Reason Code (CARC) and is described as ‘Major Medical Adjustment’. This code indicates that the insurance company has made a significant adjustment to the claim, resulting in denial of payment. It typically signifies that the billed service is not covered under the patient’s major medical policy.
2. Common Reasons
The most common reasons for denial code 102 are:
- Service Not Covered: Denial code 102 often occurs when the service or procedure being billed is not included in the patient’s major medical policy. This could be due to policy exclusions, limitations, or specific criteria that must be met for coverage.
- Out-of-Network Provider: If the healthcare provider is not contracted with the patient’s insurance company or is considered out-of-network, denial code 102 may be applied. Major medical policies typically have specific networks of providers, and services rendered by non-network providers may not be covered.
- Preauthorization Requirement: Some major medical policies require preauthorization for certain services or procedures. If the provider fails to obtain the necessary preauthorization, the claim may be denied under code 102.
- Medical Necessity: Denial code 102 can also be triggered if the insurance company determines that the service or procedure billed is not medically necessary. This means that the insurer believes the treatment could have been avoided or that a less expensive alternative was available.
- Policy Exclusions: Major medical policies often have specific exclusions for certain treatments, procedures, or conditions. If the billed service falls within these exclusions, denial code 102 may be applied.
3. Next Steps
You can address denial code 102 as follows:
- Review Policy Coverage: First, carefully review the patient’s major medical policy to determine if the denied service is indeed not covered. Check for any exclusions, limitations, or requirements for preauthorization.
- Appeal the Denial: If you believe the denial was made in error or if you have additional information to support the medical necessity of the service, consider filing an appeal. Follow the insurance company’s appeal process and provide any necessary documentation, such as medical records or expert opinions, to support your case.
- Consider Alternative Options: If the denied service is not covered under the patient’s major medical policy, explore alternative options. This could involve discussing alternative treatments or procedures with the patient, considering self-pay options, or exploring other insurance coverage the patient may have.
- Communicate with the Patient: Engage in open and transparent communication with the patient regarding the denial and the available options. Discuss any potential out-of-pocket costs and help the patient make informed decisions about their healthcare.
- Update Billing Practices: To avoid future denials under code 102, ensure that your billing practices align with the patient’s major medical policy. Verify coverage, obtain necessary preauthorizations, and stay updated on any policy changes or exclusions.
4. How To Avoid It
You can prevent denial code 102 in the future by taking the following steps:
- Verify Coverage: Before providing any services, verify the patient’s major medical coverage. Confirm that the service or procedure is covered under their policy and check for any specific requirements, such as preauthorization.
- Stay In-Network: Whenever possible, ensure that you are a contracted provider with the patient’s insurance company. Being in-network reduces the likelihood of denials under code 102 due to out-of-network provider status.
- Obtain Preauthorization: If the patient’s major medical policy requires preauthorization for certain services, make sure to obtain the necessary approval before providing the service. Failure to do so may result in denial under code 102.
- Document Medical Necessity: When billing for services, ensure that the medical necessity is clearly documented in the patient’s medical records. This includes explaining why the service or procedure was necessary and why alternatives were not suitable.
- Stay Informed: Regularly review and stay updated on the patient’s major medical policy. Be aware of any changes, exclusions, or limitations that may impact coverage for specific services or procedures.
5. Example Cases
Below are two examples of denial code 102:
- Example 1: A patient undergoes an elective cosmetic procedure that is not covered under their major medical policy. The claim is denied under code 102, indicating that the service is not eligible for reimbursement.
- Example 2: A provider fails to obtain preauthorization for a specialized diagnostic test required by the patient’s major medical policy. The claim is subsequently denied under code 102.
