How To Fix Denial Code 147 | Common Reasons, Next Steps & How To Avoid It

Denial Code 147 means that the provider contracted/negotiated rate has expired or is not on file. Below you can find the description, common reasons for denial code 147, next steps, how to avoid it, and examples.

2. Description

Denial Code 147 is a Claim Adjustment Reason Code (CARC) and is described as ‘Provider contracted/negotiated rate expired or not on file’. This denial code indicates that the insurance company will not make the payment for the billed service because the provider’s contracted or negotiated rate has either expired or is not on file with the insurance company. In simpler terms, the claim is denied because the agreed-upon rate between the provider and the insurance company is no longer valid or has not been properly documented.

2. Common Reasons

The most common reasons for denial code 147 are:

1. Expired Contract: Denial code 147 may occur when the provider’s contract with the insurance company has expired. This can happen if the provider fails to renew their contract in a timely manner or if the insurance company terminates the contract. Without a valid contract in place, the insurance company will not honor the negotiated rate, resulting in a denial.
2. Missing Contract Information: Another reason for denial code 147 is when the provider’s contracted rate is not on file with the insurance company. This can happen if there is a miscommunication or administrative error during the contracting process, leading to the provider’s negotiated rate not being properly documented in the insurance company’s system.
3. Out-of-Network Services: Denial code 147 may also occur when a provider renders services that are out-of-network, meaning they do not have a contract with the patient’s insurance company. In such cases, the insurance company will deny the claim and may only reimburse the patient at the out-of-network rate, which is typically lower than the negotiated rate.
4. Contractual Changes: Changes in the provider’s contract terms, such as modifications to the negotiated rate or changes in the services covered, can also lead to denial code 147. If the provider bills for services that are no longer covered under the updated contract, the claim may be denied.
5. Incorrect Provider Information: Denial code 147 can occur if there are errors or discrepancies in the provider’s information, such as incorrect billing or rendering provider details. These inaccuracies can prevent the insurance company from properly identifying the provider’s contracted rate, resulting in a denial.

3. Next Steps

You can fix denial code 147 as follows:

1. Contract Verification: First, verify the status of the provider’s contract with the insurance company. Ensure that the contract is active and up-to-date. If the contract has expired, contact the insurance company to initiate the renewal process. If the contract is missing from the insurance company’s records, provide them with the necessary documentation to establish the contracted rate.
2. Contract Re-Negotiation: If the provider’s contract has expired or is not on file, work with the insurance company to re-negotiate the terms. This may involve submitting updated fee schedules or other required documentation. Once the contract is re-established, resubmit the denied claim with the correct contracted rate.
3. Out-of-Network Considerations: If the denial is due to the provider rendering out-of-network services, communicate with the patient and insurance company to determine the appropriate course of action. This may involve seeking prior authorization for out-of-network services or discussing alternative in-network providers.
4. Provider Information Review: Review the provider’s information on the claim to ensure accuracy. Double-check the billing and rendering provider details, as well as any other relevant information. If there are any errors or discrepancies, correct them and resubmit the claim with the accurate provider information.
5. Appeal the Denial: If you believe the denial was made in error or due to a misunderstanding, prepare an appeal. Gather any supporting documentation, such as the provider’s contract, communication with the insurance company, or any other relevant information. Clearly explain the reasons why the denial should be overturned and submit the appeal to the insurance company for review.

4. How To Avoid It

You can prevent denial code 147 in the future as follows:

1. Contract Management: Maintain a proactive approach to contract management. Keep track of contract expiration dates and initiate the renewal process in a timely manner. Regularly communicate with the insurance company to ensure that the provider’s contracted rate is accurately documented and up-to-date.
2. Provider Enrollment: Ensure that the provider’s information is correctly entered and updated in the insurance company’s system. This includes accurate billing and rendering provider details, as well as any other required information. Regularly review and update provider information as necessary.
3. Network Participation: Verify the provider’s network participation status with the insurance company before rendering services. Confirm that the provider is in-network for the patient’s insurance plan to avoid out-of-network denials. If the provider is out-of-network, inform the patient of potential out-of-pocket expenses and discuss alternative in-network options.
4. Contractual Changes Communication: Stay informed about any changes in the provider’s contract terms. Regularly review updated fee schedules, coverage policies, or any other contractual modifications. Communicate these changes to the billing and administrative staff to ensure accurate billing and claim submission.

5. Example Cases

Below are two examples of denial code 147:

• Example 1: A provider submits a claim for a service at the negotiated rate of $100. However, the provider’s contract with the insurance company expired, and the claim is denied under code 147. The provider must renew the contract and resubmit the claim with the updated contract information.
• Example 2: In another scenario, a provider renders services to a patient who has out-of-network coverage. The provider bills at the negotiated rate, but the claim is denied under code 147 because the provider does not have a contract with the patient’s insurance company. The provider must communicate with the patient and insurance company to determine the appropriate reimbursement for the out-of-network services.

Source: Claim Adjustment Reason Codes