How To Fix Denial Code 181 | Common Reasons, Next Steps & How To Avoid It

Denial Code 181 means that a claim has been denied because the procedure code used on the date of service was invalid. Below you can find the description, common reasons for denial code 181, next steps, how to avoid it, and examples.

2. Description

Denial Code 181 is a Claim Adjustment Reason Code (CARC) and is described as ‘Procedure code was invalid on the date of service’. This means that the insurance company has denied the claim because the procedure code submitted for reimbursement was not valid for the specific date of service. In simpler terms, the procedure code used on the claim does not match the services provided on that particular day.

2. Common Reasons

The most common reasons for denial code 181 are:

1. Inaccurate Procedure Codes: One of the main reasons for denial code 181 is the submission of incorrect or outdated procedure codes. This can happen if the healthcare provider uses an outdated coding system or if there is a mistake in selecting the appropriate code for the specific service provided on the date of service.
2. Expired Procedure Codes: Procedure codes can become invalid or expire over time. If a healthcare provider uses a procedure code that is no longer recognized or accepted by the insurance company, the claim will be denied under code 181.
3. Unbundling of Services: Denial code 181 can also occur if the healthcare provider unbundles services by submitting separate procedure codes for services that should be billed together as a single code. This can lead to the claim being denied as the insurance company may consider it an invalid use of procedure codes.
4. Incorrect Date of Service: Another reason for denial code 181 is when the date of service on the claim does not match the date on which the procedure was actually performed. This can happen due to clerical errors or misunderstandings between the healthcare provider and the billing department.
5. Non-Covered Services: If the procedure performed is not covered by the patient’s insurance plan, the claim may be denied under code 181. This can happen if the procedure is considered experimental, cosmetic, or not medically necessary according to the insurance policy.

3. Next Steps

You can fix denial code 181 as follows:

1. Review Procedure Codes: First, review the procedure codes submitted on the claim and compare them to the services provided on the date of service. Ensure that the codes accurately reflect the procedures performed and are valid for the specific date.
2. Update Coding System: If the denial was due to the use of outdated procedure codes, update your coding system to ensure that you are using the most current and accepted codes. This can be done by referring to the latest coding manuals or consulting with coding experts.
3. Correct Coding Errors: If the denial was a result of coding errors, such as selecting the wrong code or unbundling services, correct the errors and resubmit the claim with the accurate procedure codes. Double-check the codes to ensure they align with the services provided on the date of service.
4. Verify Date of Service: If the denial was due to an incorrect date of service, verify the actual date on which the procedure was performed and update the claim accordingly. This may involve coordinating with the healthcare provider and reviewing medical records to ensure accuracy.
5. Check Coverage: If the denial was due to the procedure not being covered by the patient’s insurance plan, review the insurance policy to determine if the procedure is indeed excluded. If there is a misunderstanding or if the procedure should be covered, gather supporting documentation and resubmit the claim with an explanation.

4. How To Avoid It

You can prevent denial code 181 in the future as follows:

1. Stay Updated with Coding Changes: Regularly stay updated with changes in coding systems and guidelines to ensure that you are using the most current and accepted procedure codes. This can be done through attending coding workshops, subscribing to coding newsletters, or consulting with coding experts.
2. Double-Check Procedure Codes: Before submitting a claim, double-check that the procedure codes accurately reflect the services provided on the specific date of service. Verify that the codes are valid and appropriate for the procedures performed.
3. Ensure Accurate Date of Service: Pay close attention to the date of service on the claim and ensure that it matches the actual date on which the procedure was performed. This can help avoid denials due to discrepancies between the date of service and the procedure code used.
4. Verify Coverage: Before performing a procedure, verify the patient’s insurance coverage to ensure that the procedure is covered by their plan. This can help prevent denials for non-covered services and save time and effort in the billing process.

5. Example Cases

Below are two examples of denial code 181:

• Example 1: A healthcare provider submits a claim for a procedure using an outdated procedure code that is no longer recognized by the insurance company. The claim is denied under code 181.
• Example 2: A billing department mistakenly enters the wrong date of service on a claim, resulting in a denial under code 181 as the date does not match the procedure performed.

Source: Claim Adjustment Reason Codes