How To Fix Denial Code 195 | Common Reasons, Next Steps & How To Avoid It

Denial Code 195 means that a refund has been issued to an erroneous priority payer for this claim/service. Below you can find the description, common reasons for denial code 195, next steps, how to avoid it, and examples.

2. Description

Denial Code 195 is a Claim Adjustment Reason Code (CARC) and is described as ‘Refund issued to an erroneous priority payer for this claim/service’. This denial code indicates that a refund has been mistakenly issued to a payer who should not have been the priority payer for the claim or service. It suggests that there was an error in the payment allocation, resulting in the need for a refund to be issued.

2. Common Reasons

The most common reasons for denial code 195 are:

1. Incorrect Priority Payer: Denial code 195 often occurs when the payment is mistakenly allocated to a payer who should not have been the priority payer for the claim or service. This can happen due to administrative errors, such as selecting the wrong payer or entering incorrect payer information.
2. Payment Duplication: Another common reason for denial code 195 is payment duplication. This occurs when the same payment is issued to multiple payers, resulting in an overpayment. The refund is then necessary to correct the error and ensure that the correct payer receives the appropriate payment.
3. System or Data Entry Errors: Denial code 195 can also be triggered by system or data entry errors. These errors can occur during the payment processing or data entry stages, leading to incorrect payment allocation and the subsequent need for a refund.
4. Incorrect Payment Allocation: In some cases, denial code 195 may occur due to incorrect payment allocation. This can happen when the payment is allocated to the wrong claim or service, resulting in the need for a refund to be issued to the correct payer.
5. Coordination of Benefits Issues: Denial code 195 can also be related to coordination of benefits issues. If there are multiple payers involved and there is confusion or miscommunication regarding the priority payer, it can lead to incorrect payment allocation and the need for a refund.

3. Next Steps

You can fix denial code 195 as follows:

1. Review Payment Allocation: First, review the payment allocation to identify any errors or discrepancies. Check if the payment was allocated to the correct payer and if there are any instances of payment duplication.
2. Communicate with Payers: Contact the payers involved to inform them of the error and the need for a refund. Provide them with the necessary details, such as the claim or service in question, the incorrect payment allocation, and any supporting documentation.
3. Process Refund: Once the refund has been approved by the payer, process the refund according to their specific requirements. Ensure that all necessary documentation is included and that the refund is issued promptly.
4. Update Payment Allocation Process: To prevent future occurrences of denial code 195, review and update your payment allocation process. Implement checks and balances to ensure that payments are allocated correctly and that payment duplication is avoided.
5. Train Staff: Provide training to your staff on the correct payment allocation process and the importance of accuracy in data entry. Emphasize the need for attention to detail and the potential consequences of incorrect payment allocation.

4. How To Avoid It

You can prevent denial code 195 in the future as follows:

1. Double-Check Payment Allocation: Before issuing payments, double-check the payment allocation to ensure that it is being allocated to the correct payer. Verify the payer information and confirm that there are no instances of payment duplication.
2. Implement Quality Control Measures: Implement quality control measures to catch any errors or discrepancies in payment allocation. This can include having a second staff member review the payment allocation before it is finalized.
3. Improve Data Entry Accuracy: Improve data entry accuracy by providing training to staff members and implementing data validation processes. This can help reduce the likelihood of system or data entry errors that can lead to incorrect payment allocation.
4. Enhance Coordination of Benefits Process: If coordination of benefits is involved, enhance your coordination of benefits process. Ensure clear communication with all payers involved and establish a reliable system for determining the priority payer.

5. Example Cases

Below are two examples of denial code 195:

• Example 1: A healthcare provider mistakenly allocated a payment to the wrong payer for a claim. As a result, denial code 195 was triggered, and a refund needed to be issued to the correct payer.
• Example 2: Due to a system error, a payment was duplicated and issued to multiple payers for the same claim. Denial code 195 was generated, and refunds were required to correct the overpayment.

Source: Claim Adjustment Reason Codes