How To Fix Denial Code 197 | Common Reasons, Next Steps & How To Avoid It

Denial Code 197 means that a claim has been denied because precertification, authorization, notification, or pre-treatment requirements were not met. Below you can find the description, common reasons for denial code 197, next steps, how to avoid it, and examples.

2. Description

Denial Code 197 is a Claim Adjustment Reason Code (CARC) and is described as ‘Precertification/authorization/notification/pre-treatment absent’. This means that the insurance company will not make the payment for the billed service because the necessary precertification, authorization, notification, or pre-treatment requirements were not fulfilled. In simpler terms, the claim is not payable until the required steps are completed.

2. Common Reasons

The most common reasons for denial code 197 are:

1. Lack of Precertification: Many insurance plans require precertification or pre-authorization for certain services or procedures. If the provider fails to obtain the necessary precertification before performing the service, the claim may be denied under Code 197.
2. Missing Authorization: Some services, especially those that are costly or require special approval, may require authorization from the insurance company. If the provider does not obtain the required authorization before providing the service, the claim may be denied.
3. Failure to Notify: In some cases, the insurance company may require notification before a specific service or treatment is performed. If the provider fails to notify the insurance company as required, the claim may be denied under Code 197.
4. Pre-treatment Requirements: Certain treatments or procedures may have specific pre-treatment requirements, such as consultations or diagnostic tests. If these requirements are not met before the service is provided, the claim may be denied.
5. Incorrect or Incomplete Documentation: Denial code 197 may also occur if the provider fails to submit the necessary documentation or if the documentation is incomplete or inaccurate. Insurance companies often require specific information to be included in the claim, and failure to provide this information can result in denial.

3. Next Steps

You can fix denial code 197 as follows:

1. Review Requirements: First, review the specific requirements for precertification, authorization, notification, or pre-treatment for the service in question. Ensure that you understand what steps need to be taken and what documentation is required.
2. Check Documentation: Review the documentation submitted with the claim to ensure that it is complete, accurate, and includes all the necessary information. If any information is missing or incorrect, make the necessary updates and resubmit the claim.
3. Obtain Retroactive Authorization: If the denial was due to a lack of authorization, contact the insurance company to explain the situation and request retroactive authorization. Provide any additional information or documentation that may be required to support your request.
4. Appeal the Denial: If you believe that the denial was unjustified or if you have fulfilled the necessary requirements but the claim was still denied, you can appeal the denial. Follow the insurance company’s appeal process and provide any supporting documentation or evidence to support your case.
5. Improve Documentation Practices: To avoid future denials under Code 197, ensure that your documentation practices are thorough and accurate. Keep track of all precertification, authorization, notification, or pre-treatment requirements and ensure that they are met before providing the service.

4. How To Avoid It

You can prevent denial code 197 in the future as follows:

1. Understand Insurance Requirements: Familiarize yourself with the precertification, authorization, notification, and pre-treatment requirements of the insurance plans you work with. Ensure that you are aware of any specific steps or documentation that may be required.
2. Educate Staff: Train your staff on the importance of meeting these requirements and provide them with the necessary knowledge and resources to ensure compliance. Make sure they understand the consequences of failing to fulfill the necessary steps.
3. Implement Checklists: Create checklists or workflows that outline the steps to be taken for each service or procedure that requires precertification, authorization, notification, or pre-treatment. This will help ensure that no steps are missed or overlooked.
4. Verify Coverage: Before providing a service, verify the patient’s insurance coverage and check if any specific requirements need to be met. This can help you avoid denials by ensuring that all necessary steps are taken.
5. Improve Communication: Establish clear lines of communication with the insurance company and ensure that you are aware of any updates or changes to their requirements. Regularly communicate with the insurance company to stay informed.

5. Example Cases

Below are two examples of denial code 197:

• Example 1: A provider submits a claim for a specialized surgery that requires prior authorization from the insurance company. However, the provider fails to obtain the necessary authorization before performing the surgery, resulting in denial under Code 197.
• Example 2: A patient undergoes a diagnostic test that requires pre-treatment requirements, such as fasting or specific medications. However, the patient does not fulfill these requirements before the test, leading to denial under Code 197.

Source: Claim Adjustment Reason Codes