Denial Code 205 (CARC) means that a claim has been denied due to a pharmacy discount card processing fee. Below you can find the description, common reasons for denial code 205, next steps, how to avoid it, and examples.
2. Description
Denial Code 205 is a Claim Adjustment Reason Code (CARC) and is described as ‘Pharmacy Discount Card Processing Fee’. This denial code indicates that the claim has been denied because the pharmacy discount card processing fee is not covered by the insurance company. In other words, the insurance company will not reimburse the pharmacy for the processing fee associated with the use of a discount card.
2. Common Reasons
The most common reasons for denial code 205 are:
- Non-Covered Service: Insurance plans may have specific exclusions for pharmacy discount card processing fees. If the insurance policy does not cover this fee, the claim will be denied under denial code 205.
- Incorrect Billing: In some cases, the denial may occur due to incorrect billing. This could include billing the pharmacy discount card processing fee under the wrong service code or failing to provide the necessary documentation to support the fee.
- Lack of Prior Authorization: Some insurance plans require prior authorization for certain services or fees. If the pharmacy discount card processing fee was not pre-authorized, the claim may be denied under denial code 205.
- Out-of-Network Pharmacy: If the pharmacy is not in the insurance company’s network, the claim may be denied. This could include pharmacies that do not have a contract with the insurance company or pharmacies that are not part of the discount card program.
- Expired or Invalid Discount Card: If the discount card used by the patient is expired or invalid, the claim may be denied. The insurance company will not cover the pharmacy discount card processing fee if the discount card is not valid.
3. Next Steps
You can address denial code 205 as follows:
- Review Insurance Policy: First, review the patient’s insurance policy to determine if the pharmacy discount card processing fee is covered. If it is not covered, you may need to inform the patient that they will be responsible for paying the fee out-of-pocket.
- Double-Check Billing: Ensure that the pharmacy discount card processing fee is billed correctly. Use the appropriate service code and provide any necessary documentation to support the fee. Double-check for any billing errors that may have led to the denial.
- Prior Authorization: If prior authorization is required for the pharmacy discount card processing fee, work with the insurance company to obtain the necessary authorization. This may involve submitting additional documentation or completing a prior authorization request form.
- Verify Network Status: Confirm that the pharmacy is in-network with the patient’s insurance plan. If the pharmacy is out-of-network, consider referring the patient to an in-network pharmacy or exploring alternative discount card programs that are accepted by the patient’s insurance plan.
- Check Discount Card Validity: Ensure that the discount card used by the patient is valid and not expired. If the card is expired or invalid, inform the patient and explore other options for obtaining medication at a discounted price.
4. How To Avoid It
To avoid denial code 205 in the future, consider the following steps:
- Verify Coverage: Before processing a claim, verify the patient’s insurance coverage and review the policy for any exclusions or limitations related to pharmacy discount card processing fees.
- Accurate Billing: Ensure that the pharmacy discount card processing fee is billed accurately, using the correct service code and providing any necessary documentation to support the fee.
- Prior Authorization: If prior authorization is required, obtain the necessary authorization before processing the claim. This may involve submitting additional documentation or completing a prior authorization request form.
- Network Participation: Ensure that the pharmacy is in-network with the patient’s insurance plan. If the pharmacy is not in-network, consider referring the patient to an in-network pharmacy or exploring alternative discount card programs that are accepted by the patient’s insurance plan.
- Valid Discount Cards: Verify the validity of the discount card used by the patient before processing the claim. If the card is expired or invalid, inform the patient and explore other options for obtaining medication at a discounted price.
5. Example Cases
Below are two examples of denial code 205:
- Example 1: A pharmacy submits a claim for a prescription medication, including a pharmacy discount card processing fee. However, the patient’s insurance policy explicitly excludes coverage for pharmacy discount card processing fees. As a result, the claim is denied under denial code 205.
- Example 2: A pharmacy mistakenly bills the pharmacy discount card processing fee under the wrong service code. The insurance company denies the claim under denial code 205 due to incorrect billing. Upon review and correction of the billing, the claim is resubmitted and processed successfully.
