How To Fix Denial Code 23 | Common Reasons, Next Steps & How To Avoid It

Denial Code 23 means that the claim has been impacted by prior payer(s) adjudication, including payments and/or adjustments. In this article, we will provide a detailed description of Denial Code 23, common reasons for its occurrence, next steps to resolve it, tips on how to avoid it in the future, and examples of cases involving Denial Code 23.

2. Description

Denial Code 23 is a Claim Adjustment Reason Code (CARC) that indicates the impact of prior payer(s) adjudication on the claim. This means that the claim has been affected by the decisions made by previous insurance providers regarding payments and adjustments. Denial Code 23 is typically used in conjunction with Group Code OA.

2. Common Reasons

The most common reasons for Denial Code 23 are:

1. Incorrect Payment Amount: The prior payer(s) may have made an error in calculating the payment amount for the claim, resulting in an incorrect adjudication. This can lead to Denial Code 23 when the subsequent payer identifies the discrepancy and denies the claim.
2. Non-Covered Services: If the prior payer(s) determined that certain services are not covered under the patient’s insurance plan, Denial Code 23 may be applied to subsequent claims for the same services. This indicates that the claim has been impacted by the prior determination of non-coverage.
3. Contractual Obligations: Denial Code 23 can also be triggered when the prior payer(s) has contractual obligations with the provider that affect the adjudication of the claim. This could include negotiated rates, payment terms, or other contractual arrangements that impact the payment or adjustment of the claim.
4. Coordination of Benefits: In cases where the patient has multiple insurance policies, Denial Code 23 may be used to indicate that the claim has been impacted by the coordination of benefits process. This occurs when the prior payer(s) has already made payments or adjustments based on the coordination of benefits rules, affecting the subsequent claim.

3. Next Steps

To resolve Denial Code 23, follow these next steps:

1. Review Prior Payer(s) Adjudication: Obtain the explanation of benefits (EOB) or remittance advice from the prior payer(s) to understand the specific details of their adjudication. This will help identify the reasons for the impact on the claim and guide the next steps for resolution.
2. Verify Accuracy of Prior Adjudication: Carefully review the prior payer(s) adjudication to ensure that it was accurate and in compliance with the patient’s insurance plan and any contractual agreements. If any discrepancies or errors are identified, contact the prior payer(s) to address the issue and request a correction.
3. Appeal or Resubmit the Claim: If the prior payer(s) adjudication was accurate and the claim was denied or adjusted accordingly, determine if there are grounds for appeal. Follow the appeal process outlined by the subsequent payer to challenge the denial or adjustment. Alternatively, if the claim was denied due to non-covered services, consider resubmitting the claim with additional documentation or justification to support the medical necessity of the services.
4. Communicate with the Patient: Keep the patient informed about the impact of prior payer(s) adjudication on their claim. Explain the reasons for the denial or adjustment and discuss any potential financial responsibilities they may have as a result. This will help manage patient expectations and avoid surprises regarding out-of-pocket costs.
5. Document and Track: Maintain detailed records of all communication, documentation, and actions taken to resolve Denial Code 23. This will be useful for future reference and can support your case during the appeal process, if necessary.

4. How To Avoid It

To avoid Denial Code 23 in the future, consider the following tips:

1. Thoroughly Review Prior Payer(s) Adjudication: Before submitting a claim to a subsequent payer, carefully review the prior payer(s) adjudication to ensure its accuracy and compliance with the patient’s insurance plan. Address any discrepancies or errors with the prior payer(s) before proceeding.
2. Verify Coverage and Contractual Obligations: Understand the patient’s insurance coverage and any contractual obligations between the provider and the prior payer(s). This will help ensure that claims are submitted correctly and in accordance with the terms of the insurance plan and any agreements in place.
3. Coordinate Benefits Effectively: If the patient has multiple insurance policies, ensure that the coordination of benefits process is followed accurately. This includes identifying the primary payer, submitting claims to the correct payer, and providing all necessary information for coordination.
4. Stay Up-to-Date with Insurance Policies: Regularly review and stay informed about changes in insurance policies, including coverage limitations, payment terms, and coordination of benefits rules. This will help you navigate the adjudication process more effectively and avoid potential denials or adjustments.

5. Example Cases

Here are two examples of cases involving Denial Code 23:

• Example 1: A provider submits a claim for a medical procedure that was previously denied by the patient’s primary insurance due to non-coverage. The subsequent payer also denies the claim under Denial Code 23, indicating that the claim has been impacted by the prior determination of non-coverage.
• Example 2: A provider receives a remittance advice from the prior payer(s) indicating that the payment for a claim has been adjusted based on a contractual agreement. The subsequent payer processes the claim and applies Denial Code 23 to indicate that the claim has been impacted by the prior payer(s) adjudication.

Source: Claim Adjustment Reason Codes