How To Fix Denial Code 253 | Common Reasons, Next Steps & How To Avoid It

Denial Code 253 means that a claim has been denied due to a reduction in federal payment, known as sequestration. Below you can find the description, common reasons for denial code 253, next steps, how to avoid it, and examples.

2. Description

Denial Code 253 is a Claim Adjustment Reason Code (CARC) that indicates a reduction in federal payment, also known as sequestration. This means that the insurance company will not make the full payment for the billed service due to a mandated reduction in reimbursement rates by the federal government. The reduction in payment is applied to certain healthcare services and is intended to achieve budgetary savings.

2. Common Reasons

The most common reasons for denial code 253 are:

1. Sequestration Mandate: Denial code 253 is triggered when the federal government enforces a reduction in payment rates for specific healthcare services. This reduction is applied uniformly across all claims for the affected services, resulting in denials for the portion of the payment that exceeds the reduced rate.
2. Incorrect Billing: In some cases, denial code 253 may occur due to errors in billing. This could include incorrect coding or billing information that leads to the claim being processed incorrectly and subsequently denied. It is important to ensure accurate and up-to-date billing practices to avoid denials related to sequestration.
3. Lack of Awareness: Providers may be unaware of the sequestration reduction or may not fully understand its impact on reimbursement rates. This can result in claims being submitted without accounting for the reduced payment, leading to denials under code 253.

3. Next Steps

You can address denial code 253 by taking the following steps:

1. Review Sequestration Guidelines: Familiarize yourself with the specific guidelines and regulations related to sequestration. Understand which services are affected and the corresponding reduction in payment rates. This knowledge will help you accurately assess claims and anticipate potential denials under code 253.
2. Verify Billing Accuracy: Double-check all billing information, including service codes, patient identifiers, and dates of service. Ensure that claims are accurately coded and submitted to avoid any errors that could result in denials related to sequestration.
3. Appeal Denied Claims: If a claim is denied under code 253, review the denial reason and determine if it is related to sequestration. If so, consider appealing the denial by providing additional documentation or evidence to support the claim’s validity. This may include proof of the correct payment rate or any other relevant information that can help overturn the denial.
4. Stay Informed: Keep yourself updated on any changes or updates to sequestration regulations. This will help you adapt your billing practices accordingly and ensure that claims are submitted correctly to avoid denials under code 253.

4. How To Avoid It

To prevent denials under code 253 in the future, consider the following strategies:

1. Stay Updated on Regulations: Regularly monitor and stay informed about any changes or updates to sequestration regulations. This will help you anticipate and adapt to any reductions in payment rates, ensuring that claims are submitted correctly and minimizing the risk of denials.
2. Implement Accurate Billing Practices: Train your billing and administrative staff to ensure accurate and up-to-date billing practices. This includes proper coding, documentation, and submission of claims. By maintaining accurate billing practices, you can reduce the likelihood of denials related to sequestration.
3. Monitor Payment Rates: Keep track of the payment rates for services affected by sequestration. Regularly review and update your billing systems to reflect the correct reduced rates. This will help ensure that claims are submitted with the accurate payment information, reducing the risk of denials under code 253.

5. Example Cases

Below are two examples of denial code 253:

• Example 1: A healthcare provider submits a claim for a covered service with a reimbursement rate of $100. However, due to sequestration, the payment rate for that service has been reduced by 2%. As a result, the claim is denied under code 253, and the provider will only receive $98 for the service.
• Example 2: A provider mistakenly bills a service at the pre-sequestration payment rate, resulting in a denial under code 253. The claim should have been submitted with the reduced payment rate, reflecting the sequestration reduction.

Source: Claim Adjustment Reason Codes