How To Fix Denial Code 27 | Common Reasons, Next Steps & How To Avoid It

Denial Code 27 means that expenses have been incurred after coverage has been terminated. Below you can find the description, common reasons for denial code 27, next steps, how to avoid it, and examples.

2. Description

Denial Code 27 is a Claim Adjustment Reason Code (CARC) and is described as ‘Expenses incurred after coverage terminated’. This denial code indicates that the insurance company will not make payment for the billed services because the coverage for the patient has ended. In simpler terms, the claim is not payable because the patient’s insurance policy is no longer in effect.

2. Common Reasons

The most common reasons for denial code 27 are:

1. Lapsed Coverage: Denial code 27 often occurs when a patient’s insurance coverage has expired or been terminated. This can happen due to non-payment of premiums, policy cancellation, or reaching the end of the coverage period without renewal.
2. Incorrect Termination Date: Sometimes, the insurance company may have incorrect information regarding the termination date of the patient’s coverage. This can lead to denials if claims are submitted for services rendered after the actual termination date.
3. Delayed Notification: If the patient or the healthcare provider fails to promptly notify the insurance company about the termination of coverage, claims submitted after the termination date may be denied under code 27.
4. Policy Exclusions: Certain insurance policies may have specific exclusions that result in denial code 27. For example, if the policy does not cover certain types of services or treatments, claims for those services will be denied.
5. Non-Renewal of Policy: If the patient’s insurance policy is not renewed or if they fail to enroll in a new policy after the previous one expires, any claims submitted after the expiration date will be denied under code 27.

3. Next Steps

You can address denial code 27 as follows:

1. Verify Coverage Status: First, confirm the patient’s current coverage status with the insurance company. Ensure that the policy has indeed been terminated and that the denial under code 27 is accurate.
2. Review Termination Date: Check the termination date provided by the insurance company against the dates of service for the claim in question. If there is a discrepancy, gather any supporting documentation to prove that the services were rendered before the termination date.
3. Appeal the Denial: If you believe the denial under code 27 is incorrect, prepare an appeal letter outlining the reasons why the claim should be reconsidered. Include any relevant documentation, such as proof of timely notification of coverage termination or evidence that the services were rendered before the termination date.
4. Explore Alternate Coverage: If the patient’s insurance coverage has indeed been terminated, assist them in exploring alternative coverage options. This could involve helping them enroll in a new insurance plan or providing information about government-sponsored healthcare programs.
5. Offer Self-Pay Options: If the patient does not have insurance coverage, discuss self-pay options and establish a payment plan that works for both parties. This ensures that the patient can still receive the necessary healthcare services while managing their financial responsibilities.

4. How To Avoid It

You can prevent denial code 27 in the future by taking the following steps:

1. Stay Informed: Keep track of the patient’s insurance coverage status and any changes to their policy. Regularly communicate with the patient to ensure that they provide updated insurance information and notify you promptly of any changes or terminations.
2. Verify Coverage: Before providing any services, verify the patient’s insurance coverage to ensure that it is active and will cover the specific services being rendered. This can help avoid denials under code 27 due to terminated coverage.
3. Review Policy Exclusions: Familiarize yourself with the patient’s insurance policy and any exclusions or limitations it may have. This will help you determine if certain services will not be covered and allow you to inform the patient in advance.
4. Encourage Prompt Notification: Educate patients about the importance of promptly notifying both you and their insurance company of any changes to their coverage, including terminations. This will help ensure that claims are not submitted after coverage has ended.

5. Example Cases

Below are two examples of denial code 27:

• Example 1: A patient’s insurance coverage ends on December 31st, and they receive medical services on January 15th. The claim for these services will be denied under code 27 since they were incurred after the coverage termination date.
• Example 2: A patient fails to renew their insurance policy after it expires, and they continue to receive medical services. Any claims submitted after the expiration date will be denied under code 27 due to the termination of coverage.

Source: Claim Adjustment Reason Codes