How To Fix Denial Code 306 | Common Reasons, Next Steps & How To Avoid It

Denial Code 306 means that the type of bill submitted is inconsistent with the patient’s status. This denial code indicates that there is a discrepancy between the type of service billed and the patient’s current status, as recorded in the 835 Healthcare Policy Identification Segment. In this article, we will explore the common reasons for denial code 306, the next steps to take when faced with this denial, how to avoid it in the future, and provide examples to illustrate its application.

2. Description

Denial Code 306 is a specific type of denial that occurs when the type of bill submitted does not align with the patient’s status. This denial code is often triggered by inconsistencies found in the 835 Healthcare Policy Identification Segment, which provides information about the patient’s current status and the services being billed. When the type of bill and patient status do not match, the claim is denied under code 306.

2. Common Reasons

There are several common reasons why denial code 306 may occur:

1. Incorrect Type of Bill: One of the most common reasons for denial code 306 is submitting the wrong type of bill for the services provided. This could be due to human error or a misunderstanding of the correct type of bill to use based on the patient’s status. It is essential to ensure that the type of bill accurately reflects the services rendered and the patient’s current status.
2. Inconsistent Patient Status: Denial code 306 may also occur if there is an inconsistency in the patient’s status as recorded in the 835 Healthcare Policy Identification Segment. This could be a result of outdated or incorrect information being used to determine the patient’s eligibility for the billed services. It is crucial to regularly update and verify patient information to avoid this type of denial.
3. Lack of Documentation: Insufficient or incomplete documentation can also lead to denial code 306. If the necessary documentation to support the type of bill and patient status is not provided, the claim may be denied. It is essential to ensure that all required documentation is included with the claim submission to avoid this denial.
4. System or Technical Errors: Sometimes, denial code 306 may occur due to system or technical errors. This could be a result of issues with the billing software or electronic data interchange (EDI) system used to submit claims. It is important to regularly monitor and troubleshoot any technical issues to minimize the occurrence of this denial code.

3. Next Steps

If you receive a denial with code 306, here are the next steps to take:

1. Review the Claim: Start by reviewing the claim and the information submitted. Check for any discrepancies between the type of bill and the patient’s status as recorded in the 835 Healthcare Policy Identification Segment.
2. Verify Patient Status: Verify the patient’s current status and eligibility for the billed services. Ensure that the information in the 835 segment is accurate and up to date. If there are any inconsistencies, reach out to the patient or their representative to gather the correct information.
3. Correct and Resubmit: If the denial was a result of an incorrect type of bill or an inconsistency in patient status, make the necessary corrections and resubmit the claim. Ensure that all required documentation is included to support the type of bill and patient status.
4. Communicate with Payers: If the denial persists or there are ongoing issues with denial code 306, it may be necessary to communicate with the payer directly. Reach out to the payer’s provider support to discuss the specific denial and seek clarification or resolution.
5. Monitor and Adjust: Monitor future claims to ensure that the correct type of bill is used and that patient status is accurately recorded. Make any necessary adjustments to billing processes or systems to prevent future denials under code 306.

4. How To Avoid It

To avoid denial code 306 in the future, consider the following steps:

1. Understand Billing Requirements: Familiarize yourself with the specific billing requirements for different types of services and patient statuses. Ensure that you are using the correct type of bill based on the services provided and the patient’s current status.
2. Regularly Update Patient Information: Keep patient information up to date and verify eligibility before submitting claims. Regularly review and update the 835 Healthcare Policy Identification Segment to ensure accurate patient status information.
3. Provide Complete Documentation: Include all necessary documentation to support the type of bill and patient status. Ensure that all required information is included with the claim submission to avoid any potential denials.
4. Monitor Technical Systems: Regularly monitor and maintain your billing software and EDI systems to minimize the occurrence of system or technical errors. Address any issues promptly to prevent denials under code 306.

5. Example Cases

Here are two examples illustrating denial code 306:

• Example 1: A healthcare provider submits a claim using a type of bill intended for inpatient services, but the patient’s status recorded in the 835 segment indicates outpatient status. The claim is denied under code 306 due to the inconsistency between the type of bill and patient status.
• Example 2: A provider submits a claim using the correct type of bill for outpatient services, but the patient’s status recorded in the 835 segment indicates that they are no longer eligible for outpatient care. The claim is denied under code 306 because the type of bill does not align with the patient’s current status.

Denial code 306 can be resolved by carefully reviewing and verifying the type of bill and patient status, ensuring accurate documentation, and addressing any technical issues. By following the appropriate steps and taking preventive measures, healthcare providers can minimize denials under code 306 and ensure timely reimbursement for their services.

Source: Claim Adjustment Reason Codes