How To Fix Denial Code 45 | Common Reasons, Next Steps & How To Avoid It

Denial Code 45 means that the charge for a service exceeds the fee schedule or maximum allowable amount set by the insurance company or the contracted/legislated fee arrangement. This denial code is used when the adjustment amount does not match the total service or claim charge amount and should not duplicate any prior payer adjudication adjustments. Denial Code 45 is typically accompanied by Group Codes PR or CO, depending on liability.

2. Description

Denial Code 45 is a Claim Adjustment Reason Code (CARC) that indicates the charge for a service exceeds the fee schedule or maximum allowable amount. This means that the insurance company will not make the full payment for the billed service because it exceeds the predetermined limit. The denial code is used when the adjustment amount does not match the total charge and should not duplicate any prior payer adjudication adjustments.

2. Common Reasons

The most common reasons for denial code 45 are:

1. Fee Schedule Limitations: Denial Code 45 often occurs when the charged amount for a service exceeds the fee schedule or maximum allowable amount set by the insurance company. Providers may unknowingly bill for services at a higher rate than what is allowed, resulting in denials under this code.
2. Contracted/Legislated Fee Arrangement: In cases where providers have a contracted or legislated fee arrangement with the insurance company, Denial Code 45 may be triggered if the billed amount exceeds the agreed-upon fee. This can happen if providers fail to adhere to the fee arrangement or if there is a misunderstanding about the allowable charges.
3. Duplicate Adjustments: Denial Code 45 should not duplicate any prior payer adjudication adjustments. If providers mistakenly include adjustments that have already been accounted for in previous payer adjudications, it can lead to denials under this code.

3. Next Steps

To address Denial Code 45, follow these next steps:

1. Review Fee Schedule: Verify the fee schedule or maximum allowable amount set by the insurance company for the specific service. Ensure that the charged amount does not exceed this limit.
2. Check Contracted/Legislated Fee Arrangement: If you have a contracted or legislated fee arrangement with the insurance company, review the terms and conditions to ensure that the billed amount aligns with the agreed-upon fee. Make any necessary adjustments to avoid denials under Code 45.
3. Audit Adjustments: Double-check the adjustments included in the claim to ensure that they do not duplicate any prior payer adjudication adjustments. Remove any duplicate adjustments to prevent denials under this code.
4. Appeal or Resubmit: If you believe the denial under Code 45 was in error, gather supporting documentation and prepare an appeal or resubmit the claim with corrected information. Provide evidence that the charged amount is within the fee schedule or allowable limits.
5. Communicate with Payers: If there is confusion or disagreement regarding the fee schedule or allowable charges, reach out to the insurance company’s provider support. Discuss the specifics of the claim and seek clarification on how to properly bill for the service.

4. How To Avoid It

To avoid denials under Code 45 in the future, consider the following steps:

1. Understand Fee Schedules: Familiarize yourself with the fee schedules or maximum allowable amounts set by the insurance company for different services. Ensure that your billing aligns with these limits to avoid denials.
2. Review Contracted/Legislated Fee Arrangements: If you have a contracted or legislated fee arrangement, thoroughly understand the terms and conditions. Adhere to the agreed-upon fees when billing for services to prevent denials under Code 45.
3. Implement Auditing Processes: Establish auditing processes to review adjustments included in claims. Regularly check for duplicate adjustments to avoid denials resulting from including adjustments that have already been accounted for.
4. Stay Updated: Keep up-to-date with any changes to fee schedules or allowable charges. Regularly review updates from the insurance company to ensure accurate billing.

5. Example Cases

Here are two examples of Denial Code 45:

• Example 1: A provider submits a claim for a specific procedure with a charged amount of $1,500. However, the fee schedule or maximum allowable amount for that procedure is $1,200. The claim is denied under Code 45 because the charged amount exceeds the allowable limit.
• Example 2: In another scenario, a provider mistakenly includes adjustments in a claim that have already been accounted for in a previous payer adjudication. As a result, the claim is denied under Code 45 for duplicating adjustments.

Source: Claim Adjustment Reason Codes