How To Fix Denial Code 56 | Common Reasons, Next Steps & How To Avoid It

Denial Code 56 means that a procedure or treatment has not been deemed ‘proven to be effective’ by the payer. This denial code indicates that the insurance company will not make payment for the billed service because it is not considered medically necessary or supported by evidence of effectiveness. In this article, we will explore the description of denial code 56, common reasons for its occurrence, next steps to address the denial, how to avoid it in the future, and provide examples to illustrate its application.

2. Description

Denial Code 56 is a Claim Adjustment Reason Code (CARC) that signifies that the procedure or treatment billed has not been recognized as proven to be effective by the payer. This means that the insurance company does not consider the service medically necessary or supported by sufficient evidence of its effectiveness. As a result, the claim is denied, and the provider is not reimbursed for the service rendered.

2. Common Reasons

The most common reasons for denial code 56 are:

1. Lack of Medical Necessity: Denial code 56 often occurs when the insurance company determines that the procedure or treatment is not medically necessary for the patient’s condition. This could be due to a lack of supporting documentation or evidence demonstrating the effectiveness of the service in treating the specific condition.
2. Insufficient Evidence of Effectiveness: Payers may require scientific evidence, such as clinical trials or peer-reviewed studies, to support the effectiveness of certain procedures or treatments. If the provider fails to provide this evidence or if the available evidence is deemed insufficient, the claim may be denied under code 56.
3. Non-Covered Services: Some insurance plans have specific exclusions for certain procedures or treatments. If the service falls under a non-covered category, the claim will be denied under denial code 56.
4. Policy Limitations: Insurance policies may have limitations on the coverage of certain procedures or treatments. If the service exceeds the policy’s coverage limits, the claim may be denied under code 56.
5. Incorrect Coding: Inaccurate coding or billing information can also lead to denial code 56. If the procedure or treatment is not coded correctly or if the documentation does not support the code used, the claim may be denied.

3. Next Steps

If you receive denial code 56, here are the next steps to address the denial:

1. Review Documentation: Carefully review the documentation submitted with the claim to ensure that it supports the medical necessity and effectiveness of the procedure or treatment. If any additional supporting documentation is available, gather it for further review.
2. Appeal the Denial: Prepare a strong appeal letter that includes a detailed explanation of why the procedure or treatment is medically necessary and supported by evidence of effectiveness. Include any additional documentation or studies that support your case. Submit the appeal to the insurance company within the specified timeframe.
3. Engage in Peer-to-Peer Review: If the appeal is denied, request a peer-to-peer review with a medical professional from the insurance company. This allows you to present your case directly to a healthcare provider who can evaluate the medical necessity and effectiveness of the service.
4. Seek Expert Opinion: If necessary, consult with medical experts or specialists who can provide their professional opinion on the medical necessity and effectiveness of the procedure or treatment. Their expertise can strengthen your case during the appeal process.
5. Consider Alternative Options: If the denial is upheld and the procedure or treatment is not deemed medically necessary or effective, explore alternative options for the patient’s care. Discuss alternative treatments or procedures with the patient and their healthcare team.

4. How To Avoid It

To avoid denial code 56 in the future, consider the following strategies:

1. Thoroughly Document Medical Necessity: Ensure that all documentation clearly supports the medical necessity of the procedure or treatment. Include detailed notes on the patient’s condition, symptoms, and why the service is necessary for their care.
2. Stay Up-to-Date with Evidence-Based Practices: Keep abreast of the latest research and evidence-based practices in your field. Stay informed about studies and clinical trials that support the effectiveness of different procedures or treatments.
3. Verify Coverage and Policy Limitations: Before providing a service, verify the patient’s insurance coverage and policy limitations. Ensure that the procedure or treatment is covered and does not exceed any policy limits.
4. Accurate Coding and Billing: Use accurate and specific codes when submitting claims. Ensure that the documentation supports the codes used and that they accurately reflect the procedure or treatment provided.
5. Communicate with Payers: Establish open lines of communication with insurance companies. Seek clarification on coverage policies and requirements for specific procedures or treatments to avoid potential denials.

5. Example Cases

Here are two examples of denial code 56:

• Example 1: A provider submits a claim for an experimental treatment that has not yet been proven effective for the patient’s condition. The insurance company denies the claim under code 56, stating that the treatment is not supported by sufficient evidence of effectiveness.
• Example 2: A provider bills for a procedure that is excluded from coverage under the patient’s insurance policy. The claim is denied under code 56 due to the service being classified as a non-covered service.

Source: Claim Adjustment Reason Codes