How To Fix Denial Code 78 | Common Reasons, Next Steps & How To Avoid It

Denial Code 78 (CARC) means that a claim has been denied because of non-covered days or a room charge adjustment. Below you can find the description, common reasons for denial code 78, next steps, how to avoid it, and examples.

2. Description

Denial Code 78 is a Claim Adjustment Reason Code (CARC) and is described as ‘Non-Covered days/Room charge adjustment’. This denial code indicates that the insurance company will not make payment for certain days or a portion of the room charge because it is not covered under the patient’s insurance policy. This means that the patient or the healthcare provider will be responsible for the cost of those non-covered days or the adjusted room charge.

2. Common Reasons

The most common reasons for denial code 78 are:

1. Lack of Coverage: Denial code 78 often occurs when the patient’s insurance policy does not provide coverage for certain days or a specific portion of the room charge. This could be due to policy limitations, exclusions, or specific requirements for coverage.
2. Out-of-Network Providers: If the healthcare provider is not in the patient’s insurance network, denial code 78 may be triggered. Insurance plans often have different coverage levels for in-network and out-of-network providers, and non-covered days or room charge adjustments may apply when services are received from out-of-network providers.
3. Pre-Authorization Requirements: Some insurance policies require pre-authorization for certain services or hospital stays. If the necessary pre-authorization was not obtained, denial code 78 may be issued, indicating that the non-covered days or room charge adjustment will not be reimbursed.
4. Policy Limitations: Insurance policies may have specific limitations on the number of covered days for hospital stays or certain types of services. If the patient exceeds these limitations, denial code 78 may be applied to indicate that the additional days or adjusted room charge are not covered.
5. Medical Necessity: Denial code 78 can also be triggered if the insurance company determines that the non-covered days or adjusted room charge were not medically necessary. This could be due to the insurance company’s assessment that the patient’s condition did not require the extended stay or the specific room charge adjustment.

3. Next Steps

You can address denial code 78 as follows:

1. Review Insurance Policy: First, carefully review the patient’s insurance policy to understand the coverage limitations, exclusions, and requirements. Determine if the non-covered days or room charge adjustment fall within these parameters.
2. Communicate with Insurance Company: Contact the insurance company’s provider support to discuss the denial and seek clarification on the specific reasons for the non-coverage. Understand if there are any options for appeal or if there are alternative services or providers that may be covered.
3. Inform the Patient: Engage in open communication with the patient to explain the denial and the reasons behind it. Discuss the financial responsibility for the non-covered days or adjusted room charge and explore potential options for managing the costs.
4. Appeal the Denial: If you believe that the denial was incorrect or unjustified, gather any necessary documentation to support your appeal. This may include medical records, physician notes, or any other relevant information that demonstrates the medical necessity or compliance with policy requirements. Follow the insurance company’s appeal process to challenge the denial.
5. Consider Alternative Solutions: If the denial is upheld, explore alternative solutions with the patient to manage the financial impact. This could include setting up a payment plan, exploring financial assistance programs, or negotiating with the healthcare provider for a reduced payment.

4. How To Avoid It

You can prevent denial code 78 in the future by taking the following steps:

1. Verify Insurance Coverage: Before providing services or admitting a patient to the hospital, verify their insurance coverage and ensure that the specific days or room charges are covered under their policy. If there are any limitations or requirements, obtain the necessary pre-authorization.
2. Stay In-Network: Whenever possible, ensure that the healthcare provider is in-network for the patient’s insurance plan. This can help avoid non-covered days or room charge adjustments that may apply when services are received from out-of-network providers.
3. Understand Policy Limitations: Familiarize yourself with the patient’s insurance policy and any limitations on covered days or specific services. Ensure that the patient’s treatment plan aligns with the policy’s requirements to minimize the risk of denial code 78.
4. Document Medical Necessity: Clearly document the medical necessity for extended hospital stays or specific room charge adjustments. Include detailed notes, test results, and any other relevant information that supports the need for the services provided.

5. Example Cases

Below are two examples of denial code 78:

• Example 1: A patient is admitted to the hospital for a planned surgery. The insurance policy only covers a maximum of three days for this type of surgery, but the patient stays for five days. The insurance company denies the claim for the additional two days, resulting in denial code 78.
• Example 2: A patient receives treatment from an out-of-network specialist during their hospital stay. The insurance policy only covers in-network providers, and as a result, the non-covered portion of the specialist’s charges triggers denial code 78.

Source: Claim Adjustment Reason Codes