How To Fix Denial Code 94 | Common Reasons, Next Steps & How To Avoid It

Denial Code 94 means that a claim has been processed in excess of charges. Below you can find the description, common reasons for denial code 94, next steps, how to avoid it, and examples.

2. Description

Denial Code 94 is a Claim Adjustment Reason Code (CARC) and is described as ‘Processed in Excess of charges’. This denial code indicates that the claim has been processed for payment, but the amount billed exceeds the allowable charges set by the insurance company. In simpler terms, the insurance company has determined that the billed amount is higher than what they consider to be a reasonable charge for the service.

2. Common Reasons

The most common reasons for denial code 94 are:

1. Billing Errors: Denial code 94 often occurs when there are billing errors, such as incorrect coding or incorrect charges entered for the services rendered. These errors can result in the billed amount exceeding the allowable charges set by the insurance company.
2. Unreasonable Charges: Sometimes, denial code 94 is triggered when the provider’s charges for the services rendered are deemed to be unreasonably high by the insurance company. This can happen if the provider’s charges are significantly higher than the average charges for similar services in the same geographic area.
3. Lack of Prior Authorization: In some cases, denial code 94 may be issued if the services rendered require prior authorization from the insurance company, but the provider failed to obtain the necessary authorization before providing the services. Without prior authorization, the insurance company may consider the charges to be excessive and deny the claim.
4. Out-of-Network Providers: If the provider is out-of-network and does not have a negotiated contract with the insurance company, denial code 94 may be used to indicate that the charges exceed the allowable amount for out-of-network services.

3. Next Steps

You can fix denial code 94 as follows:

1. Review the Claim: Carefully review the claim to identify any billing errors or discrepancies that may have led to the excessive charges. Check for coding errors, incorrect charges, or any missing information that could have contributed to the denial.
2. Correct Billing Errors: If billing errors are identified, correct them promptly. Make sure that the coding is accurate, the charges are entered correctly, and all necessary information is included in the claim. Double-check the claim before resubmitting it to ensure that the billed amount does not exceed the allowable charges.
3. Appeal the Denial: If you believe that the charges are reasonable and justified, you can appeal the denial. Gather any supporting documentation, such as medical records or fee schedules, to demonstrate that the charges are in line with industry standards or that the services provided were medically necessary. Follow the insurance company’s appeal process and provide a clear and concise explanation of why the denial should be overturned.
4. Negotiate with the Insurance Company: If the charges are deemed to be unreasonably high, you may need to negotiate with the insurance company. Contact the insurance company’s provider relations department and discuss the charges, providing any necessary documentation to support your case. Negotiating a reasonable reimbursement rate can help avoid future denials for excessive charges.
5. Implement Prior Authorization Processes: If the denial was due to a lack of prior authorization, establish a robust prior authorization process within your practice. Ensure that all necessary authorizations are obtained before providing services to patients. This will help prevent denials for excessive charges in the future.

4. How To Avoid It

You can prevent denial code 94 in the future by following these steps:

1. Verify Insurance Coverage: Before providing services, verify the patient’s insurance coverage and determine if the services require prior authorization. Make sure that the patient’s insurance is active and that you are an in-network provider if applicable.
2. Check Fee Schedules: Familiarize yourself with the insurance company’s fee schedules and reimbursement rates. Ensure that your charges are in line with the allowable amounts set by the insurance company. If your charges are significantly higher, consider adjusting them to avoid denials for excessive charges.
3. Obtain Prior Authorization: If the services require prior authorization, make sure to obtain it before providing the services. Follow the insurance company’s guidelines and submit all necessary documentation to support the request for authorization.
4. Stay In-Network: If you are an out-of-network provider, consider joining the insurance company’s network to ensure that your charges are within the allowable amounts. Negotiating a contract with the insurance company can help avoid denials for excessive charges.
5. Regularly Review and Update Billing Practices: Regularly review your billing practices to ensure accuracy and compliance with insurance company guidelines. Stay up-to-date with coding changes and billing regulations to avoid errors that could lead to denials for excessive charges.

5. Example Cases

Below are two examples of denial code 94:

• Example 1: A provider submits a claim for a simple office visit with a charge of $500. However, the insurance company’s fee schedule for that particular service in the provider’s geographic area sets the allowable charge at $200. The claim is denied under denial code 94 because the billed amount exceeds the allowable charges.
• Example 2: A provider performs a surgical procedure that requires prior authorization from the insurance company. However, the provider fails to obtain the necessary authorization before performing the procedure. The claim is subsequently denied under denial code 94 because the charges are considered excessive without prior authorization.

Source: Claim Adjustment Reason Codes