How To Fix Denial Code P3 | Common Reasons, Next Steps & How To Avoid It

Denial Code P3 means that the workers’ compensation case has been settled, and the patient is responsible for the amount of the claim or service through a workers’ compensation ‘Medicare set aside arrangement’ or other agreement. This denial code is specific to Workers’ Compensation cases and should only be used with Group Code PR. Below you can find the description, common reasons for denial code P3, next steps, how to avoid it, and examples.

2. Description

Denial Code P3 is a specific denial code related to Workers’ Compensation cases. It indicates that the case has been settled, and the patient is responsible for the amount of the claim or service through a workers’ compensation ‘Medicare set aside arrangement’ or other agreement. This code should only be used when dealing with Workers’ Compensation claims and should be accompanied by Group Code PR.

2. Common Reasons

The most common reasons for denial code P3 are:

1. Workers’ Compensation Settlement: Denial code P3 is triggered when a workers’ compensation case has been settled, and the patient is responsible for the payment of the claim or service. This can occur when the settlement includes a ‘Medicare set aside arrangement’ or another agreement that designates the patient’s responsibility for the costs.
2. Incorrect Billing: Denial code P3 may also occur if the claim is incorrectly billed as a workers’ compensation claim when it should be billed under a different insurance or payment arrangement. It is important to ensure that the correct billing information is used to avoid this denial code.
3. Lack of Documentation: In some cases, denial code P3 may be triggered due to a lack of proper documentation or evidence of the workers’ compensation settlement or agreement. It is crucial to maintain accurate and up-to-date records to support the billing and payment arrangements.

3. Next Steps

You can address denial code P3 by following these steps:

1. Review Workers’ Compensation Settlement: Verify the details of the workers’ compensation settlement or agreement. Ensure that the patient is indeed responsible for the payment of the claim or service through the designated arrangement.
2. Confirm Billing Accuracy: Double-check the billing information to ensure that the claim is correctly categorized as a workers’ compensation claim and that the appropriate Group Code PR is used. Any errors in the billing information can result in the denial of the claim.
3. Gather Supporting Documentation: Collect all necessary documentation and evidence of the workers’ compensation settlement or agreement. This may include copies of the settlement documents, correspondence, or any other relevant records that demonstrate the patient’s responsibility for the claim or service.
4. Resubmit Claim with Documentation: If the denial was due to a lack of documentation, prepare a comprehensive package of supporting materials and resubmit the claim. Include a cover letter explaining the situation and providing the necessary evidence to support the claim’s validity.
5. Contact Insurance or Workers’ Compensation Provider: If there is any confusion or disagreement regarding the workers’ compensation settlement or agreement, reach out to the insurance company or workers’ compensation provider. Discuss the specifics of the claim and the denial, and seek clarification or resolution from their end.
6. Update Billing Practices: Based on the outcome of the denial, consider updating your billing practices to ensure accurate categorization and submission of workers’ compensation claims. Train your staff on the proper procedures and documentation requirements to avoid future denials.

4. How To Avoid It

To prevent denial code P3 in the future, consider the following steps:

1. Verify Workers’ Compensation Status: Before submitting a claim, verify the workers’ compensation status of the patient. Ensure that the case has been settled and that the patient is responsible for the payment of the claim or service through the designated arrangement.
2. Accurate Billing Information: Pay close attention to the billing information and ensure that the claim is correctly categorized as a workers’ compensation claim. Use the appropriate Group Code PR to indicate the specific denial reason.
3. Maintain Documentation: Keep thorough and up-to-date documentation of workers’ compensation settlements or agreements. This includes copies of settlement documents, correspondence, and any other relevant records that support the patient’s responsibility for the claim or service.
4. Regular Audits: Conduct regular audits of your billing processes to identify any potential errors or discrepancies. This can help catch any issues related to workers’ compensation claims and ensure accurate billing.

5. Example Cases

Below are two examples of denial code P3:

• Example 1: A healthcare provider submits a claim for a medical procedure under a workers’ compensation case. However, the claim is denied under denial code P3 because the case has been settled, and the patient is responsible for the payment through a ‘Medicare set aside arrangement’.
• Example 2: In another scenario, a provider mistakenly bills a claim as a workers’ compensation claim when it should have been billed under a different payment arrangement. As a result, the claim is denied under denial code P3.

Source: Claim Adjustment Reason Codes