What is Administrative Denial?

Administrative denial refers to refusing an insurance claim based on administrative or procedural issues rather than the medical necessity or appropriateness of the service provided. These denials occur due to errors or non-compliance with the insurance company's guidelines and requirements.

Common reasons for administrative denials include:

• Lack of necessary information, such as patient details, diagnosis codes, or procedure codes.
• Missing prior authorization or referral.
• Late submission of claims.
• Incorrect or mismatched medical codes

Difference between Administrative Denial and Medical Necessity Denial

An administrative denial occurs when an insurance claim is rejected due to procedural or documentation issues, such as incomplete forms, missing preauthorizations, coding errors, or failure to meet timely filing deadlines. These denials are not related to the appropriateness or necessity of the medical service provided.

In contrast, a medical necessity denial happens when an insurance claim is denied because the payers determine that the service or procedure was not medically necessary based on their criteria and guidelines. This type of denial is based on clinical judgment and the insurer's policies regarding what constitutes essential and appropriate care for the patient's condition.

Administrative denial examples

1) Incomplete Claim Submission:

Suppose a hospital submits a claim for a patient's surgery but fails to include the patient's complete insurance information or the necessary surgery documentation. The insurance company denies the claim due to missing details. Here, the reason for denial is incomplete or incorrect documentation.

2) Eligibility Issues:

For instance, a patient receives treatment, but their insurance coverage has expired at the time of service. The clinic submitted the claim but was denied because the patient was not covered under the insurance plan on the service date. Here, the reason for denial can be eligibility issues.

3) Coding Errors:

A physician's office submits a claim using an incorrect CPT code for a procedure. The insurance company denies the claim due to the coding error, as the code does not match the provided service. Here, the reason for denial would be mismatched or incorrect medical codes.