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Industry Insights

Examining Common Denial Reasons for Drug Screenings

By: Dyana Williams, Client Engagement Manager, Lighthouse RCM Solutions

Presumptive drug testing screens for drug presence, while definitive testing identifies specific drugs and concentrations. Both aid in patient care and treatment decisions.

In the world of healthcare, efficient revenue cycle management (RCM) is crucial for laboratories to ensure smooth operations and financial stability. Among the myriad challenges faced by healthcare providers, claim denials remain a persistent issue.

Highlighted by RCM Spotlight, our AI-powered denial management tool, presumptive drug screens are paid approximately 86.3% of the time and definitive drug screens are paid approximately 86.4% of the time. The remaining 15% difference poses consistent hurdles for healthcare providers.

However, laboratories can tap into the capabilities of this tool to proficiently identify and address these top denial reasons.


Top denial reasons by code

  • CARC 16 – “Claim/service lacks information or has submission/billing error(s)”: This denial reason highlights the importance of providing complete and accurate information when submitting claims. Billing errors or missing information can result in claim denials, so it’s crucial to ensure all necessary details are included and the submission process is error-free.


  • CARC 109 – “Claim not covered by this payer/contractor. You must send the claim to the correct payer/contractor”: The takeaway here is the need to correctly identify the appropriate insurance payer or contractor for claims submission. Sending claims to the wrong entity can lead to delays or denials, so it’s essential to verify the correct payer and follow their guidelines.


  • CARC 97 – “The benefit for this service is included in the payment/allowance for another service/procedure that has already been adjudicated”: It’s crucial for healthcare providers to understand bundling rules. This denial reason may provide opportunities to build edits that suppress billing for services that a health plan bundles in the payment for another code.


  • CARC 226 – “Information requested from the Billing/Rendering Provider was not provided or not provided timely or was insufficient/incomplete”: The key message here is that constant vigilance is needed so that information requests can be addressed swiftly. Failure to provide requested information in a timely and complete manner can result in claim denials and delays to cashflow.


  • CARC 50 – “These are non-covered services because this is not deemed a ‘medical necessity’ by the payer”: It’s crucial for labs to understand that insurance providers may only cover services that they deem medically necessary. It’s essential for laboratories to work with their ordering providers to help them understand the importance of ensuring their documentation justifies the medical necessity and level of services being billed by the laboratory. The responsibility of ensuring that the diagnosis and medical documentation supports the level of lab services being billed falls entirely on the shoulders of the laboratory. It isn’t the ordering provider who faces denials and claw-backs when a laboratory bills a service that the payer deems to be experimental or medically unnecessary.


Leveraging AI to improve your RCM

By leveraging RCM Spotlight, laboratories can streamline their revenue cycle management, reduce denial rates, and ultimately enhance financial sustainability. Our proprietary tool’s unique capabilities in claim tracking, work queues, and data analysis position it as a valuable resource to identify and address drug screening denial trends, ultimately enhancing revenue cycle management for laboratories.

Please feel free to reach out to us directly for a free consultation or trial of RCM Spotlight if you have any questions.


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