Coding Tip: Never-ending Denials

Hospitals are receiving more inpatient denials than ever these days. There seems to be no rhyme or reason for some of the denials, but all must be addressed. There are a couple of things to know before beginning to look at the denial for appeal. What type of denial is it? Most common are coding errors identified by the insurance company or clinical validity denials.

What is a Coding Denial:

Coding denials are sent after the auditor has reviewed the record in question and the auditor does not agree with the DRG that was paid. This can be for either a diagnosis or a procedure code that they think does not meet reporting requirements. This can be due to sequencing of PDX, reporting a PDX that they think is not valid, a SDX reported that they feel is not supported with the documentation provided, or a change in or deletion of a procedure code. Other reasons are also possible, but these are the most common that are seen.

What is a Clinical Validity Denial?

Clinical validity denials are sent when a the physician or clinical validation specialist has reviewed an account and there is a lack of clinical evidence that a reported condition exists. Oftentimes, this is due to the payor using a specific set of criteria for validating the diagnosis in question.


Knowing the type of denial is necessary before responding with an appeal. Both typically fall to coding for review.


Common Reasons for Denials:

  • Missing documentation in sent record
  • Auditor missed seeing documentation that was sent
  • Misunderstanding of coding guidelines by the payor auditor
  • Using only a portion of the record to make a coding determination
  • Queries are missed during review by the payor auditor
  • Payor is using a specific set of criteria for validating a specific diagnosis
  • Missed query opportunities
  • Payor not following the official coding guidelines or newest coding guidance
  • Lack of clinical evidence that a condition exists
  • Incomplete, unclear, or inconsistent documentation of a specific diagnosis

What Can Hospitals do?

If during review of a denial, the coding is correct, then record should be appealed. Look at the record for supporting documentation of the original coding. If there’s even a chance of having this overturned, it is worth the time to write the appeal. HIA reviews denials daily and for the most part they can be appealed. We typically find that there is just something that was missed in the payor review. FIGHT for those MCC’s that have been reported. FIGHT for the correct PDX on the account. FIGHT for the correct procedure code. If the denial is due to a specific set of criteria that the payor is using, and that is not in the official coding guidelines, it is worth the appeal. We see more overturned denials (wins) than losses.


There’s a ton of information out there on statistics for denials. These do vary by payor, facility and state, but the bottom line is most hospitals are not appealing. Here are stats from a variety of researches. Even if they are not for your facility, they are worth looking at:

  • Denial rates are up 23% since 2016 and the numbers keep rising
  • In 2021, over 40% of COVID claims were denied
  • Appeals from facilities have dropped over 10%
  • About 60-80% of denials are overturned or reversed when appealed
  • Each facility can anticipate 6-13% of claims being denied
  • Nearly 65% of denials do not get resubmitted

If there is the slightest possibility of overturning the denial it should be appealed.

Proactive Ways to Reduce Denials and/or Ensure Overturn

  • PROTECT the DRG at the original time of coding a record. Make sure that there is not question on any codes that may be impacting the DRG at the time of finalization
  • QUERY when there is any question on codes that are “driving” the DRG. Nobody like to have to query, but it is a something that coders/CDI must do
  • Take a second look at the common areas of denials…sepsis, respiratory failure, AKI, severe malnutrition and account that have one CC or one MCC. Make sure all are validated in the record and there is NO question regarding any of these. Sometimes a query must be sent to clarify
  • When there is conflicting documentation in the record between providers QUERY for clarification before reporting the code in question. The lack of clarity of these will end in denials
  • If a diagnosis is documented and then dropped in the record then QUERY. Do not assume this was present, treated and gone. It may be that the condition was dropped due to the physician ruling it out without the appropriate documentation of such
  • Make sure there is documentation in the record that a condition is clinically valid. Physician documentation is great, but the record must reflect the severity of the illness that is being reported. There must be clinical evidence that the condition exists other than just the physician documentation. An example would be physician documentation of AKI throughout the record but the patient has no abnormal labs. This should be queried/clarified before reporting since it does not seem to be present. The diagnosis may be from another visit (copy/paste). The physician will need to clarify what clinical evidence is used to make this diagnosis
  • Know the OCG and keep up to date on all the newest coding guidance
  • Know the clinical criteria for reporting the most denied diagnoses
  • ALWAYS respond timely before the deadline

Most often, we do see that a query was sent and this is what we use to appeal the denials.

Coders should review the entire medical record to look for any conflicting documentation and clarify this prior to final coding. Clarification prior to final coding will decrease audit recommendations and denials. Remember, denials are costly to the facility with all the time that is spent trying to appeal.



ICD-10-CM Official Guidelines for Coding and Reporting FY 2022

ICD-10-PCS Official Guidelines for Coding and Reporting FY 2022


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