An Introduction to Acute Care Hospital Technical and/or Administrative Denials

Posted on August 5, 2020
By Anthony Kolp and Cindy Betz

A technical or administrative denial occurs in the acute care hospital setting when a facility did not follow or was unable to follow the processes or policies for appropriate payment outlined by the payer. To appeal this type of denial, understanding the payer’s requirements and the facility’s contractual responsibilities is imperative.

Facilities may receive notification of a technical or administrative denial via an explanation of benefits (EOB), remittance advice (RA), or a traditional denial letter depending on the payer. The notification may include limited detail and require follow up with the payer to confirm the specific denial reason.

Technical or Administrative Denial Reasons

Many issues can trigger a technical denial, either at the beginning of a hospital admission or at some point during the hospitalization. Examples of technical or administrative denials include the following:

1. Lack of notification, pre-certification, or authorization of an admission, late notification of an inpatient admission, or failure to provide clinical information within the timeframes set forth by the payer
   1. Inability or failure to communicate with the payer
      1. Facility Causes
         1. Did not recognize transition from outpatient to inpatient
         2. Technical failure (phone lines, fax, or website down)
         3. Facility was unable to obtain accurate insurance coverage information
         4. No insurance coverage listed at the time of admission (self-pay)
         5. Break down in internal policies (lack of communication between departments advising need for inpatient notification, holidays, weekends)
         6. Patient unable to communicate on arrival due to trauma or dementia
      2. Payer Causes
         1. Payer stated that authorization was not required
         2. Payer provided incorrect contact information (Example: fax number)
         3. Technical failure (fax, phone, or website down)
         4. Incorrect number of covered days approved
         5. Provided incorrect date of continued stay review to submit clinical

2. Coordination of Benefits (COB)
   1. Primary versus secondary payer
      1. Patient incorrectly stated a secondary plan was primary
      2. Patient failed to disclose that they had two coverage plans
   2. Ending coverage with one plan and beginning coverage with a new plan
      1. Patient unaware of change in their plan/coverage
      2. New or retroactive Medicare or Medicaid eligibility
   3. Change in coverage affecting availability of in-network facilities or providers
   4. Continuation of lost healthcare benefits via COBRA (Consolidated Omnibus Budget Reconciliation Act)
3. Failure to maintain authorization for continued acute care hospitalization
   1. Incorrect information from the payer (number of covered days, due date of next clinical update)
   2. Internal processes/communication issues
      1. Facility does not have weekend utilization review or notification coverage
      2. Unexpected extended length of stay (discharge planning issues, sudden change in patient status which impacted discharge readiness)
   3. Timely filing/Billing errors
      1. Facility submitted claim past the payer’s timely filing deadline
      2. Incorrect bill type
         1. 0111-inpatient versus 0131-observation
      3. Incorrect demographics

Understanding the specific reason for a technical or administrative denial is critical in the appeal process. By understanding the denial at hand, an effective argument can be formulated to refute and overturn the technical or administrative denial.

Extenuating Circumstances

Often, a technical or administrative denial is a result of an extenuating circumstance. Extenuating circumstances are the reasons why the facility was unable to comply with the processes or policies outlined by the payer. Many payers have specific policy guidelines that list extenuating circumstances they will consider when reviewing a technical or administrative denial on appeal. Remember to refer to the specific plan policy regarding technical or administrative denials as you investigate the cause of the denial. The plan may have a provision to overturn the denial when provided with documentation on appeal that explains the extenuating circumstance.

Be aware that many plans will not review an appeal for a technical or administrative denial without first receiving written notification of the extenuating circumstance. The extenuating circumstance may be addressed in a cover letter, plan specific appeal document, or at the beginning of the appeal. However, some plans will not open the appeal packet until the extenuating circumstance has been identified and accepted as legitimate, so it is best practice to contact the payer and inquire which strategy is preferred prior to submitting an appeal.

Examples of extenuating circumstances include but are not limited to the following:

1. Technical failure resulted in an inability to communicate to the payer
2. Notification/clinical information was due over holiday or weekend when the facility may not perform utilization review
3. Natural disaster such as Covid-19
4. Patient presented for services and was unable to provide correct insurance coverage due to illness, mental status, or language differences at the time of services
5. Admission or services received were court-ordered
6. Retroactive enrollment issues where the member was terminated and then reinstated but the application was not loaded timely

It is important to note that technical or administrative denials are not based on medical necessity. A medical necessity appeal alone will not overturn a technical or administrative denial. Without identification and explanation of an extenuating circumstance, the opportunity for a successful appeal is low.