What is ANSI code 45?

ANSI code 45, commonly encountered in healthcare billing and claims processing, signifies that the charge submitted for a service exceeds the maximum fee allowed by the payer. This specific adjustment is not simply a repetition of prior payments or reductions, but rather a distinct indication of an overcharge relative to the payer's established fee schedule.

This code typically appears on an Electronic Remittance Advice (ERA) or Explanation of Benefits (EOB) that healthcare providers receive after a claim has been processed. When a provider sees ANSI code 45, it means the payer has reduced the payment for a service because the billed amount was higher than what their contract or policy permits for that specific procedure or service.

Understanding Denial Code 45 in Detail

Payer contracts often stipulate a maximum allowable amount for various medical procedures and services. When a provider bills an amount higher than this agreed-upon maximum, the payer will adjust the payment down to their allowed amount and apply ANSI code 45.

Key characteristics of this denial include:

• Exceeds Maximum Fee: The fundamental reason is that the billed charge surpasses the highest amount the payer is willing to pay for that service.
• Not a Prior Adjustment: This adjustment is a fresh determination of an overcharge, distinct from a re-application of a prior discount or a previous payment posted. It highlights a unique instance where the submitted charge surpassed the allowable limit.
• Impact on Revenue: For healthcare providers, this code directly impacts revenue, as they will receive less than the amount billed. If not managed properly, it can lead to significant lost income.

Common Reasons for ANSI Code 45 Denials

Several factors can lead to a denial with ANSI code 45:

• Incorrect Fee Schedules: The provider's billing system may not have the most current or correct fee schedule for a particular payer, leading to over-billing.
• Out-of-Network Services: Services provided by an out-of-network provider may be subject to different, often lower, allowable amounts compared to in-network rates.
• Coding Discrepancies: While not directly a coding error itself, using an incorrect CPT/HCPCS code or modifier can sometimes indirectly lead to a mismatch with the payer's fee schedule for the intended service, resulting in a payment reduction.
• Lack of Prior Authorization: In some cases, if a service required prior authorization and wasn't obtained, the payer might reduce payment to a "non-authorized" rate, which could be lower than the billed amount.
• Patient Eligibility Changes: Unforeseen changes in a patient's insurance plan or eligibility status might affect the allowable amounts the payer is obligated to cover.

Strategies to Address and Prevent ANSI Code 45

Effectively managing ANSI code 45 denials is crucial for maintaining a healthy revenue cycle and minimizing lost revenue for healthcare providers.

Prevention Strategies:

1. Verify Eligibility and Benefits Thoroughly: Always confirm patient eligibility, specific benefits for planned services, and any applicable co-pays or deductibles before services are rendered.
2. Maintain Updated Fee Schedules: Regularly update your practice management system with the latest payer-specific fee schedules and contractual agreements. This ensures that your billed charges align with agreed-upon rates.
3. Understand Payer Contracts: Ensure your billing team thoroughly understands the terms and conditions of all payer contracts, especially regarding maximum allowable amounts for common services.
4. Obtain Pre-authorizations: Secure pre-authorizations for services that require them to ensure coverage and expected reimbursement levels.
5. Ensure Accurate Coding: Verify that services are coded correctly using appropriate CPT/HCPCS codes and modifiers to reflect the medical necessity and actual work performed, aligning with what the payer expects.

Steps to Resolve Denials:

When you receive an ANSI code 45 denial, follow these steps:

1. Review the ERA/EOB Carefully: Examine the denial explanation and compare the billed amount against the allowed amount on the remittance advice.
2. Compare to Contractual Agreement: Verify the billed amount against your current contractual agreement with the payer for that specific service.
   • If Billed Amount > Contracted Rate: If your billed amount genuinely exceeded the contracted rate, the difference should typically be written off as a contractual adjustment. Do not bill the patient for this difference unless your contract explicitly allows it for specific non-covered services.
   • If Billed Amount <= Contracted Rate (Payer Error): If your billed amount was within or below the contracted rate, there might be a payer processing error. In this scenario, appeal the denial promptly, providing documentation of your contract and the correct allowable amount.
3. Identify Root Cause: Determine why the overcharge occurred. Was it a system error, an outdated fee schedule, a misunderstanding of the contract terms, or a coding mismatch?
4. Educate Staff: Use these denials as valuable learning opportunities to train billing staff on common pitfalls, payer-specific rules, and best practices for charge entry and claim submission.

By proactively managing fee schedules, diligently reviewing denials, and fostering a strong understanding of payer contracts, healthcare providers can significantly minimize the impact of ANSI code 45 and optimize their revenue cycle.