Blue Cross Blue Shield (BCBS) may deny healthcare service claims due to an invalid diagnosis code, sometimes citing “wrong 527 diagnosis code invalid.” This alert addresses scenarios where BCBS believes the submitted diagnosis code is incorrect for the service provided, potentially leading to claim rejection and the need for patient refunds.
Providers face refund obligations in situations where they knew, or reasonably should have known, that BCBS would not cover the service due to an incorrect diagnosis code. However, there are exceptions. A refund is not required if the provider was unaware of the non-coverage and could not have reasonably known, or if the patient was informed in writing about the likely denial and agreed to pay. This written notification must be signed by the patient prior to service administration.
If a provider believes the denial based on an invalid diagnosis code is incorrect, they have the right to appeal. An appeal request must be submitted within 30 days of the initial denial notice to potentially delay refund obligations. Submitting an appeal within this timeframe allows providers to withhold refunds until a review decision is reached. A favorable review means no refund is necessary. However, an unfavorable decision necessitates a refund within 15 days of the review outcome.
Providers also retain the right to appeal within 120 days of the denial notice. It’s crucial to note that appeals submitted after the initial 30-day period do not permit a delay in refunding the patient. Regardless of the appeal submission timeline, both the patient and the provider will receive notifications regarding the appeal and its determination. Patients are separately informed of the denial and their potential right to a refund if the provider should have been aware of non-coverage. Patients are advised to contact BCBS if they do not receive refund information within 30 days. Providers are urged to carefully review denial notices related to diagnosis codes and understand their appeal and refund responsibilities.
