256Denial Code (CARC)Active
CO 256 Denial Code: Managed Care Contract Issues
Code 256 indicates that the service in question is not covered under the terms of the managed care contract. The payer has determined that the claim does not meet the contractual obligations agreed upon, resulting in a denial.
Who Pays: Group Code Liability
With code 256, the group code is typically CO, meaning the provider must write off the amount and cannot bill the patient. However, verify your contract as some circumstances might allow a PR designation if the contract permits billing the patient.
Why Claims Get Code 256
- The service is not included in the managed care contract benefits.
- The claim was submitted with incorrect or outdated contract terms.
- The provider is out-of-network for the patient's managed care plan.
- Authorization was not obtained for the service as required by the contract.
- The service exceeds coverage limits outlined in the contract.
How to Fix & Resubmit
- Review the managed care contract to confirm coverage terms for the denied service.
- Verify whether the service was authorized or if an authorization is needed.
- Check if the provider is listed as in-network for the patient's plan.
- Contact the payer for clarification if the denial seems incorrect based on the contract.
- If applicable, correct the claim with updated contract information or obtain necessary authorizations before resubmitting.
Corrected Claim or Appeal?
If the denial was due to a misunderstanding of contract terms or missing authorization, a corrected claim with the appropriate documentation may resolve the issue. If the denial is truly based on contract terms, an appeal may not be successful.
Preventing Future 256 Denials
- Ensure all staff are familiar with the managed care contract details and coverage limitations.
- Verify network status and authorization requirements before submitting claims.
- Regularly update and review contract terms with payers to avoid outdated information.
- Implement a checklist for verifying contract compliance before claim submission.