In billing terminology, what does it mean if a service is "denied"?

In billing terminology, when a service is described as "denied," it indicates that the insurance company has refused to pay for the service that has been billed. This can occur for various reasons, such as lack of medical necessity, incomplete information provided on the claim, or the service being outside of the coverage parameters of the patient's insurance policy.

Understanding this definition is crucial for effective medical billing, as it impacts revenue cycle management and the actions that the billing office must take next. When a service is denied, the practice may need to investigate the reason for the denial, correct any issues, or appeal the decision to ensure that the provider receives the appropriate payment for the services rendered.

In contrast, if a service is approved, it indicates that the insurance company has accepted the claim and will reimburse the provider. Understanding the distinctions between approval and denial helps billing personnel navigate the complexities of insurance processes and ensure proper follow-up.