AAPC Denial Management & Appeals 2 — Questions and Answers
Question 1: What is the purpose of an Explanation of Benefits (EOB) in the denial management process?
- It serves as the patient's medical record
- It details payer decisions including payment amounts, adjustments, and denial reasons (Correct answer)
- It is used to verify patient eligibility
- It is the same as a remittance advice sent to providers
Correct answer: It details payer decisions including payment amounts, adjustments, and denial reasons
An EOB is sent to the patient and details how their insurance claim was processed, including payments, contractual adjustments, patient responsibility, and denial reasons.
Question 2: Which type of appeal is submitted directly to an independent external reviewer when internal payer appeals are exhausted?
- Internal appeal
- Grievance
- External appeal (Correct answer)
- Informal reconsideration
Correct answer: External appeal
An external appeal is reviewed by an independent organization outside the insurance company and is typically the last step when internal appeals are denied.
Question 3: A denial is received with remark code N130. What does this indicate?
- Claim submitted with incorrect NPI
- Payment is issued based on a lesser of cost provision (Correct answer)
- Procedure code inconsistent with modifier
- Claim filed past the timely filing limit
Correct answer: Payment is issued based on a lesser of cost provision
Remark code N130 indicates the payment was made using a lesser-of-cost provision, meaning the payer paid the lower of the billed amount or allowable rate.
Question 4: When building an appeal letter for a denied claim, which element is MOST critical to include?
- The patient's insurance card photocopy
- A clear reference to the denied claim, clinical justification, and relevant policy language (Correct answer)
- A list of other patients with similar treatments
- The provider's tax ID and billing address only
Correct answer: A clear reference to the denied claim, clinical justification, and relevant policy language
An effective appeal letter must reference the specific denied claim, provide clinical or policy-based justification, and cite relevant payer policy language to support the reversal.
Question 5: What does a denial with reason code PR-1 indicate?
- The claim was filed out of network
- Deductible amount applied — patient responsibility (Correct answer)
- Benefit maximum has been reached
- Service requires prior authorization
Correct answer: Deductible amount applied — patient responsibility
PR-1 is a Patient Responsibility adjustment reason code indicating that the amount was applied to the patient's deductible.
Question 6: Which federal law gives patients the right to appeal health insurance claim denials?
- ERISA and the ACA (Correct answer)
- HIPAA Privacy Rule only
- The False Claims Act
- COBRA
Correct answer: ERISA and the ACA
Both ERISA (for employer-sponsored plans) and the ACA (for marketplace and non-grandfathered plans) provide patients with the right to internal and external appeals of denied claims.
Question 7: A biller receives a denial for 'missing or invalid modifier.' What is the correct course of action?
- Write off the charge as a contractual adjustment
- Review the procedure code, determine the correct modifier, and resubmit a corrected claim (Correct answer)
- Send the claim to the patient with the full balance
- File an external appeal immediately
Correct answer: Review the procedure code, determine the correct modifier, and resubmit a corrected claim
When a claim is denied for a missing or invalid modifier, the biller should verify which modifier is appropriate for that procedure and payer, then resubmit a corrected claim.
AAPC Denial Management & Appeals 2
What is the purpose of an Explanation of Benefits (EOB) in the denial management process?