Due Diligence in Limiting Payer Denials

When submitting a claim for payment, providers must exercise due diligence to ensure all services and supplies listed are provided as indicated. Sometimes, however, no matter how diligently providers and staff stay on top of changes, regulations, and industry standards, there are still payer denials.

Medicare Administrative Contractor (MAC) Palmetto GBA, covering North Carolina, South Carolina, Virginia, and West Virginia, recently posted the prepayment review results for a targeted probe and education for Opdivo^® (nivolumab), which took place from October through December 2025. Along with the results, it also shared reminders on how to avoid several of the denial reasons identified in this targeted review.

Prepayment reviews occur for claims before any payment is issued to determine if payment should be made for the services billed. According to the Centers for Medicare & Medicaid Services, 42 C.F.R. § 405.902, “prepayment medical review (or prepayment review) means a review that occurs before an initial determination for payment is made on the selected claim to determine whether payment should be made.” The reviews are generally implemented for services where there is a high likelihood of ongoing improper payments.

Prepayment Review Results for Opdivo

Opdivo is immunotherapy primarily used to treat melanoma, non–small cell lung cancer, renal cell carcinoma (kidney), classical Hodgkin lymphoma, urothelial cancer (bladder), and various gastrointestinal cancers (esophageal, gastric). It is commonly used and has become a standard treatment option for many cancer types. Because of this, Palmetto GBA, MAC for Jurisdiction M, conducted a prepayment review for Targeted Probe and Educate specific to Healthcare Common Procedure Coding System (HCPCS) code J9299 (Injection, nivolumab, 1 mg) for Opdivo. Palmetto GBA recently published the results of this prepayment review.¹ After the probe, 27 providers were removed from further probes. Of the 27 providers, there were 791 claims that resulted in a 2% denial rate, equaling $175,741.48 of the potential $10,471,995.15 reviewed. The breakdown of the prereview reflects 9 providers in North Carolina, 6 in South Carolina, 8 in Virginia, and 4 in West Virginia. The denial rates ranged from 1% for providers in North Carolina and Virginia, 4% in South Carolina, and 6% in West Virginia. The top 5 denial reasons were:

1. No documentation of medical necessity
2. Dependent services denied (qualifying service denied medically)
3. More units billed than ordered
4. Requested records not submitted in a timely manner
5. Insufficient documentation.

How to Avoid Denials

Given the findings of this recent prepayment review, understanding the reasons for denials and how to avoid them can assist providers as part of their due diligence when submitting claims for reimbursement. It should be noted that even clean and fully supported claims do not preclude any payer—especially Medicare— from performing a prepayment review. Even within the same jurisdiction, some providers may be outliers who submit claims with issues, triggering prepayment reviews for all providers, regardless of their history.

Lack of Medical Necessity

According to Medicare, the medical necessity of a service is the overarching criterion for payment, in addition to the individual requirements of a Current Procedural Terminology (CPT^®) code.² Medical necessity is defined as the need for a particular medical service/procedure for the patient. The provider must be clear about why this service is necessary or most appropriate over some other service/procedure. The challenge is that medical necessity can vary by provider for the same scenario and patient. A difference of clinical opinions, especially if one of those belongs to the reviewer of a medical record review, can sometimes be problematic to overturn. According to Medicare, this is how to best avoid a denial of payment due to lack of medical necessity documentation:

• Submit all documentation related to the services billed that support the medical necessity of the services. Documentation should support:
  • A covered indication or condition for the service billed
  • A physician or nonphysician practitioner managing the care of the covered indication or condition billed
  • Any medical history that supports a need for the service
  • Any diagnostic results or symptomology that support a need for the service
  • Legible documentation.
• Submit all documentation to support that the ongoing skills of a qualified therapist were required to complete the treatment and that the initiation of therapy treatment services was medically necessary.
• Ensure Advance Beneficiary Notice is valid, complete, and submitted in the record, if applicable.
• Obtain a legible physician or nonphysician provider signature on all documentation necessary to support medical necessity.
• Use the most appropriate ICD-10-CM codes to identify the beneficiary’s medical diagnosis.
• Submit treatment note documentation that includes date of treatment, description of modality/procedure to support accurate billing, total treatment minutes/ total timed code treatment minutes, and signature of a qualified professional.
• Include the therapy discharge note and summary in the documentation.
• Ensure all submitted documentation is legible.

Ancillary Services Denied Due to Denial of Primary Service

When services (represented by billing codes) are integral to the primary service and that primary service has been deemed not medically necessary, the ancillary services will likely also be denied. The totality of the services is considered dependent upon one another. To avoid this denial, Medicare recommends the following:

• Ensure the documentation provided supports that the services were reasonable and medically necessary for the treatment of the beneficiary.
• Ensure all records are properly and legibly signed.
• Ensure the documentation clearly states that the service(s) was rendered.

More Units Billed than Ordered

Billing the correct number of units for any service seems elementary, but ensuring proper units when it comes to drugs can be challenging—especially if the documentation is vague or easy to misinterpret. Reporting drug waste for single-dose vials/packages can make it even trickier. The Medicare Claims Processing Manual, Chapter 17, “Drugs and Biologicals,” also directs hospitals to report all packaged services on the claim.³ This is due to Medicare using not only the cost reports from hospitals, but also the utilization data for CPT/HCPCS codes to establish pricing.

“Hospitals must report all appropriate HCPCS codes and charges for separately payable drugs, in addition to reporting the applicable drug administration codes. Hospitals should also report the HCPCS codes and charges for drugs that are packaged into payments for the corresponding drug administration or other separately payable services. Historical hospital cost data may assist with future payment packaging decisions for such drugs. Drugs are billed in multiples of the dosage specified in the HCPCS code long descriptor. If the drug dose used in the care of a patient is not a multiple of the HCPCS code dosage descriptor, the provider rounds to the next highest unit based on the HCPCS long descriptor for the code to report the dose provided.”³

To avoid denials due to incorrect units, Medicare recommends the following:

• For time-based general outpatient services, make sure the start and end times or total length of the service are documented clearly in the record.
• For other general outpatient services, make sure the amount of the service is documented clearly in the record.
• When reporting drugs or biologicals, make sure the amount of the drug given is clearly documented and properly converted into units when submitted for payment.
• For outpatient therapy services, make sure the timed treatment minutes/unit(s) for the timed services provided are documented clearly in the record.

Medical Records Not Submitted in a Timely Manner

There are some things we have no control over, but never let the reason for denial be that support for the services (eg, documentation) was not provided to the reviewer in a timely manner. In the office setting, this can be an issue if someone is out on vacation or leave. For hospitals, it can be even more challenging, as job duties tend to be more siloed. Furthermore, staff responding to the request for medical records may not realize that documentation is housed in a separate record, understand which documentation is supportive, or know whether a request was received.

When an Additional Documentation Request (ADR) is received, the provider has 45 days from the date the request was generated to respond with medical records. If fewer than 120 days have passed after denial notification on the remittance advice, Medicare directs providers to submit records to the contractor requesting records at the address listed on the original ADR to request reopening. Do not resubmit the claim.

To avoid denials due to the lack of timely submission of documentation per request, Medicare recommends the following:

• Be aware of the ADR date and the need to submit medical records within 45 days of the ADR date.
• Submit the medical records as soon as the ADR is received.
• Monitor the status of your claims in Direct Data Entry and begin gathering the medical records as soon as the claim goes to the location of SB6001.
• Return the medical records to the address on the ADR. Be sure to include the appropriate mail code or station number. This ensures that your responses are promptly routed to the Medical Review department. Fax and electronic data submissions are also accepted, as indicated on the ADR.
• Gather all the information needed for the claim and submit it at one time.
• Attach a copy of the ADR to each individual claim.
• If responding to multiple ADRs, separate each response and attach a copy of the ADR to each individual set of medical records. Make sure each set of medical records is individually identifiable and bound securely to ensure that no documentation is detached or lost. Do not use paper clips.
• Do not mail packages C.O.D. CMS cannot accept them.

Insufficient Documentation

A denial due to insufficient documentation could be the result of multiple reasons. As mentioned previously, the person who received the request for medical record submission may not know which records to submit. This has been a common reason for denial in radiation oncology. It is possible that the documentation by the provider is lacking in detail, specificity to the patient, or missing components of the service to support the level of complexity of the service being billed.

To avoid denials due to insufficient documentation, Medicare recommends the following:

• Submit all documentation related to the services being billed.
• Ensure that results submitted are for the date of service being billed, the correct beneficiary, and the specific service being billed.
• Ensure that the documentation is complete with proper authentication, and the signature is legible.

Opportunities for Education and Third Party Reviews

Palmetto GBA offers individualized education to the providers selected for the prepayment review. The MAC will discuss each claim denial and how to identify and avoid future potential issues. It will also provide education for those not part of a Targeted Probe and Educate if a request for education is made. It should be noted that although Palmetto GBA is the only MAC referenced in this article, other MACs also do prepayment reviews and provide opportunities for education. Providers should take advantage of all opportunities for education and insight that are offered by payers.

Additionally, a third-party medical record review is recommended on a regular basis. Whether this is annually, every other year, or some other interval, engaging with an entity whose focus is compliance, reimbursement, and best practice standards takes some of the stress of knowing the minutiae off the provider’s shoulders. Providers should still know the basics, but there are so many nuances to coding, billing, and reimbursement that it can be overwhelming to keep up and even harder to be objective about your own work. By engaging with someone outside of the practice, providers can ensure the objectivity needed for a successful review.

Payer denials are going to happen—no entity is immune from them—but do not let preventable mistakes be the reason the provider or practice is considered a major risk to the payer. Complete the due diligence necessary to ensure that submission of clean claims and responses to payer requests are answered in a timely and appropriate manner. Enroll in ongoing education and make the investment necessary to offset the potential high-cost penalty of a targeted review.

Teri Bedard, BA, RT (R)(T), CPC, is executive director of Client and Corporate Resources at Revenue Cycle Coding Strategies in Des Moines, Iowa.

References

1. Pre-payment review results for Opdivo for Q4 2025. Palmetto GBS. Published February 2, 2026. Accessed February 24, 2026. https://palmettogba.com/jma/did/ie68jdclzb?cat=jma-medical-review#ls.

2. The Centers for Medicare and Medicaid Services. Chapter 12, Physicians/nonphysician practitioners. In: Medicare Claims Processing Manual. 100-04. Accessed February 24, 2026. https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Downloads/clm104c12.pdf.

3. The Centers for Medicare and Medicaid Services. Chapter 17, Drugs and biologicals. In: Medicare Claims Processing Manual. 100-04. Accessed February 24, 2026. https://www.cms.gov/ regulations-and-guidance/guidance/manuals/ downloads/clm104c17.pdf