Education guide - Medicare reason codes and reducing claim rejections

Providing an overview of Medicare reason codes used when services are rejected in claims lodged for Medicare benefits.

The following information helps reduce common reasons for claim rejection using patient verification and eligibility checks available through:

  • online claiming functions integrated with your practice management software, or
  • Health Professional Online Services (HPOS)

Services eligible for Medicare benefits

We pay Medicare benefits for clinically relevant services. A service is clinically relevant if it is generally accepted by the relevant health profession as necessary for the appropriate treatment of the patient. Services listed in the Medicare Benefits Schedule (MBS) must also be rendered according to the provisions of the relevant Commonwealth, State and Territory laws.

When determining appropriate MBS items to bill, you should refer to the relevant MBS item descriptors and explanatory notes available at MBS Online on the Department of Health website.

Claiming rejections and reason codes

We may reject claims for Medicare benefits such as:

  • an incorrect MBS item being used
  • the patient having received the maximum allowable number of benefits for an MBS item
  • issues with patient or health professional eligibility
  • system issues
  • further information being required to assess the claim

When claims are rejected, a Medicare reason code provides a brief explanation or reason for the rejection. Generally, this information can be used to:

  1. Identify any claiming errors
  2. Make any corrections
  3. Resubmit for payment

Medicare reason codes are 3 digit codes found in processing reports and Medicare benefit statements. View the Medicare reason codes list.

Common reason codes for rejecting claims

Reason code Explanation Actions to reduce rejected claims
159 Item associated with other service on which benefit payable

If the service is eligible for a Medicare benefit such as the service is not performed on the same occasion, not associated with the other service, not performed through the same incision, then for:

  • online claims – check with your software vendor or software guide about what system functionality is available to indicate or provide this information. If no override indicator is available then provide additional clinical information in free text
  • manual claims – notate the details on the account

For certain MBS items, you can use the MBS Items Online Checker in HPOS to check eligibility before you lodge the claim. Log on to HPOS to see what items can be checked using the MBS Items Online Checker.

160 Maximum number of services for this item already paid For certain MBS items, you can use the MBS Items Online Checker in HPOS to check eligibility before you lodge the claim. Log on to HPOS to see what items can be checked using the MBS Items Online Checker.
162 Benefit has been previously paid for this service

Where multiple eligible items are claimed such as 2 attendances, 2 skin biopsies or 2 x-rays make sure to provide information supporting payment for each service.

If the service is eligible for a Medicare benefit because the service is not a duplicate service, such as attendances at different times, biopsies taken at different physical locations, x-rays of separate limbs and not for comparison purposes, then for:

  • online claims – check with your software vendor or software guide about what system functionality is available to indicate or provide this information. If no override indicator is available, provide additional clinical information in free text
  • manual claims – notate the details on the account

For certain MBS items, you can use the MBS Items Online Checker in HPOS to check eligibility before you lodge the claim. Log on to HPOS to see what items can be checked using the MBS Items Online Checker.

179 Benefit not payable - associated service already paid

Where multiple eligible items are claimed, such as 2 skin biopsies or 2 x-rays, make sure to provide information supporting payment for each service.

If the service is eligible for a Medicare benefit such as biopsies taken at 2 different physical locations or x-rays of separate limbs and not for comparison purposes, then for:

  • online claims – check with your software vendor or software guide about what system functionality is available to indicate or provide this information. If no override indicator is available, provide additional clinical information in free text
  • manual claims – notate the details on the account

For certain MBS items, you can use the MBS Items Online Checker in HPOS to check eligibility before you lodge the claim. Log on to HPOS to see what items can be checked using the MBS Items Online Checker.

252 Service possibly aftercare

If the service is eligible for a Medicare benefit and the service is not normal aftercare, then for:

  • online claims – check with your software vendor or software guide about what system functionality is available to indicate or provide this information. If no override indicator is available provide 'not normal aftercare' in free text
  • manual claims – notate the details 'not normal aftercare' on the account
374 Old card issue used - benefit not payable - also refer @

Check a patient’s Medicare card details to make sure the card is current and your practice records are up-to-date. Update your records, if required.

  • online claims – use online patient verification (OPV) functionality
  • manual claims – use patient verification in HPOS to either confirm patient details or search for patient details (if a Medicare card number isn’t available)

Patient verification can be done before you lodge claims.

529 Bulk bill additional item claimed incorrectly

If the unreferred Medicare service and related bulk bill additional item are eligible for a Medicare benefit, make sure you lodge both items together in the same claim for the patient. Use the correct bulk bill incentive item that applies to the unreferred Medicare service.

  • online claims – use Online Concession Entitlement Verification (OCV) functionality

Practices must check the validity of a patient's concession card by:

  • sighting the patient's concession card
  • confirming the patient is the person named on the concession card
  • making sure the concession card is valid and has not expired
550 Associated service not claimed - no benefit payable

If the service is eligible for a Medicare benefit such as an associated service is required, then:

  • check the associated service has been claimed before you lodge your claim, or
  • lodge the associated services together in the same claim and if required in the correct order of services

For certain MBS items, you can use the MBS Items Online Checker in HPOS to check eligibility before you lodge the claim. Log on to HPOS to see what items can be checked using the MBS Items Online Checker.

606 Referring provider number not open at date of referral

Make sure you always provide the correct referral or request details including the:

  • date the referral or request was issued or written – not the date the referral was first used, and
  • valid provider number for the referring or requesting provider

Organisations and agencies such as private health insurers, pathology and diagnostic imaging companies can apply to us for approval to access the Medicare Provider Data File to verify provider details necessary for processing and paying Medicare claims.

This is in accordance with legislative requirements contained in section 130 of the Health Insurance Act 1973.

Where an @ symbol appears on a Medicare benefit statement, it means the Medicare card number that was quoted and lodged in the claim has now been changed and shows the current Medicare card issue number. You will need to check your practice records and update them with the current Medicare card issue number for future claims.

By completing some checks before you lodge claims or making sure you provide all the information needed to assess claims, you can reduce the likelihood of claim rejections.

Considerations for incorrect claiming

As an eligible health professional you are legally responsible for services billed under your provider number or in your name. This includes any incorrect billing of services that result in overpayment of Medicare benefits, regardless of who does your billing or receives the benefit.

You may be liable to pay an administrative penalty in addition to repaying Medicare payments for incorrectly claimed services.

More information

Online:

Service Contact
Medicare reason codes list Medicare provider enquiries
MBS Online MBS Online
on the Department of Health website
Enquiries on MBS item interpretation MBS item interpretation
Medicare provider enquiries for Medicare card, claiming and payment enquiries Medicare provider enquiries
HPOS Health Professionals Online Services
Vendors offering online claiming functions available in software Vendors offering Medicare online claiming

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Page last updated: 15 September 2016

This information was printed Sunday 4 December 2016 from humanservices.gov.au/health-professionals/enablers/education-guide-medicare-reason-codes-and-reducing-claim-rejections It may not include all of the relevant information on this topic. Please consider any relevant site notices at humanservices.gov.au/siteinformation when using this material.