OA-70 Denials Explained: How to Identify, Appeal, and Prevent Them

OA-70 denials are a common yet complex issue in medical billing. These denials occur when a payer adjusts a claim due to extraordinary costs exceeding the Diagnosis-Related Group (DRG) threshold, creating additional financial and operational challenges for healthcare providers. For revenue cycle management (RCM) teams, understanding OA-70 denials is essential to minimize revenue leakage, reduce rework, and improve cash flow.

In this guide, we’ll break down what OA-70 denials mean, how to effectively manage and appeal them, and the strategies you can implement to prevent them from impacting your bottom line.

What Is a OA-70 Denial?

The OA-70 denial code refers to "Cost outlier - Adjustment to compensate for additional costs." It is categorized under the "Other Adjustment" (OA) prefix, indicating that the financial responsibility for the adjustment does not fall on the patient but is instead the result of payer policy. These adjustments occur when a claim's costs significantly exceed the DRG threshold, triggering a cost outlier payment calculation.

In essence, OA-70 denials highlight cases where the original reimbursement does not fully account for the extraordinary costs incurred by the provider, and the payer reduces or adjusts the payment accordingly. Financial responsibility typically lies with the payer, but the impact on the provider can be substantial if not properly managed.

Comparison: OA-70 vs Similar Denial Codes

Denial Code	Prefix Meaning	Reason/Description	Who's Financially Responsible
OA-70	Other Adjustment	Cost outlier - Adjustment to compensate for additional costs	Payer
OA-23	Other Adjustment	Payment adjusted due to contractual agreement	Payer
CO-45	Contractual Obligation	Charges exceed the fee schedule or maximum allowable amount	Payer

The primary difference between OA-70 and similar codes lies in the reason for the adjustment. While OA-70 is specific to cost outlier cases, OA-23 involves general contractual adjustments, and CO-45 pertains to charges exceeding allowable limits. These nuances highlight the importance of understanding and addressing each denial code appropriately.

Common Causes of OA-70 Denials

1. Incorrect DRG Coding: Errors in coding or assigning the wrong DRG can prevent the system from recognizing the claim as eligible for cost outlier payments.
2. Insufficient Documentation: Lack of detailed clinical documentation to justify the extraordinary costs can result in payer denials.
3. Missed Outlier Thresholds: Claims that just barely exceed the threshold due to miscalculated charges may trigger an adjustment.
4. Payer Policy Variations: Inconsistent payer rules regarding cost outlier calculations can lead to denials if not accounted for during billing.
5. Late or Incomplete Claims Submission: Delayed submissions or missing information can cause claims to be flagged for adjustment.

Impact on Revenue Cycle Teams

OA-70 denials pose both financial and operational challenges for healthcare organizations.

Financial Impact:
- Loss of revenue due to reduced payments and prolonged denial resolution timelines.
- Increased accounts receivable (AR) days, straining cash flow.
- Write-offs from unsuccessful appeals or missed deadlines.
- Greater overhead costs as denial management resources are diverted to resolve these issues.

Operational Impact:
- Significant time spent by billing and coding teams identifying and correcting claim issues.
- Need for specialized knowledge of payer-specific policies and outlier payment calculations.
- Increased collaboration between clinical, billing, and coding teams to provide supporting documentation.
- Monitoring recurring denial patterns and appeal outcomes to mitigate future issues.

To address these challenges, RCM teams require advanced denial management tools like CombineHealth.ai's Adam (AI Denial Manager) to efficiently track and resolve OA-70 denials, reducing both operational bottlenecks and financial losses.

Steps To Appeal a OA-70 Denial

Appealing an OA-70 denial requires a methodical and timely approach to ensure success. Follow these steps:

Step 1: Review the Denial Notice
Carefully examine the payer’s Explanation of Benefits (EOB) or Electronic Remittance Advice (ERA) to understand the reason for the denial. Confirm that the denial code is accurate and review the associated claim details.

Step 2: Gather Documentation
Collect all necessary documentation, including detailed clinical records, itemized billing statements, and any supporting evidence that justifies the extraordinary costs.

Step 3: Verify Eligibility
Ensure that the claim meets the payer’s cost outlier criteria, including DRG thresholds and reimbursement guidelines. Double-check for coding accuracy.

Step 4: Prepare Appeal Letter
Draft a comprehensive appeal letter addressing the payer’s reason for denial. Include all supporting documentation, clearly outline the claim’s eligibility for cost outlier payment, and request a reconsideration.

Step 5: Submit Within Deadline
Adhere to the payer’s specific timeline for submitting appeals. Late submissions may result in automatic rejection.

Step 6: Track and Follow Up
Monitor the status of your appeal and maintain communication with the payer. Follow up regularly to ensure timely resolution and address any additional requests for information.

How To Prevent OA-70 Denials

Proactively addressing potential issues can help RCM teams avoid OA-70 denials altogether.

Front-End Prevention

• Implement robust eligibility verification systems to confirm patient coverage and payer policies upfront.
• Train staff on accurate DRG coding and documentation requirements to avoid errors that trigger denials.

Billing Best Practices

• Conduct regular audits to ensure compliance with payer-specific cost outlier rules.
• Use charge capture systems to ensure all services and costs are accurately reflected in claims.

Technology Solutions

• Leverage CombineHealth.ai’s Adam (AI Denial Manager) to identify trends and predictive patterns for OA-70 denials.
• Use Rachel (AI Appeals Manager) to streamline the appeals process and improve success rates.

With intelligent tools like Adam and Rachel, RCM teams can reduce the likelihood of OA-70 denials while optimizing their denial management workflows.

FAQs

Q1: What does OA-70 mean in medical billing?
OA-70 refers to a denial code for cost outlier adjustments, where the payer reduces or adjusts reimbursement to account for extraordinary costs exceeding the DRG threshold.

Q2: Can OA-70 denials be appealed?
Yes, OA-70 denials can be appealed by providing detailed documentation and evidence to justify the extraordinary costs incurred.

Q3: How long do I have to appeal?
Timelines vary by payer, but appeals generally need to be submitted within 30-90 days of the denial notification. Always verify the specific deadline with the payer.

Q4: How can I prevent these denials?
Effective prevention strategies include accurate coding, thorough documentation, adherence to payer policies, and leveraging technology like CombineHealth.ai’s tools. See our complete guide on denial prevention.