PR 1 Denial Code – Deductible Amount

When the insurance process the claim towards PR 1 denial code – Deductible amount, it means they have processed and applied the claim towards patient annual deductible amount of that calendar year.

Now let us see definition of deductible amount and In-network and Out of Network to better understand PR 1 Denial Code.

What is Deductible Amount?

Patient has to pay the fixed fee annually to provider as per contractual for the healthcare services rendered, before the insurance company starts paying the benefits to the healthcare provider for the service rendered.

This is only paid if the healthcare services are obtained by patient from healthcare provider, until patient meets the deductible amount every calendar year.

For example let us consider below scenario to understand PR 1 denial code:

Let us consider Alex annual deductible amount is $1000 of that calendar year and he has obtained the below services from the provider during that period.

DOSBilled AmountAllowed AmountInsurance DeductibleInsurance
Paid amount
Remarks
January, 6 20195004004000Patient has paid $400.00 towards this claim. So remaining deductible amount is $600.00.
February, 2 20191000800600200Met annual deductible once the patient pays $600.00 towards this claim.
March, 15 20198006000600Insurance not applied the claim towards deductible amount has its previously met.

In the above scenario, Alex has to pay the $1000 annual deductible amount of that calendar year to the provider for the health care services. Once the annual deductible amount $1000 met, then insurance company starts paying to the provider for the health care services performed.

What is In-Network and Out of Network deductible?

Some of the insurance company plans have both, In-network deductibles for the services you receive from In-Network provider and Out of network deductibles for the services you receive from Out of Network provider.

For Example:                

Let us consider Alex annual in-network deductible amount is $500.00 and out of network deductible amount is $1000.00 and has obtained services from both In-Network (Participating Providers) as well as Out of Network providers (Non-Participating providers).

In this scenario insurance company start’s paying the benefit for in-network services after patient completes paying the in-network annual deductible amount i.e. $500.00 towards in-network bills. Same like that, insurance company start’s paying the benefit for out of network services after patient completes paying the out of network annual deductible amount i.e. $1,000.00 towards out of network bills.

It means the amount paid by Alex i.e. $500.00 towards in-network bill doesn’t count towards out of network bills. So, Alex has to pay $1,000.00 separately towards out of network bills if the health care services obtained from out of network providers.

Important Note: Some of the insurances do count out of network deductible amount towards in-network deductible amount. So it totally depends on the patient insurance plans.

What are the things Provider (AR Team) has to look when the claim processed and applied towards PR 1 Denial Code?
  • Whenever claim applied towards PR 1 Denial code, first we need to review the other claims for the calendar year for the patient to determine if the claims were paid.
  • Next we need review other claims to determine, if any of them were processed to deductible.
  • If they have processed, then check previous notes (Billing application) or with insurance representative (by calling) for total deductible amount of the year.
  • If a valid EOB/ERA is available, then need to post the deductible and transfer the balance to patient.
  • If EOB/ERA is not available, call the insurance company and request for EOB/ERA.
  • If annual deductible is already met, call the insurance and request them to reprocess the claim correctly.
Call insurance company claims department and ask below details for PR 1 Denial Code:
  1. May I know the claim received and processed date?
  2. May I know the allowed amount and claim applied towards deductible?
  3. May I know the insurance annual deductible for the patient?
  4. May I know is it applied towards in-network/out of network deductible?
  5. May I know how much annual deductible amount met so far?

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