Have you ever consulted a doctor and then received an invoice? If you have, that bill goes through a process called medical billing.
In this process, many codes and rules help move the bill from the doctor to the insurance company. One crucial part of this process is something called an entity code.
At Health Med Affairs, we specialize in decoding these complexities to make medical billing smoother for healthcare providers.
Below, we explain “What is an entity codes in medical billing, including entity code rejections and how to fix them?”
What Is an Entity Code in Medical Billing?
An entity code is a special code used in medical claims. It tells the insurance company who is involved in the healthcare service. This includes:
- The patient
- The subscriber (insurance policyholder)
- The provider (doctor, hospital, clinic)
- The billing provider or facility
Every claim must list these people or organizations. The entity code labels each one so the payer knows their role in the transaction.
Need help organizing your claim structure? At Health Med Affairs, we ensure that your claims include accurate entity codes to avoid delays and rejections.
Why Do We Use Entity Codes in Medical Billing?
Medical billing is not just about listing services and getting paid. It’s about sending accurate, complete information to the payer. When you understand what is entity code in medical billing, you understand its role in keeping claims clean and correct.
Entity codes help:
- Identify each person or party on the claim
- Prevent confusion about who is the provider or patient
- Ensure payments go to the correct entity
- Reduce entity code rejection errors
- Speed up insurance approvals
If the entity code is missing or wrong, the claim may be rejected or delayed.
Entity Code Meaning in Medical Billing
So, what does an entity code mean? In simple terms, it is a label that helps insurance systems know the difference between the people and companies listed on a medical claim.
For example:
- A provider might be labeled with one code.
- A billing organization might use a different code.
- The patient and the subscriber (if not the same person) also need unique codes.
These labels are essential when submitting electronic claims through clearinghouses.
Health Med Affairs’s billing experts ensure every claim uses the correct codes so you can get paid faster and more reliably.
Where to Find the Entity Code on Claim Forms?
You’ll usually find the entity code on claim forms such as:
- CMS-1500 (for outpatient/physician claims)
- UB-04 (for hospitals and inpatient services)
- Electronic claims using the 837I format
These forms require specific fields that include the entity code, National Provider Identifier (NPI), and address.
What Happens When an Entity Code Is Wrong?
Entity code rejection is a common billing problem. It occurs when a claim contains an incorrect or missing code, leaving the payer unclear about who did what.
Some examples of errors:
- Billing provider code is used in place of the rendering provider code
- The subscriber is mistakenly listed as the patient
- NPI is listed without a corresponding entity code
As a result, the claim is rejected with a rejection code or clearinghouse rejection code, such as:
- Entity not recognized
- Entity identifier code missing
- Entity not allowed in this segment
This slows down payment and adds to your workload.
Tired of claim denials? Let Health Med Affairs manage your claim submissions and reduce costly errors with our professional billing services.
Clearinghouse Rejection Codes: What They Mean
Before a claim reaches the payer, it goes through a clearinghouse, a software system that checks for errors. If something is wrong, it sends back the claim with a clearinghouse rejection code.
These codes tell you:
- What’s missing
- What needs fixing
- Why the claim can’t be forwarded
Common entity-related clearinghouse codes:
- A3: Entity identifier code missing
- A7: Entity not eligible for benefits
- A8: Entity not allowed in this segment
Reading and understanding these codes helps you correct the issue fast and reduce denials.
What Is an Entity Code Rejection?
An entity code rejection is when a claim is denied because of a problem with how entities (people or providers) are labeled. This is one of the top reasons claims are returned or denied by clearinghouses and insurance companies.
Common causes:
- Wrong provider NPI tied to the wrong role
- Missing rendering provider code
- Billing provider listed as rendering provider
- Incorrect patient/subscriber relationship
What is an Entity Code in Medical Billing for Patients?
You might wonder, does the patient need to know about entity codes?
Not always. But if your insurance denies your claim or asks for more information, they might tell you the problem is an entity code error. In that case, you or your doctor’s office will need to fix it before the claim is paid.
It helps to ask your provider if they are using the correct information on your file.
Patients and providers can reach out to Health Med Affairs if they need help figuring out claim issues or rejections. We’re here to help!
How to Fix an Entity Code Rejection?
Here are the steps to fix a rejection code related to the entity code:
- Read the Rejection Message Carefully
Look at the clearinghouse response and check which entity code is causing the problem.
- Check the Provider’s Details
Ensure the provider’s information is correct, including the NPI number (National Provider Identifier), tax ID, and role in the claim.
- Update the Entity Code
Use the correct entity code for medical billing provider, rendering provider, or referring doctor.
- Resubmit the Claim
After fixing the mistake, send the claim again.
Need expert help fixing rejected claims? Our team at Health Med Affairs specializes in denial management and resubmissions.
Entity Code on Claim: Where It Appears
The entity code on a claim is usually found in the EDI (electronic data interchange) file sent to the insurance company. But don’t worry, if you’re a patient, you don’t need to see it.
Medical billers and coders are the ones who use it. They make sure each provider and patient have the correct entity code.
Entity Code vs. Tax ID or NPI: What’s the Difference?
Many people get confused between entity code, Tax ID, and NPI. Let’s clear that up:
- Tax ID: Identifies the business for taxes
- NPI: Identifies the healthcare provider
- Entity Code: Identifies the provider’s role in the claim
You need all three, but each one serves a different purpose.
Conclusion
So, what is an entity code in medical billing? It’s a special identifier that tells the insurance company who is involved in your care.
Whether it’s the doctor, the facility, or the billing office, each role needs the right code for your claim to be processed quickly.
Key Takeaways:
- Entity codes label everyone involved in the claim
- Wrong or missing codes cause rejections
- Correct coding leads to faster payments and fewer delays
- Understanding rejection codes helps you act fast
Trust Health Med Affairs with Your Billing Needs
At Health Med Affairs, we help healthcare providers with clean claims, reduced rejections, and timely billing.
Our expert team assists solo and multi-specialty groups with medical billing needs. Contact us for services including billing, coding, denial management, and more.
FAQs
Q1: Is the entity code only used by medical billers?
Yes, patients usually don’t see entity codes. Medical billers, providers, and insurance companies use them to process claims.
Q2: Can a claim have more than one entity code?
Absolutely! One claim may involve multiple providers. Like the billing and rendering providers, each one needs its entity code.
Q3: Does every insurance company use the same entity codes?
The codes are similar, but some insurance companies may have unique formats. It’s essential to follow each payer’s rules.
Q4: Can entity codes change over time?
If a provider changes roles or billing systems, their code setup might change. Always keep billing profiles updated.
Q5: Where can I learn more about clearinghouse rejection codes?
Most clearinghouses offer training materials or online help centers. You can also ask your medical billing software provider for code descriptions.
