PR-27 Denial Code: Lapsed Plan, Patient Balance, and Reversals

What is the PR-27 denial code? PR-27 is a Claim Adjustment Reason Code (CARC) meaning "Expenses incurred after coverage terminated," reported with the Patient Responsibility (PR) group code, which marks the denied amount as one that may be billed to the patient or insured.

Undeny's Take

PR-27 and CO-27 share a reason; only the liability label differs. The PR version is the payer saying the patient owes you, and that is often true. But two federal rules make a PR-27 provisional more often than front desks realize. Marketplace enrollees who get advance premium tax credits have a three-month grace period, and the plan can pend and then deny claims from the second and third months. People who lose job-based coverage under a plan subject to COBRA have at least 60 days to elect it, and coverage elected in that window reaches back to the day it was lost. So before a PR-27 goes to a patient statement, ask two questions: "Did you get a COBRA notice?" and "Are you behind on a marketplace premium?" Either answer can turn the bill back into a claim.

What PR-27 Means on the 835

The official X12 description is "Expenses incurred after coverage terminated." The Medicare Claims Processing Manual (Pub. 100-04, Chapter 22) defines the PR group as an adjustment that "may be billed to the patient or insured."

The remittance should also tell you the end date. In an official interpretation (RFI 1573), X12 notes that the 835 Coverage Expiration Date segment in loop 2100 is "Required when payment is denied because of expiration of coverage." The same interpretation describes a claim first denied with CARC 27 that was later "adjusted to pay" after the payer's membership records were updated, which is exactly the reversal you are hoping for.

Why the Payer Thinks the Plan Had Lapsed

• A marketplace grace period ran out. Under 45 CFR 156.270(d), a qualified health plan must give enrollees receiving advance payments of the premium tax credit a three-month grace period. It must pay claims for the first month and "may pend claims" for the second and third. If the grace period is exhausted without full payment, 45 CFR 155.430(d)(4) sets the last day of coverage at "the last day of the first month of the 3-month grace period," so later visits land after termination, which works as a retroactive termination from the provider's side.
• Job-based coverage ended during the COBRA election period. Under 26 CFR 54.4980B-6, the election period runs at least 60 days, and if the patient elects, "coverage must be provided from the date that coverage would otherwise have been lost."
• Eligibility was checked once, not on the date of service. A plan that was active at intake may have ended before a later visit.

How to Resolve a PR-27

1. Read the coverage expiration date on the 835 and compare it with the date of service. If the service predates it, the denial is wrong and you can ask for reprocessing.
2. Ask the patient whether new coverage started, such as an employer plan, Medicaid, Medicare or a marketplace plan, and bill that payer instead.
3. If the patient lost job-based coverage, ask about COBRA. When a provider calls during the election period, the regulation requires a plan that cancels and later reinstates coverage to say the patient "will have coverage retroactively" if COBRA is elected. Once the patient elects and pays, ask the plan to reprocess.
4. If the patient is in a marketplace plan with a premium tax credit, ask whether they are behind on premiums. The plan must notify providers of possible denials in the second and third grace months, and the rule ends enrollment only when the grace period is exhausted without paying all outstanding premiums.
5. If you have proof the coverage was active, such as a premium receipt or an employer letter, appeal with it. The appeal generator can draft the letter.
6. If no coverage was active on the date of service, bill the patient under your financial policy and attach the remittance.

PR-27 Compared With CO-27, CO-26, PR-31 and CO-109

CO-27 is the same reason with the Contractual Obligation group, so the payer is not assigning it to the patient. CO-26 is the mirror image: expenses incurred before coverage began. PR-31 means the payer could not identify the patient as its insured at all. CO-22 points to another payer that may be primary, and CO-109 means the claim went to the wrong payer.

Frequently Asked Questions

Can I bill the patient for a PR-27 denial?

Usually, because the PR group marks the amount as one that may be billed to the patient. Check first whether coverage could be reinstated through a COBRA election or by paying marketplace premiums inside the grace period. If neither applies and no other plan was active, bill the patient with the remittance attached.

What is the difference between PR-27 and CO-27?

Both use the same X12 reason, expenses incurred after coverage terminated. PR assigns the amount to the patient, while CO labels it a contractual adjustment the payer is not passing to the patient. The fix is the same: find the coverage that was active on the date of service.

Can a PR-27 be reversed after the patient's coverage is reinstated?

Yes. X12's interpretation RFI 1573 describes a claim denied with CARC 27 that was later adjusted to pay once membership records were updated. COBRA is one route to that outcome, because coverage elected during the election period is restored back to the date it was lost.

Where do I find the date the coverage ended?

Look for the Coverage Expiration Date segment in loop 2100 of the 835. X12 says it is required when payment is denied because coverage expired. If your practice management system hides it, ask your clearinghouse for the raw 835.

Why did a marketplace patient's claim deny months after the visit?

Marketplace plans may pend claims from the second and third months of a premium grace period. If the grace period ends without full payment, coverage terminates at the end of the first grace month, and the pended claims can then be denied as expenses incurred after coverage terminated.

Informational only, not legal, medical, or billing advice. Always verify against your current payer contract and policy.

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