Common Claim Denial Reasons and How to Fix Each One

The common claim denial reasons fall into a short list: coverage and eligibility, missing or wrong information, coordination of benefits, prior authorization, medical necessity, coding and bundling, non-covered services, duplicates and late filing. Each one has two fixes: one for the claim in front of you, and one for the process that produced it. This guide covers both, after a quick look at how to read the reason the payer sent.

How do you read a denial reason?

A denial arrives on the remittance: the electronic remittance advice (ERA, the 835 transaction) or a paper explanation of benefits (EOB). Each denied line carries up to three codes.

• A group code that says who owns the balance: CO (contractual obligation, which the provider absorbs and generally cannot bill to the patient), PR (patient responsibility), OA (other adjustment) or PI (payer initiated reduction).
• A claim adjustment reason code (CARC) that says why the line was not paid in full.
• Often a remittance advice remark code (RARC) that adds detail, such as which information was missing.

Read the three together. The same reason code can mean a fixable error on one claim and a final decision on another, and some codes describe routine contractual adjustments rather than denials. The code lists are updated during the year, so look a code up in the current list rather than from memory.

Coverage and patient information

The patient was not covered on the date of service

The plan had ended, had not started, or the patient was enrolled in a different plan. Confirm coverage for the date of service and bill the right payer. If the patient moved to a Medicare Advantage plan, the claim generally goes to that plan, not to Original Medicare. To stop it repeating, verify eligibility before each visit and every month for recurring services. Our insurance eligibility verification checklist covers what to confirm.

Missing or invalid information

A member ID with a typo, a name that does not match the payer's records, a missing referring provider, an invalid NPI or a wrong place of service. CO-16 is the familiar code for a claim that lacks information or has billing errors, and a remark code usually names what is missing. Correct the field at its source and resubmit. Problems like these are often caught earlier, as rejections, which are fixed and sent again as a new claim. Our page on claim rejection vs denial explains the difference.

Coordination of benefits

The payer believes another plan should pay first, or has no record of the other plan. Ask the patient about all their coverage, correct the order on file, and bill the primary payer first. Sometimes the patient has to update their other-coverage information with the payer directly before the claim can be paid.

Authorization and medical necessity

No prior authorization

The service needed approval before it was done, and none was on file. If the authorization exists, resubmit with the number. If it was never requested, a payer may allow a retroactive request in limited cases, so read its policy; otherwise the denial usually stands. To prevent it, check authorization rules when the service is ordered and keep each payer's list current.

Not medically necessary

The payer decided the diagnosis on the claim does not support the service. CO-50 is the code people know for a non-covered or not-necessary service. First check whether the claim carried the wrong or a less specific diagnosis: that is a coding fix and a corrected claim. If the claim was right and the payer disagrees, appeal with the documentation that shows why the service was needed.

For Medicare, read the national and local coverage determinations that apply to the service. When a provider expects Original Medicare may deny a service as not reasonable and necessary, a valid Advance Beneficiary Notice given before the service is generally what allows the provider to bill the patient if Medicare does deny it.

Coding problems

Bundled services

Two services were billed that the payer pays as one. CO-97 is the familiar code: the benefit for this service is included in the payment for another service. Check the bundling edits (the National Correct Coding Initiative edits for Medicare, the payer's own rules for commercial plans). If the services were truly separate, a modifier backed by the documentation may apply. If not, the denial is correct and the line is a contractual adjustment.

Modifier errors

A missing modifier, the wrong one, or one the documentation does not support. Fix the modifier and send a corrected claim. Keep a short reference of the modifiers your practice uses, with what each one requires in the note.

Invalid or non-specific codes

A deleted code, a code not valid on the date of service, or a diagnosis category that has more specific codes beneath it. ICD-10-CM changes every October 1 and can change in April, and CPT changes every January 1, so update your templates and favorite-code lists at those dates.

A service the plan does not cover

The service is excluded from the patient's benefits. Confirm the benefit before the service where you can. Whether the patient can be billed depends on your contract, the plan's rules and whether the patient was told in advance, so read your contract before sending the patient a bill.

Process problems

Duplicate claim

The payer already has a claim for the same patient, date and service. CARC 18 is the code for an exact duplicate, and X12 says to send it with group code OA. Before sending anything again, check the status of the original claim (the 276/277 claim status transaction, or the payer's own portal). To change a claim that was already processed, send a corrected or replacement claim the way the payer asks, never a second original.

Filed too late

The claim reached the payer after its timely filing limit. CO-29 is the code. These are hard to overturn, usually only with proof the claim was sent on time, such as an accepted acknowledgment report. Keep those reports. Limits vary by payer and contract; Medicare's is generally 12 months from the date of service.

Correct, reconsider or appeal?

Each payer sets its own steps and deadlines. Medicare has its own appeal process with several levels, starting with a redetermination by the Medicare Administrative Contractor. Check the current CMS guidance and your payer contracts before you pick a route. For the habits that stop these reasons before they start, see how to reduce claim denials.

Frequently asked questions

What is the difference between a denial and a rejection?

A rejection failed edits before the payer processed the claim, so you fix the data and send it again as a new claim. A denial was processed and not paid, in whole or in part, so you correct it, ask for reconsideration or appeal, following the payer's process.

Can a patient be billed for a denied claim?

It depends on the group code and your contract. An amount with the CO group code generally cannot be billed to the patient, while a PR amount can. For a non-covered or not-necessary service, billing the patient usually depends on advance notice, which for Original Medicare means a valid Advance Beneficiary Notice.

How long do I have to appeal a denial?

It depends on the payer. Commercial deadlines are set in your contract and the payer's provider manual, and Medicare sets a deadline for each appeal level. Never assume one window applies to every payer; check before the denial ages.

Should I resubmit a denied claim as a new claim?

No. Sending the same claim again as a new original usually comes back as a duplicate. Send a corrected or replacement claim, or appeal, the way the payer asks.

Sources

• Claim Adjustment Reason Codes, X12
• Claim Adjustment Group Codes, X12
• Medicare Claims Processing Manual, chapter 22 (group codes and reason codes), CMS
• Medicare Claims Processing Manual, chapter 1 (timely filing, section 70.4), CMS
• Medicare Advance Written Notices of Non-coverage (MLN006266), CMS
• NCCI for Medicare, CMS
• ICD-10 code updates, CMS
• The CPT code process, American Medical Association
• Original Medicare vs. Medicare Advantage (MLN8659122), CMS
• 42 CFR 405.980, Reopening of initial determinations, Code of Federal Regulations