Top Medical Billing Denials: Common Causes, Codes & How to Resolve Them
Medical billing denials are one of the most common challenges faced by healthcare providers and Revenue Cycle Management teams.
A claim may be submitted correctly from the provider's perspective but still be denied because of eligibility issues, missing authorization, incorrect coding, duplicate submission, timely filing, coordination of benefits, or many other reasons.
Every denied claim represents revenue that may be delayed or potentially lost if the issue is not handled correctly.
For medical billers, AR representatives, denial specialists, and anyone working in healthcare Revenue Cycle Management, understanding why claims are denied and how to resolve them is an essential skill.
This guide explains the most common medical billing denials, their causes, examples of commonly encountered claim adjustment reason codes, and the steps billing teams can take to resolve and prevent them.
What Is a Medical Billing Denial?
A medical billing denial occurs when an insurance payer receives and processes a claim but refuses to pay all or part of the requested reimbursement.
The payer normally explains the reason through an:
- Electronic Remittance Advice (ERA)
- Explanation of Benefits (EOB)
- Claim status response
- Payer portal
- Written correspondence
The denial must then be reviewed to determine the appropriate next action.
Depending on the reason, the billing team may need to:
- Correct the claim
- Submit missing information
- Contact the payer
- Verify eligibility
- Obtain authorization information
- Submit medical records
- File a reconsideration
- Submit an appeal
- Bill another payer
- Transfer appropriate responsibility to the patient
A denial should never be worked without understanding its underlying cause.
Claim Rejection vs. Claim Denial
Although the terms are sometimes used interchangeably, a rejection and a denial are not exactly the same.
Claim Rejection
A rejected claim usually fails before full adjudication.
Common reasons include:
- Invalid member ID
- Missing required fields
- Invalid payer ID
- Incorrect claim format
- Missing provider information
- Invalid code format
Rejected claims usually need to be corrected and resubmitted.
Claim Denial
A denied claim has generally reached the payer and undergone adjudication.
The payer may determine that:
- The service was not covered
- Authorization was missing
- The claim was filed too late
- The service was considered duplicate
- Another payer should be billed first
- Medical necessity requirements were not met
- Coding or billing rules were not followed
Denied claims may require more detailed investigation than simple rejections.
What Are CARC and RARC Codes?
Insurance payers commonly use standardized codes to explain claim adjustments.
CARC
Claim Adjustment Reason Codes (CARCs) explain why a claim or service line was adjusted, reduced, denied, or assigned to another financial responsibility.
Examples include codes relating to:
- Missing information
- Duplicate services
- Timely filing
- Eligibility
- Coverage
- Authorization
- Medical necessity
RARC
Remittance Advice Remark Codes (RARCs) provide additional explanation about the payer's decision.
CARC and RARC codes should always be interpreted along with:
- The EOB or ERA
- Payer policy
- Patient eligibility
- Claim history
- Medical documentation
- Contract requirements
A code by itself does not always tell the entire story.
1. Missing or Incomplete Information
One of the most common claim problems occurs when required information is missing or incomplete.
A commonly encountered CARC associated with missing information is:
CO-16
This generally indicates that the claim or service lacks information needed for processing.
Possible causes include:
- Missing modifier
- Missing referring provider
- Missing authorization number
- Missing NPI
- Missing diagnosis information
- Incomplete patient demographics
- Missing documentation
- Invalid or incomplete claim fields
How to Resolve It
First review the ERA or EOB and any accompanying remark codes.
Then:
- Identify exactly what information is missing.
- Review the original claim.
- Verify the information in the practice management system.
- Correct the missing or invalid field.
- Submit a corrected claim when appropriate.
- Document the action taken.
Do not simply resubmit the same unchanged claim, because it may be denied again.
2. Duplicate Claim or Service
A common adjustment reason associated with duplicate services is:
CO-18
This generally indicates that the payer believes the claim or service has already been submitted or processed.
Duplicate denials can occur when:
- The same claim was submitted twice.
- A corrected claim was submitted incorrectly as a new claim.
- Two identical procedure lines were billed without appropriate modifiers.
- An automated billing process generated duplicate submissions.
- The payer incorrectly identified a legitimate service as a duplicate.
How to Resolve It
Check:
- Previous claim numbers
- Dates of service
- CPT/HCPCS codes
- Units
- Modifiers
- Provider information
- Previous payer processing
If the claim truly is a duplicate, no additional payment may be due.
If the service was legitimately performed more than once, review whether documentation and an appropriate modifier support separate reimbursement.
3. Timely Filing Denial
A common reason code associated with timely filing is:
CO-29
This generally means that the payer believes the claim was submitted after the permitted filing deadline.
Every payer may have different timely filing requirements.
For example, filing periods may vary depending on:
- Insurance plan
- Provider contract
- Original claim
- Corrected claim
- Secondary claim
- Appeal
How to Resolve It
First determine:
- Date of service
- Original submission date
- Payer's timely filing limit
- Whether the claim was previously submitted
- Whether proof of timely filing exists
Possible evidence may include:
- Clearinghouse acceptance reports
- Electronic claim acknowledgements
- Payer claim numbers
- Previous correspondence
- Submission reports
If you can demonstrate that the claim was originally submitted within the filing limit, a reconsideration or appeal may be appropriate.
Prevention
Maintain claim-submission reports and monitor unbilled or rejected claims before filing deadlines expire.
4. Medical Necessity Denial
A commonly encountered code related to medical necessity is:
CO-50
This may indicate that the payer determined the service was not medically necessary under its coverage criteria.
Medical necessity denials may result from:
- Diagnosis not supporting the procedure
- Payer coverage policy
- Missing documentation
- Frequency limitations
- Incorrect diagnosis coding
- Failure to meet clinical criteria
How to Resolve It
Review:
- Diagnosis codes
- Procedure codes
- Provider documentation
- Payer medical policy
- Medical necessity criteria
- Authorization information
If the service was medically necessary and documentation supports it, an appeal may be appropriate.
Medical records or a letter of medical necessity may sometimes be required.
5. Service Not Covered
A claim may be denied because the patient's insurance plan does not cover the billed service.
Possible reasons include:
- Plan exclusion
- Benefit limitation
- Non-covered procedure
- Experimental or investigational service
- Service excluded under the patient's benefit package
The appropriate action depends heavily on the insurance policy and patient benefits.
How to Resolve It
Verify the patient's benefits for the date of service.
Check:
- Was the service covered?
- Was there a benefit limitation?
- Was authorization required?
- Is another payer responsible?
- Was the patient informed of potential financial responsibility?
If the denial is incorrect according to the patient's benefit plan, contact the payer or submit an appeal.
6. Authorization or Precertification Missing
Many services require approval before they are performed.
Authorization-related denials can occur when:
- No authorization was obtained.
- Authorization expired.
- Wrong procedure was authorized.
- Wrong provider or facility was listed.
- Approved visits were exceeded.
- Date of service fell outside authorization dates.
- Authorization number was missing from the claim.
How to Resolve It
Verify:
- Authorization number
- Effective dates
- CPT/service approved
- Number of visits
- Rendering provider
- Facility
- Payer requirements
If valid authorization exists, provide the information to the payer or submit a corrected claim as required.
If no authorization was obtained, determine whether retrospective authorization, reconsideration, or an appeal is allowed.
7. Eligibility or Coverage Terminated
Claims can be denied when the patient was not eligible under the insurance plan on the date of service.
Possible causes include:
- Insurance terminated
- Incorrect member ID
- Wrong payer billed
- Patient changed insurance
- Coverage had not started
- Patient demographics did not match payer records
How to Resolve It
Verify eligibility for the specific date of service, not just the current date.
Check:
- Effective date
- Termination date
- Member ID
- Subscriber information
- Other available insurance
- Medicare or Medicaid coverage when applicable
If another insurance policy was active, the claim may need to be billed to the correct payer.
8. Coordination of Benefits (COB)
Coordination of Benefits determines which insurance plan should pay first when a patient has more than one policy.
COB denials can occur when:
- Payer records are outdated.
- Another insurer is listed as primary.
- Patient has not updated COB information.
- Primary EOB was not submitted to the secondary payer.
- Wrong payer was billed as primary.
How to Resolve It
Determine the correct payer order.
The patient may need to contact the insurance company and update their COB information.
After the payer updates its records, the claim may need to be reprocessed or resubmitted.
For secondary claims, make sure the required primary payer information is included.
9. Bundled or Included Service
A frequently encountered adjustment code is:
CO-97
This generally indicates that the payer considers the service included in payment for another procedure or service.
This may occur because of:
- Bundling rules
- National Correct Coding Initiative edits
- Payer-specific reimbursement policy
- Procedure combinations
- Modifier issues
How to Resolve It
Review:
- CPT codes billed
- Modifiers
- NCCI edits when applicable
- Payer reimbursement policies
- Documentation
If the services were separately reportable and documentation supports separate reimbursement, determine whether an appropriate modifier should have been used.
Never add a modifier merely to bypass a payer edit without supporting documentation.
10. Wrong Payer or Incorrect Payer Responsibility
A claim may be denied because it was submitted to the wrong insurance carrier.
A commonly encountered code is:
CO-109
This generally indicates that the claim or service is not covered by that payer or contractor and may need to be sent to the appropriate payer.
Possible causes include:
- Wrong Medicare contractor
- Wrong insurance plan
- Coverage changed
- Another payer is primary
- Incorrect payer ID
How to Resolve It
Verify:
- Eligibility
- Insurance card
- Payer ID
- Primary/secondary order
- Date-of-service coverage
Then submit the claim to the correct payer when appropriate.
11. Non-Covered or Contractual Adjustments
Some remittance codes represent contractual adjustments rather than traditional claim denials.
For example:
CO-45
commonly represents the amount by which the billed charge exceeds the payer's allowed amount or fee schedule.
This is important because not every adjustment should be worked as an appeal.
For participating providers, the difference may represent a contractual write-off.
AR representatives should therefore understand the difference between:
- A true denial
- Patient responsibility
- Contractual adjustment
- Non-covered charge
- Underpayment
Incorrectly treating contractual adjustments as unpaid AR can distort aging reports.
12. Modifier-Related Denials
Modifiers provide additional information about how a service was performed.
Claims may be denied because:
- Required modifier is missing.
- Incorrect modifier is used.
- Modifier is incompatible with the procedure.
- Documentation does not support the modifier.
- Payer-specific rules were not followed.
Examples of commonly used modifiers include:
- 25
- 59
- 24
- 26
- TC
- 76
- 77
The correct modifier depends on the actual service and documentation.
How to Resolve It
Review:
- CPT code
- Documentation
- Modifier guidelines
- Payer policy
- NCCI edits where applicable
Only correct the modifier when the medical record supports the change.
13. Diagnosis and Procedure Mismatch
A claim may be denied when the diagnosis submitted does not support the procedure performed.
Possible causes include:
- Incorrect ICD-10 code
- Diagnosis entered incorrectly
- Diagnosis not linked to procedure
- Payer medical necessity requirements
- Coding error
How to Resolve It
The billing or coding team should review the medical record.
Do not change a diagnosis simply to obtain payment.
Any corrected diagnosis must be supported by the provider's documentation.
14. Provider Credentialing or Enrollment Issues
Claims may also be denied because of problems involving the provider rather than the patient or procedure.
Examples include:
- Provider not enrolled with payer
- Credentialing incomplete
- NPI mismatch
- Tax ID mismatch
- Provider not effective on date of service
- Rendering provider not recognized
- Service performed outside contracted network
How to Resolve It
Coordinate with the credentialing team and payer.
Review:
- Enrollment effective date
- Provider NPI
- Group NPI
- Tax ID
- Contract status
- Rendering provider information
Some claims may be reprocessed once the enrollment issue is corrected, depending on payer rules.
15. Invalid Place of Service
The Place of Service (POS) code tells the payer where the service was performed.
Incorrect POS information can affect:
- Coverage
- Reimbursement
- Coding edits
- Provider eligibility
Examples include office, inpatient hospital, outpatient hospital, telehealth, and other settings.
How to Resolve It
Verify where the patient actually received the service and compare it with:
- Claim POS
- Provider documentation
- Procedure requirements
- Payer policy
If incorrect, submit the appropriate corrected claim according to payer requirements.
How an AR Representative Should Work a Denial
An effective denial workflow should be systematic.
Step 1: Identify the denial
Review the:
- ERA
- EOB
- Claim status
- CARC
- RARC
- Payer portal
Step 2: Find the root cause
Ask:
- Was the claim submitted correctly?
- Was eligibility active?
- Was authorization required?
- Was coding correct?
- Was the claim timely?
- Was the service covered?
- Was another payer responsible?
Step 3: Review supporting information
Check:
- Original claim
- Medical records
- Eligibility response
- Authorization
- Previous notes
- Payer policies
- Previous submissions
Step 4: Determine the correct action
The next step may be:
- Corrected claim
- Rebill
- Reconsideration
- Appeal
- Medical records submission
- Payer call
- Patient contact
- Adjustment
- Write-off according to policy
Step 5: Document everything
Good AR documentation should include:
- Date of follow-up
- Payer contacted
- Representative name when applicable
- Call reference number
- Claim status
- Denial reason
- Action taken
- Follow-up date
Clear documentation prevents duplicated work and helps other team members understand the account history.
Corrected Claim vs. Appeal
Knowing when to correct a claim and when to appeal is important.
Corrected Claim
Usually appropriate when the original claim contains incorrect information such as:
- Coding error
- Incorrect modifier
- Wrong units
- Incorrect provider information
- Missing claim data
The correction must always be supported by the actual medical and billing records.
Appeal
An appeal may be appropriate when the provider believes the payer processed the claim incorrectly despite the original information being correct.
Examples may include:
- Medical necessity dispute
- Incorrect benefit application
- Authorization dispute
- Incorrect bundling
- Underpayment
- Timely filing when proof of timely submission exists
The exact process depends on payer requirements.
How to Prevent Medical Billing Denials
The best denial is the one that never occurs.
Healthcare organizations can reduce denials by improving processes throughout the revenue cycle.
Important prevention strategies include:
Verify eligibility before services
Confirm active coverage, benefits, deductible, copayment, and payer requirements.
Obtain authorization when required
Verify authorization before the service and ensure it matches the procedure and date.
Maintain accurate patient information
Incorrect demographics can cause unnecessary claim problems.
Improve provider documentation
Documentation should clearly support services billed.
Use accurate coding
Procedure, diagnosis, modifier, and POS information should reflect the actual service.
Scrub claims before submission
Claim edits can identify errors before they reach the payer.
Monitor rejected claims
Rejected claims should be corrected quickly rather than remaining unresolved.
Track timely filing
AR and billing teams should know payer filing deadlines.
Analyze denial trends
If the same denial repeatedly occurs, fixing the upstream process is more valuable than repeatedly correcting individual claims.
Why Denial Analysis Is Important
A denial should not be viewed only as an individual unpaid claim.
Denials can reveal weaknesses in the revenue cycle.
For example:
A high number of eligibility denials may indicate problems with front-office verification.
Frequent authorization denials may indicate weaknesses in the authorization process.
Repeated coding denials may require coder education or documentation improvement.
Timely filing denials may indicate workflow delays.
By categorizing and analyzing denials, an RCM organization can identify root causes and prevent future revenue loss.
Who Handles Medical Billing Denials?
Different organizations structure their RCM teams differently.
Denials may be handled by:
- AR Representatives
- Denial Management Specialists
- Medical Billers
- Medical Coders
- Authorization Specialists
- Payment Posting teams
- Team Leads
- RCM Managers
AR representatives frequently play an important role because they follow outstanding claims until they are resolved.
If you want to understand this position in detail, read:
What Is an AR Representative in Medical Billing? Duties, Skills & Career Path
Where Denial Management Fits in the Medical Billing Cycle
Denial management is only one part of the overall healthcare revenue cycle.
Before a claim reaches denial management, it may already have passed through:
Registration → Eligibility → Authorization → Documentation → Coding → Charge Entry → Claim Submission → Payer Adjudication → Payment Posting
Understanding the complete workflow makes it easier to identify where a denial originated.
For a full explanation, read:
Medical Billing Process Explained: A Complete Step-by-Step Guide
Is Denial Management a Good Medical Billing Career Skill?
Yes.
Understanding denials requires knowledge across several areas of medical billing, including:
- Eligibility
- Coding
- Insurance policies
- Claims
- AR
- Appeals
- Documentation
- Payer portals
- Reimbursement
Professionals who become skilled at identifying denial causes and recovering unpaid revenue can progress into positions such as:
- Senior AR Representative
- Denial Specialist
- Quality Analyst
- AR Team Lead
- RCM Supervisor
- RCM Manager
If you are new to the industry, you can also read:
How to Start a Career in Medical Billing: A Step-by-Step Guide for Beginners
Final Thoughts
Medical billing denials are an unavoidable part of Revenue Cycle Management, but many denials can be prevented or successfully resolved when billing teams understand their root causes.
The key is not simply to resubmit every unpaid claim.
Effective denial management requires reviewing the payer's response, understanding the reason code, checking the original claim and documentation, determining the correct corrective action, and documenting the outcome.
More importantly, organizations should analyze denial trends and correct the underlying process that caused the denial.
For medical billers and AR professionals, mastering denial management is one of the most valuable skills for improving collections, reducing outstanding AR, and protecting provider revenue.
If you are looking to build or advance your career in healthcare Revenue Cycle Management, explore the latest medical billing, AR, coding, and RCM opportunities on BillingJobs.online.