List Of Common Denial Codes And Their Reasons

In medical billing, a denial code identifies the reason an insurance company refuses to pay a submitted claim. These codes often begin with “CO” (Contractual Obligation) or “PR” (Patient Responsibility) and point to the exact issue blocking payment. Common situations include missing modifiers, coding errors, lapsed insurance coverage, or duplicate claims.

Detailed Denial Codes and How to Address Them

CO-4: Missing Modifier

Reason: A required modifier was not included or was applied incorrectly.
What Next?

• Review whether the coding team applied the correct modifier.
• Correct the claim and resubmit.
• If the information is already correct, contact the payer for reprocessing or submit supporting documents to appeal.

CO-11: Incorrect Coding

Reason: Diagnosis or procedure codes do not match the service provided.
What Next?

• Review all diagnosis codes for errors.
• Correct and resubmit the claim.
• If accurate, appeal with medical documentation to prove medical necessity.

CO-15: Missing or Invalid Authorization Number

Reason: Prior authorization was missing or entered incorrectly.
What Next?

• Check field 23 on the CMS-1500 form for authorization details.
• Verify whether prior approval was obtained.
• Request retroactive authorization if possible.

CO-16: Incomplete Information

Reason: Required information (such as SSN, CLIA numbers, or modifiers) is missing.
What Next?

• Review remark codes for clarification.
• Double-check clinical notes for missing details.
• Run claims through a clearinghouse before submission.

CO-18: Duplicate Claim

Reason: The same service was billed more than once.
What Next?

• Confirm whether a duplicate submission occurred.
• Verify with the insurance company if the claim has already been processed.
• Request reprocessing or appeal if the denial was in error.

CO-22: Coordination of Benefits

Reason: Another payer should be billed first.
What Next?

• Verify the patient’s primary, secondary, and tertiary coverage.
• Update COB details in patient records.
• Resubmit to the appropriate payer.

CO-27: Expired Insurance Coverage

Reason: The patient’s insurance was inactive on the service date.
What Next?

• Confirm coverage dates with the insurer.
• Ask the patient about other active insurance plans.
• If the denial is incorrect, return the claim for reprocessing.

CO-29: Filing Limit Expired

Reason: Claim submitted after the payer’s filing deadline.
Examples:

• Aetna: 1 year for hospitals, 90 days for physicians
• Cigna: 90 days in-network, 180 days out-of-network
• Tricare: 1 year
• United Healthcare: 90 days
  What Next?
• Verify submission dates.
• If filed on time, appeal with proof of submission.

CO-45: Excessive Charges

Reason: Charges exceeded the payer’s maximum allowable fee.
What Next?

• Review HCPCS coding accuracy.
• Provide supporting documents for reconsideration.
• Resubmit as a replacement claim if adjustments are valid.

CO-50: Medical Necessity

Reason: Service determined not medically necessary.
What Next?

• Review payer’s medical necessity criteria.
• Submit additional documentation if available.
• Appeal if the service is justified.

CO-97: Service Already Adjudicated

Reason: Bundled or already processed service.
What Next?

• Verify if the service is included in a bundled package.
• Work with coding to determine if a modifier can be applied.
• File an appeal if the denial is incorrect.

CO-167: Diagnosis Not Covered

Reason: The diagnosis is not included under the insurance plan.
What Next?

• Review the payer’s covered diagnosis list.
• Correct codes if an error occurred.
• Resubmit as a corrected claim or appeal.

CO-242: Not Medically Necessary

Reason: Payer determined the service unnecessary.
What Next?

• Review medical justification for the service.
• Submit supporting clinical records.
• Appeal if the service was appropriate.

CO-256: Procedure/Place of Service Mismatch

Reason: Procedure code inconsistent with place of service (e.g., outpatient billed as inpatient).
What Next?

• Verify the correct place of service code.
• Correct and resubmit the claim.

Other Denial Codes

• CO-23: Primary payer paid less than the secondary payer’s allowance.
• CO-40: Service considered experimental or investigational.
• CO-107: Related qualifying service is missing.
• CO-109: Service not covered by the payer.
• CO-222: Maximum number of units exceeded.

Steps After a Claim Denial

1. Review denial codes and reasons carefully.
2. Correct the claim and gather supporting documentation.
3. File an internal appeal within 180 days, supported by records.
4. If denied again, request an external review within four months.
   • The decision of the external reviewer is binding on the insurer.

Medical Billing Denial Codes

Denial codes are used in medical billing to explain why an insurance claim was adjusted or rejected.

Claim Adjustment Reason Codes (CARC)

Claim Adjustment Reason Codes (CARCs) are standardized codes used in ERA (Electronic Remittance Advice) transactions. They indicate the reason why a payment adjustment was made or why a claim was denied.

Remittance Advice Remark Codes (RARC)

Remittance Advice Remark Codes (RARCs) work alongside CARCs to provide more context about the adjustment. They are divided into two types:

• Supplemental RARCs – Add extra clarification to the CARC, giving more detail about why the adjustment occurred.
• Informational RARCs – Act as general notes or alerts related to the remittance process.

Both CARCs and RARCs follow HIPAA standards. Any new codes or changes are regularly managed and reviewed by the CARC and RARC committees to ensure accuracy and consistency in communication.

How to Avoid Claim Denials?

Preventing claim denials requires a proactive approach, where providers focus on accuracy, compliance, and communication at every stage of the billing process. The following strategies can significantly reduce denials and improve reimbursement outcomes:

Train Staff

Well-trained staff are the first line of defense against claim denials. Billing teams must stay updated on payer rules, coverage policies, and claim submission requirements. Regular training ensures that employees understand coding guidelines, authorization procedures, and documentation standards, reducing the chances of errors that lead to rejections.

Verify Insurance

Insurance verification should always be completed before scheduling appointments or procedures to ensure accurate and timely care. This process confirms whether a patient’s coverage is active, identifies copay or deductible responsibilities, and checks if specific services require prior authorization. By establishing insurance details upfront, providers can prevent denials caused by ineligible coverage.

Use Technology

Modern billing software and clearinghouse tools help minimize errors in claim submission. These systems flag missing data, incorrect codes, and formatting issues before claims are sent to the payer. Technology also enables real-time tracking of claim status, allowing billing teams to correct mistakes early and avoid costly rework.

Enhance Documentation

Accurate and complete documentation is critical to supporting claims. Providers should ensure that medical records, coding, and patient demographics are clearly recorded in the electronic health record (EHR). Well-documented clinical notes make it easier to justify medical necessity and reduce denials related to missing or incomplete information.

Check Eligibility in Real Time

Real-time eligibility checks confirm whether the patient’s plan covers the services being provided. This step ensures that procedures are billed under active coverage, helping to avoid denials for non-covered services or expired insurance policies. Automated eligibility verification systems can streamline this process at the point of service.

Stay Updated

Insurance companies frequently update their policies, including requirements for prior authorization, referrals, and medical necessity. Providers must stay informed about these changes to remain compliant. Establishing a process to monitor payer bulletins, newsletters, and updates helps reduce denials caused by outdated practices and procedures.

Run Audits

Regular audits are an effective way to identify recurring denial patterns and correct them before they escalate. By analyzing denial reports, billing teams can identify common errors, such as incorrect coding or missing information, and implement targeted solutions to address these issues. Proactive auditing helps maintain compliance and improve overall revenue cycle performance.

How BillingFreedom Helps You Avoid Claim Denials?

Claim denials remain one of the most significant challenges in medical billing, often resulting in revenue loss, delayed reimbursements, and increased administrative strain for healthcare providers. With BillingFreedom, the focus is on addressing these denials at their root. Whether caused by incomplete documentation, coding errors, missed authorizations, or outdated insurance details, providers can safeguard revenue and maintain efficiency.

Our approach emphasizes training billing teams, verifying insurance before appointments, leveraging technology to minimize errors, and conducting regular audits to identify patterns of denials. We also ensure real-time eligibility checks and continuous monitoring of payer policies for accuracy and compliance. 

By applying these strategies consistently, providers experience fewer rejections, quicker reimbursements, and a more reliable revenue cycle, freeing them to dedicate more time to patient care instead of administrative rework.

For more details about our exceptional medical billing services, please don't hesitate to contact us via email at info@billingfreedom.com or call us at +1 (855) 415-3472. 

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