Common Denial Codes in Medical Billing and How

Common Denial Codes in Medical Billing and How to Address Them

Medical billing is a crucial function in the healthcare industry that ensures providers get reimbursed for their services. However, one of the most significant challenges in the billing process is claim denials. Denials not only delay payment but also create administrative burdens and negatively impact revenue flow.

Understanding the most common denial reason codes—and how to address and prevent them—is essential for optimizing revenue cycle management.

In this blog, we’ll explore:

What denial codes are
The most frequent denial codes in medical billing
Strategies to handle and prevent denials

What Are Denial Codes in Medical Billing?

Denial codes are alphanumeric explanations provided by insurance payers to indicate why a submitted claim was denied or not paid as requested. These codes help billers understand the specific issue with the claim so they can correct it and resubmit if necessary.

Denial codes are usually classified as:

CARC (Claim Adjustment Reason Codes)
RARC (Remittance Advice Remark Codes)

Understanding these codes helps billers identify the root cause of denials and avoid recurring errors.

Top 10 Most Common Medical Billing Denial Codes

1. CO-16 – Claim/service lacks information

This code appears when the claim is missing critical data such as diagnosis codes, patient details, or provider information.

Solution:
Implement strict data validation before submission. Use claim scrubbing tools to detect missing information early.

2. CO-18 – Duplicate claim/service

This indicates that a claim for the same service and date of service has already been received.

Solution:
Check the claim history before resubmitting. If a correction is needed, follow the proper resubmission process.

3. CO-29 – The time limit for filing has expired

Each payer has a specific time window for submitting claims. Submitting outside this window results in automatic denial.

Solution:
Track submission deadlines carefully. Automate reminders or use billing software that alerts you before deadlines expire.

4. CO-97 – The benefit for this service is included in the payment/allowance for another service

This often relates to bundled services where separate reimbursement is not allowed.

Solution:
Review bundling rules and NCCI edits before submitting. Use appropriate modifiers when needed to unbundle valid services.

5. CO-109 – Claim not covered by this payer/contractor

This typically means the patient’s insurance provider does not cover the services billed.

Solution:
Verify insurance eligibility before service. If necessary, obtain prior authorization.

6. CO-125 – Submission/billing error(s)

This generic code reflects various billing format errors such as wrong place of service or mismatched coding.

Solution:
Double-check billing rules and coding guidelines. Use automated claim scrubbers to identify issues before submission.

7. CO-B7 – This provider was not certified/eligible to be paid for this procedure/service

Claims are denied when providers aren’t credentialed properly with the payer.

Solution:
Ensure all providers are credentialed and contracted with the appropriate payers before rendering services.

8. CO-151 – Payment adjusted because the payer deems the information submitted does not support this level of service

This often happens when documentation doesn’t justify a higher-level code.

Solution:
Ensure clinical documentation is detailed and supports the level of service coded.

9. CO-204 – This service/equipment/drug is not covered under the patient’s insurance plan

Indicates non-covered services were billed.

Solution:
Review the patient’s benefits prior to service. Provide cost estimates and discuss out-of-pocket responsibilities.

10. CO-A1 – Claim denied charges

General denial that may require a follow-up for more detailed explanation.

Solution:
Review the remittance advice or call the payer for more details. Appeal with supporting documentation if applicable.

How to Address and Prevent Claim Denials

Claim denials can be resource-intensive to manage. The best approach is a mix of proactive prevention and responsive correction:

✅ Verify Patient Insurance

Always verify eligibility and coverage details before the appointment. This reduces surprises and denials due to coverage issues.

✅ Use Medical Necessity Guidelines

Ensure services rendered are medically necessary and covered under the patient’s insurance plan.

✅ Implement Real-Time Claim Scrubbing

Use billing software with built-in scrubbing tools that detect errors before submission.

✅ Train Billing Staff

Your billing team should be updated on the latest codes, payer rules, and compliance regulations.

✅ Analyze Denial Trends

Review denial reports regularly to identify recurring issues and patterns. This allows you to implement targeted solutions.

✅ Timely Follow-Up

Monitor unpaid claims and respond to denials immediately. The longer you wait, the harder it becomes to recover payment.

Partner with Experts Like Castel Medical Billing

At Castel Medical Billing, we specialize in helping healthcare providers reduce denials, improve clean claim rates, and accelerate revenue cycles. Our expert team handles all aspects of the billing process — from coding and claim submission to denial management and appeals.

? Let us help you turn denials into dollars.