Medical Billing Denial Codes: Reasons & Tips to Overcome Them

In medical billing, when you submit the claims to insurance payers, either they process them to pay you or reject them due to several reasons, of which the most common reasons are incorrect or outdated use of codes, missing modifiers, or patient eligibility checks. To help you understand the causes of denials, the insurance company uses specific denial codes. Hence, to improve the revenue cycle, it’s essential to master these claim denial codes.

In today’s guide, we’ll discuss what denial codes are in medical billing, their types, and the most common denial codes and their reasons. We will also suggest the best strategies to overcome denials and maximize reimbursements, improving your revenue cycle.

What Are Denial Codes in Medical Billing?

Denial codes, also known as Claim Remittance Codes, indicate why the insurance payer rejects the submitted claim, whether it is partially paid or entirely dismissed. These denial codes consist of two to five digits and use different prefixes before the numbers.

Here’s what prefixes are commonly used in medical billing denial codes;

CO – When CO appears in denial codes, it refers to contractual obligations, which are the insurance contract terms between the provider and payer.
PR – It relates to Patient Responsibility, meaning the patient is responsible for paying the bill, including deductibles, coinsurance, and copays.
PI – It relates to Payer-Initiated Reductions, meaning payments are adjusted or not paid due to the payer’s own integrity reasons.
OA – Stands for Other Adjustment, which means the denials don’t fall under any other category, like CO, PR, or PI.

How Many Types of Denials in Billing?

Denials in healthcare billing are often categorized into two types: soft and hard, having different meanings and issues. For providers and the billing team, it is most important to understand these types so you know what to do next: either resubmit the claim or write it off. Here’s the explanation of both denial types for better understanding;

Soft Denials

Soft denials mean these are temporary and that you can fix them after correcting the issues, such as using the correct code. After that, you will get your payments.

Hard Denials

This type of claim denial makes it hard to get paid for the submitted claim for various reasons. Some of them may include no prior authorization, an expired filing submission, or rendered services not covered by the payer.

List of Common Denial Codes

Below, we list the common denial codes that facility providers and healthcare organizations have faced in recent years. By mastering these codes, you’ll instantly catch the reasons, enabling you to fix errors and resubmit them for the maximum possible reimbursement.

CO-16

Payer uses the CO-16 denial code when the required information is missing, such as NPI, modifiers, or patients’ demographics (name, DOB, or address). However, it can also happen when you submit all the information, but a small typing error can lead to claim denials.

CO-18

The insurance payer uses the CO-18 code when duplicate claims have been found. It means the billing team has submitted the claim for the same service twice. However, it may also occur that medical billers submit corrected claims without using the claim resubmission codes, indicating duplication in the payer’s system.

CO-22

CO-22 denial code refers to the coverage of benefits issues. Payer uses it in two cases: one when they pay their portion for the provided services, and secondly, when the patient’s coverage plan doesn’t cover under their COB plan. Moreover, CO-22 is also used when a patient has two or more insurers – primary, secondary, or tertiary.

CO-27

In medical billing, the CO-27 denial code indicates that the patient’s insurance has expired. Hence, make sure to verify eligibility and benefits coverage before delivering services to prevent this denial.

CO-29

The denial code CO-29 appears when the provider or the billing staff submits the claim too late. Usually, this denial code falls under the “hard denial” category until you have proof that you had submitted the claim early or before the time limit. Moreover, every insurance company has its own time limits, strict policies, and requirements, so ensure you submit claims promptly to prevent this denial.

CO-45

If the payer uses the CO-45 denial code in ERA/EOB, it means the provider charged a fee higher than the payer-provider fee schedule allows. Moreover, the provider can’t resubmit the claim for this denial or bill the patient for these services.

Example: The Provider or medical billers charge $150 for services, even though the payer allows or schedules only $100. In this case, the $50 was written off, meaning it was/will never be paid, as the provider accepts this when signing the contract with ithe insurance company.

CO-50

The denial code CO-50 indicates that the treated service wasn’t medically necessary. Hence, the payer will not pay until the provider submits another appeal with valid documentation regarding the patient’s care.

CO-97

CO-167

If you encounter the denial code CO-97, it indicates a “bundled service” problem, meaning the service was delivered at the same visit. In this case, if the service is different, then use modifiers to get paid for both.

Moreover, CO-97 can occur if the patient’s insurance policy doesn’t cover this service, or if it is bundled with another service that must be paid for.

Example: If the provider performs the colonoscopy and treats the patient with a biopsy, then the payer only pays for the biopsy, as some insurance considers exploration (colonoscopy) as part of the procedure.

CO-167

The denial code CO-167 means that the insurance coverage policy doesn’t cover the services. It often falls under the “hard denials” category because even the patient sometimes doesn’t know their own coverage limits.

CO-4

Denial code CO-4 refers to the mismatched or incorrect modifier usage. In this case, you just need to add a correct modifier and resubmit the appeal for quick reimbursement.

For example, the radiologist performs a 3-view X-ray of the left knee, and the biller forgets to attach the (-LT) modifier, resulting in claim rejection due to incomplete documentation.

CO-11

The payer uses the denial code CO-11 when the ICD-10 diagnosis code doesn’t match the CPT-procedure code, indicating inconsistent medical necessity.

For example, the medical coder uses the (ICD-10 M25.571), which indicates the pain in the right foot, while using the (CPT 73620) that shows that the patient was treated for the left foot, so the submitted claim is rejected with the denial code CO-11.

CO-15

CO-15 denial code appears when the prior authorization for the services/treatment is missing or invalid. Often considered a hard denial because every insurance company has its own rules and regulations regarding the services, and if prior authorization is required before the patient’s treatment, then the payer won’t pay. To overcome this denial, complete the CMS-1500 form, including the valid prior auth number, before the patient’s appointment to avoid future CO-15 denials.

CO-222

In medical billing, the denial code CO-222 indicates that contractual obligations have been exceeded, meaning the insurance plan or contract fee schedule has been exceeded.

For example, the patient’s insurance plan covers the $500 limit, but the visits exceed this limit by approximately $700, then the provider must write off $200.

Most Useful Strategies to Overcome Denials in Medical Billing

Use Accurate Medical Codes

When it comes to medical coding, either you are the expert at assigning codes, or you hire someone who is a certified medical coder, because it’s the most complicated part of the medical billing process. Hence, avoid using outdated CPT, ICD-10, and HCPCS codes for the provided service or treatment, so the payer won’t delay your payment by using CO-11.

Double-Check Claims

Use a double-check method before submitting claims to the payer. It helps you find errors, such as missing modifiers, incorrect or outdated patient demographics, or overlooked medical codes, which increases the chance of claims approval the first time.

Verify Prior-Authorization

To avoid CO-15, ensure your billing team pre-verify the service before the patient’s visit and use it accurately to ensure a clean claim submission.

Check Provider Credentials

Before submitting a claim, you must verify the provider’s credentials, such as NPI, licenses, and medical board certifications, to ensure they are valid and not expired. If the provider needs recredentialing services, apply for them within the required timeframe to avoid credentialing expiration-related denials, which can delay payments for weeks or even months.

Staff Training

An expert billing team is necessary for the medical billing process, as it handles the most complex parts, and even minor errors can cause delays and even denials. Hence, hire certified medical coders and RCM experts who can handle every aspect of billing, regardless of the niche’s complexity, effortlessly, ensuring providers are paid on time for the services they render.

Cut Denials by 15–20% With eClaim Solution

Did you face denials again and again, even after resubmitting it? Then you should rethink it once to change the strategy. Appealing denials alone isn’t the solution; doing it correctly using the claim resubmission codes is mandatory.

At eClaim Solution, we are masters in denial management and appeals, know where and how to use the resubmission codes (6, 7, or 8), and ensure the reappeal passes on the first attempt. Moreover, we combine AI in medical billing with human expertise to ensure that every step of the process is accurate and compliant, minimizing the risk of denials.

Frequently Asked Questions

What are claim denials in medical billing?

Claim denials in medical billing mean when an insurance company rejects payment for rendered services due to missing modifiers, outdated codes, incomplete documentation, or coverage plan issues. To overcome denials, the billing team needs to resubmit the appeals by addressing the problems and using the correct claim resubmission codes, ensuring prompt recovery of lost revenue.

How to resolve claim denial?

It is so simple if handled properly. If the denials occur, then follow these steps; First, categorize the denial code as soft or hard. Second, determine the cause of the denial and fix it using the proper claim resubmission code. Now, re-appeal the denial within the specified timeframe. Lastly, monitor and track the denied claim until it gets processed and paid by the payer.

Why do I need to outsource denial management services?

If the denial occurs, it’s hard to get your pay back because it requires expertise and a lengthy process, and it can be stressful for providers while they’re handling patients.

By outsourcing denial management services, you’ll gain access to denial experts who can handle every denial efficiently and smoothly, reduce administrative workload, and help you recover lost revenue.

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