Common denial reason codes in medical billing

What are denial reason codes?

Claim denial reason codes are standardized codes used by payers to explain why a claim was denied or otherwise not processed for reimbursement as expected. The alphanumeric codes can help providers identify and address issues with their claims, ensuring complete and timely reimbursement in the future.

There are several types of denial codes, which are indicated by the letters at the start of a denial reason code. The letters, or claim adjustment group code, represent a type of denial. The codes include:

• CO (Contractual Obligations), which are adjustments based on payer agreements (e.g., CO-45: Charges exceed the contracted fee schedule).

• PR (Patient Responsibility), or costs that the patient must pay (e.g., PR-1: Deductible amount).
• OA (Other Adjustments), which are non-billable adjustments that do not require provider action (e.g., OA-18: Duplicate claim/service).
• PI (Payer-Initiated Reductions), or reductions by the payer unrelated to contractual obligations (e.g., PI-204: Service not covered under the plan).
• CR (Correction and Reversal), which is used for claims that had been denied but are being corrected or reversed by the payer and are often paired with another claim adjustment group code.

After the letters in the alphanumeric reason codes, the numbers indicate why a claim was denied or not processed.

Top claim denial reason codes

Certain denial reason codes appear more than others, and providers can use these codes to determine if they can revise a claim for reimbursement after an initial denial and how to correct the errors identified by payers. Some of the more common denial reason codes are listed below with tips on how to prevent them.

CO-4: Missing modifier

The CO-4 code means a procedure code is missing a modifier, which signals additional information about the procedure, such as the location. Typically, modifiers are missing or do not match the code for the procedure. Providers can review coding to ensure the correct modifier is listed and resubmit the claim. If denial reason code is common, though, providers should review coding practices.

CO-11: Diagnostic coding error

When payers assign a CO-11 code, they mean the diagnostic code on the claim is incorrect for the patient's diagnosis or irrelevant to the services provided. This could mean the diagnostic code given does not justify the treatment. To avoid this denial reason code, providers need to have accurate clinical documentation to support specific diagnosis codes. Billing and coding training on an ongoing basis can help to prevent these errors.

CO-15: Authorization number problem

A CO-15 code indicates a missing, invalid or incorrect authorization number. Payers often cite this denial reason code when a procedure or service requires prior authorization. Providers should be aware of what procedures or services require this extra step, and staff need to track and verify authorizations to find the code. If authorization was given prior to service, billers can contact the payer to find the number. If not, providers need to pursue retrospective authorization.

CO-16: Lack of or incorrect information

When providers receive a CO-16 code, their claim lacks information or is incorrect. It is a broad denial reason code but often means the claim is lacking correct modifiers, Social Security numbers, CLIA (Clinical Laboratory Improvement Amendments) numbers, or technical or demographic data. Providers must ensure accurate data collection and input. A checklist of necessary information for clean claims may help billers identify gaps in data collection, while a verification process can ensure complete claims. With the correct information, providers can resubmit claims for reimbursement.

CO-18: Duplicate bill

The CO-18 code represents double billing. Payers use the denial reason code to reject a duplicate claim, which occurs when providers submit multiple claims for the same procedure by accident or without an appropriate modifier. Double billing also occurs when a primary payer has forwarded the claim to a secondary payer for reimbursement. For the latter, providers could verify if a primary payer forwarded the claim by checking electronic remittance advice. For other cases, practice management systems may be able to verify double billing.

CO-22: Coordination of benefits mistake

The CO-22 code represents an issue with the coordination of benefits. COB determines primary, secondary and tertiary payers for services. Providers will receive this denial reason code if a claim is submitted to the wrong payer. Providers should submit claims to the primary payer first and can perform patient eligibility checks to identify the primary payer. Billers should also ensure patient insurance information is updated in their billing systems. 

CO-29: Expired time limit

The CO-29 code means providers missed the claim timeframe and the claim will not be paid by the payer. Payers, for example, may allow claim submission up to one year after the service, but timeframes vary by payer. An abundance of CO-29 codes indicates a slow revenue cycle. Providers may want to implement automated reminders for timely filings.

CO-50: Service not medically necessary

With a CO-50 code, payers are telling providers the services or procedures on the claim are not medically necessary based on the clinical information submitted with the claim. Payers cite this code based on their ideas of medical necessity for a specific diagnosis. Providers can fight this denial by providing additional evidence or clinical documentation. Otherwise, providers should consider clinical documentation improvement strategies.

CO-97: Already adjudicated

A CO-97 code usually means the service billed was already covered, whether under a bundled payment or by a previous claim. Providers should ensure medical billing and coding practices are up to date through continuous education on coding and billing rules and frequent audits to prevent a CO-97 code.

CO-167: Diagnosis not covered

Payers may not cover specific diagnoses or procedures, resulting in a CO-167 code on claim denials. Providers can try to rectify this denial issue by ensuring accurate coding and clinical documentation of diagnosis. They may need to ensure their diagnosis translates to the appropriate codes used by the payer. If there is an error, providers can resubmit an adjusted claim for reimbursement.

What to do when you receive a denial reason code

Claim denial reason codes provide information to providers on what they can do to rectify a specific claim and/or optimize workflows to prevent denials.

Providers should start by tallying their most common denial reason codes and identifying patterns. Do you see more codes related to medical necessity, missing information or coding errors? Understanding where there is a breakdown in revenue cycle workflows will help providers pinpoint where to make improvements and with what training to provide staff, whether it is coding practices or clinical documentation improvement.

When providers receive a denial, they also need to work quickly to correct the claim if it is a soft denial that can be reworked. In addition, staying on top of denial patterns can enable faster optimization to prevent denials and ensure timely filings.

Revenue cycle technology and automation can also help. The most common claim denials are related to missing or incorrect patient or insurance information. Billing heavily relies on accurate data collection and exchange. Practice management systems, billing software and other technologies can ease the manual burden of keying in information and provide additional capabilities, such as automated patient eligibility. Software can also verify claims and track their statuses, so providers stay abreast of changes.

Claim denials have a significant impact on revenue cycle management. Denials cost providers money, time and resources--all of which are better spent on more difficult cases and value-adding activities. Getting to the point of preventing denials is key to protecting revenue.

Jacqueline LaPointe is a graduate of Brandeis University and King's College London. She has been writing about healthcare finance and revenue cycle management since 2016.