As a healthcare provider, you know how important accurate billing is. But did you know that even a small error can lead to major issues?

That's why understanding these errors is important so you can avoid them

According to Premier, healthcare claim denials cost over $20 billion each year. But it’s not just about money—delayed payments and appeals can also affect the care you provide.

Before understanding denial codes, let’s first understand what they are. 

What Are Denial Codes? 

Denial codes are alphanumeric codes given by insurance companies to explain why a claim was denied or not paid. For instance, CO-11 means “Error in Coding,” the most common denial codes in medical billing, while CO-18 stands for “Duplicate Claim.” Understanding these codes can make it easier to fix errors and get paid.

Types of Denials in Medical Billing

There are two types of denial:

Hard Denials

Hard denials happen when a claim is permanently rejected, with no chance to resubmit. It happens if the service isn’t covered by the insurance, there's no pre-authorization, or if deadlines are missed. 

Reductions in hard denials can be achieved by updating your billing procedures and ensuring compliance through professional medical billing services.

Soft Denials

Soft denials are temporary and can be fixed. They usually happen because of missing information, small coding errors, or patient eligibility mismatches. Unlike hard denials, you can resolve these by submitting extra documentation or correcting mistakes. 

Top 10 Denial Codes in Medical Billing

1. CO-4: Missing or Incorrect Modifier

If a procedure code doesn’t match the modifier or requires one, your claim might get rejected. 

To avoid this, always keep your codes and modifiers updated. 

If it’s denied, simply correct and resubmit, or contact the payer if it’s still rejected.

2. CO-15: Missing or Invalid Authorization Number

If a procedure needs prior authorization and the authorization number is missing or wrong, the claim will be denied. 

To prevent this, track authorizations through payer portals. 

If the claim is denied, check with the payer for the correct authorization number or apply for retroactive authorization.

3. CO-16: Missing Information

Sometimes one missing detail, like a Social Security number or patient accident date, can lead to a denial. 

So, make sure your team knows what information is required and double-check everything before submission. 

If a claim is denied, correct the missing data and resubmit.

4. CO-18: Duplicate Claim

Denial can also happen if a person submits the same claim twice, whether to the primary and secondary insurance or as an unmarked corrected claim. 

It can be prevented by ensuring claims are only submitted once and checked for duplication. 

If resubmitting a corrected claim, use the proper code to avoid confusion.

5. CO-45: Charge Exceeds Fee Schedule

If the amount charged exceeds the agreed-upon rate between the provider and payer, your claim may be denied. 

It can be prevented by reviewing your fee agreements regularly. 

If it’s denied, you may need to work with the patient on a payment plan.

6. CO-22: Coordination of Benefits

The patient's claim will be rejected if it is submitted to the wrong insurance company, even though they have both primary and secondary insurance. 

Always submit to the primary insurance first, and confirm which insurance is primary. 

If denied, correct the insurance information and resubmit.

7. CO-167: Diagnosis Not Covered

Some diagnoses may not be covered by a payer. 

Make sure your diagnosis codes align with the payer’s requirements. 

If the claim is denied, correct the diagnosis and resubmit.

8. CO-50: Procedure Not Medically Necessary

If the payer doesn’t think a procedure is medically necessary, it can be denied. 

To prevent this, ensure thorough documentation of the patient's condition and treatment.

If denied, submit a clear appeal with additional details to prove the necessity.

9. CO-150: Level of Care Not Justified

This denial indicates that the service provided wasn’t justified based on the submitted medical information. 

To prevent this, ensure your documentation clearly shows why the service is needed. 

If denied, check for discrepancies, collect additional information, and submit an appeal.

10. CO-151: Frequency of Service Not Supported

If a service is provided too frequently or exceeds the allowed frequency, it will be denied. 

Proper documentation to justify the frequency of services is key. 

If denied, collect additional supporting documents and appeal.

How to Avoid Claim Denials in Medical Billing

Preventing claim denials is all about following a few key steps. Here’s how you can ensure your claims get paid:

• Train Your Staff

Proper training is very important. If your team isn't updated with the latest claim filing rules, they might make mistakes that lead to denials and lost revenue. Make sure everyone knows the coverage policies and payment requirements.

• Verify Insurance Information

Submitting claims to the wrong payer is a common cause of denials. To avoid this, check a patient’s benefits eligibility before their appointment. This will confirm their coverage and clarify their financial responsibility upfront.

• Check Eligibility

Make sure to confirm eligibility for services before treatment. Not all procedures are covered by every insurance plan, so it’s essential to double-check whether a service is covered before submitting a claim.

• Run Audits

Rather than letting mistakes grow, run regular audits to identify patterns of denials. This helps you fix recurring issues and prevent them in the future.

Our Approach to Denial Management

Denial management in medical billing can be challenging. It requires technical expertise and the ability to effectively communicate with insurance companies to find the best solution.

At our company, we take the hassle out of it. We offer expert medical billing services with a focus on efficient denial management. We combine data-driven processes with a persistent approach to reduce denials and improve your cash flow.

If you’re looking for a reliable partner to manage your billing and reduce denials, reach out to us today!

Conclusion

Medical billing mistakes can be stressful and expensive for healthcare providers. One of the biggest reasons for these errors is denial codes. Understanding these codes and why they happen is key to avoiding them and making your billing process easier.

FAQs

What Are Claim Denials?

Claim denials happen when an insurance company refuses to pay for healthcare services that a patient receives from a healthcare provider. This can occur for several reasons, such as errors in the claim or issues with the patient’s coverage.

What is the common rejection in medical billing?

One of the most common reasons for claim rejections in medical billing is submitting duplicate claims.

What is the main denial in medical billing?

A common reason for claim denials is missing or incorrect patient information. Errors such as the wrong date of birth, misspelled names, or invalid insurance details can prevent claims from being processed successfully.

What is the most frequent medical error?

Among medical errors, medication errors are among the most common. These can include prescribing the wrong medication, incorrect dosages, or overlooking potential drug interactions, all of which can have serious consequences for patients.

What is the most common cause of 70% of serious medical errors?

Communication problems are a leading cause of serious medical errors, accounting for nearly 70% of such incidents. Miscommunication between healthcare providers or between providers and patients can lead to misunderstandings, delayed treatments, or incorrect procedures.