When you work as a medical biller, an important part of your job will be dealing with denied claims. If a claim is denied, it means the claim has reached the insurance payer and was processed and then denied. If a claim or reference number is issued, reference that number when calling the insurance company for follow up.
Correcting denied claims is important, because denied and rejected claims mean that reimbursement to the medical office or hospital is not approved. You must examine the denial codes to determine the course of action to correct the claim so it can be approved.
Denial Code Prefixes
Each denial code will have a prefix; here is what they mean.
CO (Contractual Obligation)
The claim was denied because of a contractual agreement between the provider and payer. Usually this is due to pre-negotiated terms, such as reimbursement caps, disallowed charges, or bundled payments. These claims may be corrected, but the healthcare provider is responsible for correcting and resubmitting the claim.
PR (Patient Responsibility)
The payer determined the patient is responsible for the cost of the procedure, treatment, or appointment. Reasons for this determination can be co-pays, annual deductibles, policy exclusions, or services that aren’t covered by the policy.
PI (Payer Initiated Reductions)
The insurance payer reduced the reimbursement on the claim due to their own internal policies. Examples can be fee schedule adjustments or policy limitations.
OA (Other Adjustment)
This is a general category for adjustments or denials that don’t fit into other categories. Reasons for this code prefix can be coordination of benefits or policies specific to that insurance payer.
There may also be explainer codes, two of most common are listed below.
CARC (Claims Adjustment Reason Codes)
Explains why a claim or service line was paid differently than billed.
RARC (Remittance Advice Remark Code)
Provides more information for CARC or information about remittance processing.
Most Common Denial Codes in Medical Billing
These are the most typical denial codes in medical billing and coding, that appear on claims that have been denied.
Missing Information on Claim CO-16
Most often, this code comes back on a claim that was processed and denied, and you’ll need to send in a corrected claim referencing the original claim.
When this denial code comes back, the claim might be missing the National Provider Identifier (NPI) number, missing referring physician number, or any other important information that is required to approve the claim.
No Pre-Authorization CO-15
Some procedures, such as surgeries, MRIs, and CT scans must be pre-authorized by the insurance payer to be reimbursed. Without pre-authorization, these services will not be reimbursed, and it is the responsibility of the provider to obtain pre-authorization.
If you already have a pre-authorization code, you’ll need to send that to the insurance payer. It is exceptionally difficult to get proper payment from the insurance payer if you’ve already provided these services prior to authorization, so send in the paperwork early.
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Duplicate Claim AO-18
Denial code 18 indicates a duplicate claim has been submitted. You need to find out if it is a true duplicate claim or not. The payer may have a similar claim on file. These claims can be a legitimate duplicate claim, they may also be a corrected claim that the payer filed as a duplicate claim because they did not see any changes in the claim. You may have to correspond with the insurance company and let them know this is a corrected claim. If it is a false positive, it may be due to lack of communication, improper coding, or medical billing software errors.
Patient Cannot be Identified PR-33
There can be valid reasons for this type of denial, such as, if the patient was on a company health plan, but they were terminated from their job. This denial code is also commonly used when the policy does not cover dependents.
The medical biller must contact the patient to find out if their policy is current, and communicate with the insurance payer to make sure they have the most current information.
Coordination of Benefits CO-22
This code means that the claim wasn’t paid because the payer billed is not the primary insurance, and they believe another insurance company should pay the claim. This can occur when a patient is double covered, for example, if both spouses have separate policies that cover each other. The insurance payers don’t want to double pay a claim, so the best solution is to make sure the primary insurance pays first.
Global Services CO-97
The denial code CO-97 means you are trying to bill for a service that is already considered bundled in another health services package that has already been processed. The service for which you are billing usually requires a modifier to indicate this service is outside the bundled services. NOTE: Bundled services often have a time period (i.e 90 days, 60 days) where you cannot bill for new services related to that procedure, as they are considered part of that bundle. Your original procedure code requires a modifier to show it is outside of the pre-bundled scope of work.
Coverage Terminated PR-27
This means at the time the service was provided, the insurance coverage was no longer in effect, so the service cannot be covered, and is the patient’s responsibility.
Prior to Coverage PR-26
A 26 code means the service was provided before the patient’s insurance was active, so the claim is being denied. This can be mitigated by verifying patient eligibility, obtaining pre-authorization, making sure all documentation is in order, and filing claims in a timely manner.
Not Medically Necessary CO-50
The diagnosis code you wrote down does not match a procedure that is medically necessary for the diagnosis provided.
Insurance companies can also use coverage determination to decide whether a procedure is medically necessary or not. Each payer may have their own list of procedures which are deemed necessary for a given diagnosis.
Service Does Not Match Procedure CO-11
Denial code 11 means that the billed procedure does not match the diagnosis. This can be caused by incorrect medical coding, upcoding or downcoding, lack of documentation, or a procedure that is normally bundled being unbundled.
Timely Filing CO-29
Every insurance payer has a specific window of time in which the provider can file a claim. While most of the time, claims are filed as soon as possible, there may be instances where the time frame has passed. To correct this, research whether the claim was sent to the payer but it was lost or not processed. You may be able to correct this denial.
Become a Medical Biller and Coder at Campus Sacramento
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