Denials are one of the biggest challenges in healthcare revenue cycle management (RCM). Rejected claims delay reimbursement, create administrative burdens, and can cost your practice thousands of dollars each year. Understanding the main reasons for denials in medical billing and the most common denial codes is the first step to preventing lost revenue.
At Hometown Billing, we help avoid denials and handle denial management for practices nationwide. In this guide, we’ll cover the top 10 denial codes in medical billing, explain why they happen, and share steps to reduce claim rejections.
Who Uses Denial Codes?
Denial codes in medical billing aren’t just for your practice’s billing staff. They play an important role for several stakeholders across the healthcare revenue cycle:
- Medical Billers: Denial codes help billing teams quickly identify why a claim was rejected. This allows them to correct errors and resubmit.
- Healthcare Providers & Administrators: Doctors, imaging centers, and practice managers use denial reports to understand revenue trends and pinpoint problem areas.
- Insurance Companies & Payers: Payers assign denial codes to claims to explain the reason for rejection.
- Revenue Cycle Management Teams: Internal and outsourced RCM specialists review denial codes to track patterns, reduce errors, and improve acceptance rates.
- Auditors & Compliance Officers: Denial codes provide an audit trail, helping compliance teams ensure claims meet payer and Medicare and Medicaid standards.
In short, denial codes are a universal language used across the healthcare billing services ecosystem. They help identify problems, track performance, and improve collections.
Top 10 Denial Codes in Medical Billing
1. Missing or Incorrect Information
Denial Code: CO-16 – This common denial code happens when a claim is missing important information or contains a mistake. Even small typos can lead to rejection.
2. Duplicate Claims
Denial Code: CO-18 – This code means the claim or service submitted is an exact duplicate of a previous claim or service. This denial arises when the same service for the same patient, provider, and date is billed more than once. This can happen due to billing errors, system glitches, or a lack of coordination. It indicates the payer already processed a claim for that exact service, so the new submission is rejected as a duplicate.
3. Non-Covered Services
Denial Code: CO-167 – Medical billing denial code 167 means the service provided is not covered under the patient’s insurance plan. This denial typically occurs when the payer determines that the diagnosis code does not justify payment. This may be because it’s explicitly excluded from coverage, or medical necessity requirements were not met.
4. Lack of Prior Authorization
Denial Code: CO-197 – The CO-197 denial code essentially signals that the insurer rejected the claim because the provider didn’t comply with the insurer’s prior approval or notification requirements.
5. Coordination of Benefits Issues
Denial Code: CO-22 – Care may be covered by another payer per coordination of benefits. When patients have multiple policies, claims must be billed in the correct order.
6. Timely Filing Issues
Denial Code: CO-29 – This code signals that a filing time limit has passed. Submitting claims after payer deadlines is one of the top reasons for denials in medical billing. Insurance providers need claims to be submitted promptly following the date of service. Automated claim tracking helps ensure deadlines are never missed.
7. Medical Necessity Denials
Denial Code: CO-50 – A common denial in medical billing, this code occurs when an insurance provider concludes that a service is not medically necessary. Healthcare professionals can challenge this interpretation by submitting further evidence or clarification. Strong documentation helps prevent rejections to begin with.
8. Bundling Issues
Denial Code: CO-151 – Denial code 151 in medical billing means that the payer has denied or adjusted a claim. This happens when the payer determines that the provider billed for a service more times than the patient’s coverage allows, whether through one claim or across multiple claims. This often happens because the information submitted doesn’t justify the number or frequency of services billed.
9. Service Already Paid For
Denial Code: CO-97 – Another common denial code in medical billing, this rejection occurs when the same service is billed twice. The service may have already been included in a bundled service or covered by an earlier claim. Proper tracking prevents unnecessary submissions and denials.
10. Wrong CPT Code
Denial Code: CO-11 – This code indicates a procedure code is inconsistent with the diagnosis. Incorrect coding can be one of the most costly and time-consuming issues in medical billing. Denial code 11 signals that the medical claim has used the wrong CPT code for the billed procedure or service.
Because coding rules are highly specific, even small mistakes can trigger this common denial in medical billing. Working with trained coding specialists can help lower the risk of denials.
How To Prevent Common Denials in Medical Billing
While denial codes in medical billing are frustrating, they’re also preventable. Best practices include:
- Eligibility and benefits verification
- Ensuring prior authorization
- Accurate documentation and coding to align with diagnoses and procedures
- Claims scrubbing to catch errors before submission
- Denial tracking and appeals
How Hometown Billing Helps Prevent & Reverse Denials
Preventing denials takes experience, proactive monitoring, and persistence. At Hometown Billing, our team of over 30 medical billing specialists works with different practices every day. We help to reduce denial rates, recover lost revenue, and optimize collections. Here’s how we do it:
- Before submission, every claim is reviewed for accuracy in coding, modifiers, and documentation to avoid preventable denials.
- When denials do occur, our experts identify the root cause, correct errors, and file timely appeals to reverse them.
- We track trends across CMS and commercial insurers to stay ahead of changing rules and codes in medical billing.
- Transparent dashboards show you which denial codes are costing the most and how we’re addressing them.
- Our team ensures every claim meets HIPAA, CMS, and payer documentation and pre-authorization standards, lowering audit risks.
By combining preventive strategies with aggressive denial recovery, Hometown Billing helps practices maintain a healthier revenue cycle and ensure more consistent cash flow.
Partner With Our Billing Experts
At Hometown Billing, we help practices cut down on denials, improve first-pass acceptance rates, and recover lost revenue. Our experts keep your billing processes and RCM running smoothly. We handle all types of billing services and procedures, including ambulance billing, physical therapy billing, behavioral health RCM, and more.
Contact us today to learn how we can help your practice prevent denied claims and maximize collections.
