Claim denials are more than an administrative headache — they’re lost revenue, wasted staff time, and sometimes broken patient relationships. Understanding medical billing denial codes (CARC, RARC, CO/PR/OA) is the first step to reducing denials and improving your practice’s financial health. This guide walks you through the most common denial codes, why they happen, how to fix them, and a defensible workflow to prevent recurrence.
What are Denial Codes (CARC / RARC / CO / PR / OA)?
Denial codes are standardized messages payers use to explain why a claim or line item wasn’t paid.
- CARC (Claim Adjustment Reason Codes) explain the reason for an adjustment or denial.
- RARC (Remittance Advice Remark Codes) give supplemental information or instructions.
- Common code prefixes: CO (Contractual Obligation), PR (Patient Responsibility), OA (Other Adjustments).
Knowing the difference helps you route denials to the right team (clinical, eligibility, coding, or patient billing) and resolve faster.
Top Denial Codes You’ll See — What They Mean & How to Fix Them
Below are high-impact denials that commonly show up in U.S. practices and ambulatory centers.
CO 16 — Claim/Service lacks information
Why: Missing demographics, invalid NPI, or missing modifiers.
Fix: Correct the missing fields, attach supporting documentation, resubmit. Implement front-end checks in the scheduling or registration workflow.
Do you need more information, visit the blog: https://www.allzonems.com/5-common-remark-codes-for-the-co16-denial/
CO 18 — Duplicate claim/service
Why: Claim already processed or resubmitted incorrectly.
Fix: Confirm EOBs and avoid duplicate resubmission. If duplicate payment occurred, follow payer recoupment process.
Do you need more information, visit the blog https://www.allzonems.com/co-18-denial-code-duplicate-claim-service/
CO 50 — Not medically necessary
Why: Insufficient documentation to justify service per payer policy or LCD/NCD.
Fix: Provide clinical notes, test results, or a peer review. Use medical necessity guidelines when ordering services.
Do you need more information, visit the blog: https://www.allzonems.com/co-50-denial-code-guide/
CO 197 — Precertification/authorization missing
Why: Required prior authorization not obtained or not on file.
Fix: Apply for retro-authorization if allowed; otherwise obtain authorization before service. Add authorization checks into scheduling.
Do you need more information, visit the blog: https://www.allzonems.com/medical-billing-co-197-denial-code-guide/
PR 1 / PR 2 / PR 3 — Patient responsibility (deductible, coinsurance, copay)
Why: Patient portion not collected at point of care.
Fix: Update billing statements; collect at checkout where possible; provide clear estimates.
CO 11 / CO 231 — Invalid diagnosis or coding mismatch
Why: Outdated or incorrect ICD-10 codes.
Fix: Update to correct, current diagnosis codes; ensure coder and provider alignment.
Root Causes — Where denials originate
- Front-end registration errors: incorrect insurance, DOB, subscriber information.
- Authorization failures: missing or expired authorizations.
- Coding & documentation gaps: mismatched CPT/ICD pairing, missing operative reports.
- Payer policy & bundling rules: NCCI edits or global periods.
- Eligibility & coverage lapses: services performed outside coverage dates.
Practical Steps to Fix & Prevent Denials
- Strengthen registration and eligibility checks: Verify eligibility and patient benefits before the visit. Automate these checks and surface red flags to schedulers.
- Build a prior authorization workflow: Identify services that require authorization and automate reminders when authorizations are about to expire.
- Use claim scrubbing and edit engines: Run claims through scrubbing rules (NCCI, modifier suggestions, missing data) before submission to reduce preventable denials.
- Improve clinical documentation: Train providers on documentation that supports coding level and medical necessity. Use templates for common procedures.
- Classify denials and route fast: Create triage queues: eligibility, coding, clinical documentation, and patient billing. Route denials to the correct specialist within 24–48 hours.
- Track KPIs and root causes: Important KPIs: denial rate (% of claims denied), denial reason distribution, time to resolution, recovery rate, and dollars recovered per denial.
Appeals — Best Practices & Quick Template
Appeals succeed when they’re timely and evidence-based.
- Include the original claim, EOB, clinical notes, operative reports, and a succinct cover letter referencing the denial code and the corrective argument.
- Use payer-specific appeal windows and follow their preferred submission method.
Quick Appeal Points
- State the denial code and why it’s incorrect.
- Include concise supporting evidence (progress notes, lab/imaging).
- Cite the medical necessity or contract language if applicable.
- Request reconsideration and a date-stamped response.
Sample Denial-Management Workflow (Simple)
- Daily ingest: Pull denials automatically from ERA/EOB.
- Triage (24–48 hrs): Assign to eligibility, coding, clinical, or patient billing.
- Research & corrective action (3–10 days): Fix and refile or prepare appeal.
- Follow-up: Track until paid or exhausted (set automatic reminders).
- Analyze monthly: Top 10 denial codes, process gaps, and provider education needs.
Conclusion — Where to Start Today
Start by identifying your top 5 denial codes over the last 30–60 days. Build quick fixes for high-volume, high-dollar denials first (e.g., CO 50, CO 197, CO 16). Automate what you can, educate staff, and measure improvements. Reducing denials by even a few percentage points produces a measurable lift in cash flow and reduces administrative burden.
If you want, I can:
- create an editable appeal letter for CO 50 and CO 197,
Appeal Letter Template – CO 50 (Lack of Medical Necessity)
[Your Practice Name]
[Address]
[City, State ZIP]
Phone: [Number]
Date: [MM/DD/YYYY]
To: [Insurance Company Name]
Re: Appeal for Denial – CO 50
Patient: [Patient Name]
Member ID: [ID]
Claim #: [Claim Number]
DOS: [Date of Service]
Provider: [Provider Name]
Dear Claims Review Department,
We are appealing the denial of the above claim, which was denied under CO 50 – Services Not Medically Necessary. After reviewing the patient’s clinical documentation, we believe the denial was made in error.
The services provided were medically necessary based on the patient’s condition and supported by clinical evidence. Attached are the following:
- Progress/clinical notes
- Diagnostic findings
- Treatment plan
- Medical necessity guidelines (if applicable)
These documents clearly demonstrate that the service(s) performed were essential to diagnose and/or treat the patient’s condition. We respectfully request reconsideration and prompt payment.
Thank you for your timely review.
Sincerely,
[Your Name / Title]
Appeal Letter Template – CO 197 (Precertification/Authorization Absent)
[Practice Name]
[Address]
Date: [MM/DD/YYYY]
To: [Insurance Company Name]
Re: Appeal for Denial – CO 197
Patient: [Name]
Claim #: [Claim Number]
DOS: [Date]
Dear Appeals Department,
We are appealing the denial of Claim # [XXXXX], denied for CO 197 – Precertification/Authorization Absent.
At the time of service, the provider acted based on the patient’s urgent/clinical condition. The following supporting documents are attached:
- Clinical notes detailing medical urgency
- Hospital/office intake documentation
- Any attempt to contact the payer
- Applicable payer guidelines
Given the medical necessity and the provider’s good-faith effort to deliver timely care, we request a retroactive authorization (if applicable) and reconsideration of payment.
Thank you for your prompt attention.
Sincerely,
[Your Name / Title]