It is estimated that almost every year, one out of five medical claims in the U.S. is denied or rejected, and this is depriving healthcare providers of billions of dollars in revenue.
When an unsuccessful claim has ever frustrated you, you are not the only one. The positive aspect is that the denials are avoidable. Even in incidents where they occur, they can be rectified and successfully resubmitted, provided that you have a sound claims denial management policy.
This guide will demonstrate how to deal with claim denials, the effective utilization of resubmission codes, and how to handle healthcare claim denials. These steps will allow you to get your practice paid in a timely and regular manner.
Understanding Claim Denials in Healthcare
We must first know what the problem is before we can correct it.
In medical billing, denial happens when an insurance payer receives a claim but will not pay it, normally because of a lack of information, a coding mistake, or coverage.
Claim issues are of two major types:
- Rejection of Claim: The claim was never sent through the clearinghouse due to either formatting or data error.
- Claim Denial: The claim was submitted, and the payer denied it due to wrong coding or due to a lack of documentation.
Levels of Rejections in Medical Billing
Three major levels can be distinguished:
- Clearinghouse Rejection: the claim has been rejected prior to payment to the payer as a result of an absence of NPI, an invalid policy ID, or formatting mistakes.
- Payer Level Rejection: Payer Level Rejection: errors made during the payer’s first validation (such as incorrect CPT/ICD-10 combinations).
- Adjudication Denial Claim: examined and rejected due to a lack of paperwork, non-covered services, or previous permission.
The knowledge of these levels can assist practices in understanding where to direct their medical claim denial management activities.
The Real Cost of Denials
According to the American Medical Association, the prevalence rate of denial of claims is between 5% and 10% of all U.S. healthcare providers. Some of the specialties, nevertheless, may have rates up to 20%. The average cost to rework a denied claim is between 25 and 118 dollars, and this does not include lost time or delays in cash flow. Thousands of dollars in a month may be lost by high-volume practices.
These costs are dealt with by effective claims denial management.
A Texas multi-specialty clinic was experiencing multiple refusals based on invalid diagnosis codes. The billing department had to take weeks to look after payments manually. The analysis of the data indicated that the problem was the mismatch of the codes: the ICD-10 and CPT combinations were not in accordance with the payer guidelines. The clinic contracted a medical billing firm that offers coding denial management. Its denial rate dropped from 14 to 4 within 90 days, and the turnaround on claims was 35 days shorter.
Takeaway: Professional assistance and a systematic approach to controlling the denial could effectively handle even the most difficult issues.
Common Reasons for Claim Denials
The important thing to do is to know why denials happen so as to prevent them in the future. The most frequent ones are
- False or absent Information.
- Wrong patient demographics
- Nonexistent insurance identifier or group number.
- Absence of rendering provider NPI.
- Coding Errors
- Lost CPT, HCPS, or ICD-10 codes.
- Inappropriate diagnosis/procedure pair.
- Upcoding or unbundling mistakes.
- Eligibility and Authorization Problems
- Expired insurance
- Lack of prior authorization
- Non‑covered services
- Claims/Duplications or Prompt Filing.
- Filing a claim two times.
- Making claims later than due by the payer.
With the prevention of these problems, you can reinforce and automate your denials management plan.
Effective Claims Denial Management Includes the Following Steps
Step 1: Identify the Root Cause
. The most common denial codes are
- CO-16: Missing information
- CO-97: Service not covered
- CO-29: The time restriction to make a filing is over.
Being knowledgeable of the clearinghouse rejection codes as well as the payer-specific denial code will enable you to amend the claim in a haste manner.
Step 2: Categorize Denials
Type denials, Group coding, eligibility, documentation, etc. The practice identifies the trends and allows the staff to be trained in order to avoid future mistakes.
Step 3: Correct and Proper Resubmission Codes.
In resubmission, one has to use the relevant resubmission codes:
- 7: Replacement of prior claim
- 8: Void/cancel prior claim
Appropriate application of these codes will make the payer process the new claim instead of dismissing it as a duplication.
Step 4: Automatic Where It Can Be.
Use leverage billing software which monitors denial trends, indicates missing data, and confirms that the codes have been properly validated before they are submitted.
Step 5: Train and Educate Staff
To significantly lower your denial rate, hold regular training on payer policies, coding updates, and denial prevention.
Step 6: Monitor KPIs
Track metrics such as
- Denial rate percentage
- Average days to payment
- First‑pass resolution rate
Regular KPI observance fosters sustainable revenue cycle well-being.
End the claim denials and rejections that cost the revenue. Hire experts to complete it. 👉 To find out how our healthcare claims denial management services will help you optimize your reimbursements and expedite your billing procedures, schedule a free consultation with Providers Care Billing LLC right now.
📞 Call Now: 888-495-3786
📧 Email: Info@providerscarebilling.com
Role of Technology in Denial Prevention
Today’s medical billing companies use AI tools to try to predict and avoid denials before they actually happen. These tools:
- Check eligibility in real time.
- Verify payer rules.
- Flag mismatched or missing codes.
- Send automated rejection alerts from clearinghouses.
When practices incorporate such technology, there is less clearing house rejection in medical billing and higher first pass acceptance.
Final Thoughts:
Each denial is a story of how something had gone amiss and how to do better the next time around. Your practice will be able to resume lost revenue and avoid future losses by learning how to handle claims denial management and knowing the clearinghouse rejection codes, as well as using resubmission codes correctly.
The medical billing denial management is not only concerned with correcting errors; it is also about enhancing your entire revenue cycle, regardless of whether you are a lone practitioner or a large health care facility.
If you handle virtual sessions, you’ll also need to ensure your coding and modifiers are correct to prevent telehealth claim denials. Learn more in our Beginner’s Guide to Telehealth Billing for Therapists (2025 Update).
FAQS
1. Is it possible to submit a corrected claim denial?
Yes, the majority of claim denials are available for resubmission. When the error (for example, a wrong coding, lost documentation, or an eligibility matter) has been corrected, the claim can be resubmitted with a different resubmission code.
2. How can you increase the claim submissions to decrease the claim refusals?
To minimize claims denied, pre-check patient eligibility, code medical records correctly, and pre-review claims. Install claims denial management software to identify missing data, and periodically train personnel on payer rules.
3. What can you do when a claim is denied?
Understanding why a claim is denied is important. Once you identify and fix the issue, you can resubmit the claim with the appropriate resubmission code.
4. What do you do to re-file a rejected insurance claim?
To resubmit a declined claim, you must first obtain the insurer’s Explanation of Benefits (EOB). If any mistakes have been made, you must fix them, such as any wrong CPT or ICD-10 codes.
5. Which three mistakes on a claim lead to denials the most often?
Issues with eligibility verification, missing patient information, and coding errors.
The errors usually would cause clearinghouse rejection codes or payer denials.
6. What are the reasons that a claim should be resubmitted?
The resubmission of a claim should occur when it was refused because of wrong information, lack of documentation, or an error in code.
7. What is the distinction between a resubmission and a corrected claim?
A corrected claim is the variation of the original, filed with correct information in order to rectify the errors. Resubmission is, however, a new filing of the claim after it has been submitted with an error, or upon a request by a payer.
8. What is the maximum number of times to appeal an insurance denial?
The appeal of an insurance denial is usually possible three times, depending on the policy of the payer. All appeals must contain powerful supporting documents, including records of medical necessity or coding justification.
9. What is the cost of resubmitting a claim that has been rejected?
Providers incur an average cost between $ 25 and $118 to re-file rejected claims, which reflects the time of the staff and administrative resources.
10. Can I resubmit a claim to my insurance?
Yes, you can reclaim a claim to your insurance that was rejected or denied. Make sure to fix any mistakes, such as the absence of information, authorization, coding differences, etc.
11. What is the secret to making an insurance denial appeal?
In order to be successful in the appeal, you need to write a clear letter of appeal by referencing the policies and coding rules of the payer and attaching supportive documentation, and reviewing the reason for the denial.
12. What to do to effectively appeal an insurance denial.
Check the reason for the denial, collect the supporting material, and make an appeal letter before the deadline. A code or guideline of reference payers to bolster your argument and make a claim more likely to be approved.
13. What are the denied claim reasons?
Errors in coding, absence of information, previous authorization, and ineligible services cause claims to be denied. These denials can be significantly reduced by means of regular audits and proper data entry.
14. What would you do with a denied claim?
Determine the rejection code, amend missing or incorrect information, and reformat the claim with appropriate resubmission codes. Never send data back without confirming it first; otherwise, it will be rejected again.
15. Claim denied in health insurance—what now?
Verify the contents of the Explanation of Benefits (EOB) provided by the insurer, correct the mistake, and submit an appeal or amended claim within a reasonable time. Attach all the necessary materials to prove that you should be paid.
16. Claim Denials in Healthcare Billing?
Claim denials are rejections of payment by payers based on coding errors or eligibility problems, or a lack of documentation. A good denial management process can solve and avoid such mistakes.
17. How should we deal with a refusal to provide wrong information?
Get over the rejected claim, rectify incorrect patient or insurance information, and resubmit it with the correct resubmission code. Last check on all data to avoid additional rejection.
18. Insurance claim denied, but I owe nothing?
In case of claim denials without paying the amount, there is the likelihood that the provider wrote off the balance or the balance is some contractual adjustment. Nevertheless, it is best to verify with your provider.
