Common Claim Denial Codes and What They Each Mean

Key Takeaways:

• Denial codes decode the “why” behind unpaid claims.

• Rejections happen before processing; denials happen after.

• Decoding denial codes correctly accelerates reimbursement, strengthens appeals, clarifies financial responsibility, and improves the patient billing experience.
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• Most denials are preventable with upfront checks and clean claims.

• AI can shift denial management from reactive fixes to proactive prevention.

No matter how efficient your revenue cycle team is, claim denials can drain a lot of your team’s time, delay payments, and cloud accountability.

They show up with cryptic codes, vague reasons, and leave you asking: “Do we fix this, appeal it, or just write it off?”

But most denials come with standardized codes that, if read correctly, tell you exactly what went wrong and what to do next. 

That’s why we created this guide—to help you make sense of the common claim denial codes you’ll see in your ERAs and EOBs. We’ll break down what these denial codes actually mean, why they show up, and what to do when they land in your workflow.

What Is Denial Coding?

Denial coding is the standardized way payers tell you why a processed claim did not pay and what to do next. You’ll find these codes on the insurer-issued remittance (usually an ERA or paper EOBs) that lists:

• Group Code (CO, PR, OA, PI): Who is responsible for the adjustment
• CARC (Claim Adjustment Reason Code): Specific reason the claim was adjusted or denied
• RARC (Remittance Advice Remark Code): Extra context or instructions from the payer

Once you receive the remittance letter, you need to decide whether to:

• Correct and resubmit
• Appeal with documentation
• Or bill the patient

How Does Claim Denial Differ From Claim Rejection?

A rejection happens before adjudication during front-end validation at the clearinghouse or payer intake. Unlike denied cases, you don’t get denial codes or an ERA. You see a rejection notice that points to data or format errors to fix. You correct the error and resubmit.

Let us explain this with an example:

Say you submit CPT 70551 (MRI) for a patient. Here’s what happens when the claim is rejected vs. denied:

Why Are Denial Codes Important?

When you can read and decode denial codes, you turn a vague “no” into a clear plan that moves money faster within your RCM workflow. 

Here’s what you get for reading and decoding denial codes correctly:

• Faster reimbursement: You see the exact reason and the required fix, so you correct it once and move the claim to payment sooner.
• Clean responsibility split: Group Codes show whether to adjust as contractual, appeal to the payer, or bill the patient compliantly.
• Stronger appeals: RARCs often tell you what evidence or policy to include, so your appeal packets land the first time.
• Better prioritization: You can triage work by “quick correction” vs “full appeal” vs “re-bill,” which lowers touches per claim.
• Smoother patient experience: Correct PR vs CO decisions prevent surprise bills and unnecessary write-offs.
• Operational visibility: Standardized codes feed dashboards and automation, so you can monitor denial rate, avoidable denial mix, and time to cash.

Common Denial Codes in Medical Billing

Whether you're chasing down a $30 copay or a $3,000 denial, understanding the code behind it is the first step. 

Here's a breakdown of some common denial codes and the real-world situations where they typically show up.

Claim Adjustment Group Code

Group codes are two-letter codes that tell you who the unpaid amount belongs to. They usually point the unpaid amount to the patient, you, or neither. Used together with CARCs, they spell out why the claim didn’t pay as billed.

Here’s what each group code means:

Claim Adjustment Reason Code

CARCs are the standardized reasons payers use to explain why a claim line was paid, reduced, or denied differently than you billed. They’re numeric (e.g., 16, 29, 45, 97) and appear on your ERA/EOB after adjudication. 

On ERAs, each CARC sits inside an adjustment entry with a Group Code that assigns financial responsibility (provider write-off, patient liability, other adjustment, or payer-initiated reduction).

Here are some common CARC codes found in denied claims:

Remittance Advice Remark Code

RARCs are short, standardized messages the payer puts on your ERA/EOB to add detail about a payment adjustment or to share general “alert” information about how the remittance was processed. They either supplement a CARC or appear as informational messages with no dollar change.

But, RARC codes don’t always appear on the EOB/ERA. Some adjusted lines include only Group Code and CARC. RARCs are used only if the payer needs to add detail or an alert.

Here are the common RARC codes you’ll see and what they each mean:

What Does An AI-Assisted Denial Prevention and Management Look Like?

Denial management shouldn’t be just about fixing claims after they’re denied. Preventing the denials in the first place matters just as much, and even more, since most of the denials are avoidable.

The reality is that most RCM teams manage denials manually, one claim at a time. 

But, with AI built into the right moments, i.e., before submission, during follow-up, and when preparing appeals, you can shift from reactive cleanup to proactive prevention. 

Here’s what proactive denial prevention and management with CombineHealth’s AI agents looks like in practice:

1. Jessica (our AI scribing agent) transcribes clinician notes in real-time and creates standardized documents to be passed for coding.
2. Amy (our AI coding agent) takes over by assigning the ICD, CPT, and E/M codes, providing a line-by-line rationale, and updating codes into the EHR. She even spots documentation gaps in real-time.
3. Mark (our AI billing agent) then navigates payer portals and aggregators to perform patient eligibility checks. He also applies payor-specific billing SOPs, validates codes & modifiers, and prepares charges for claim submission.
4. Upon denial, Adam (our AI denial management agent) works with the payor portals, payor chatbots, and aggregators like Availity for claim status checks and makes follow-up calls.
5. Finally, Rachel (our AI appeal agent) drafts clear, payer-specific appeal letters.
6. But before closing the loop, Mark continuously learns from prior denial patterns for smarter future actions.

FAQs

What is the purpose of a denial code?

A denial code explains why a payer didn’t pay a claim as billed. It helps providers identify the issue (like missing info, medical necessity, or coverage problems), so they can correct, appeal, or adjust the claim accordingly.

What does “denial upheld” mean?

“Denial upheld” means the payer reviewed your appeal but decided not to reverse the denial. The claim remains unpaid unless further action (like a second-level appeal) is taken.

What is a COB denial code in medical billing?

COB (Coordination of Benefits) denial codes indicate the claim should’ve gone to another payer first. These denials happen when primary and secondary payer info is missing, outdated, or mismatched.

How do you handle claim denials?

Start by reviewing the denial code and Group Code. Then decide whether to correct and resubmit, appeal with documentation, or adjust the claim per policy. Prioritize high-dollar or easily fixable denials first.

How to prevent claim denials?

Use pre-bill edits, verify eligibility and authorization, apply correct coding, and stay current on payer rules. Trend denial codes regularly to fix upstream issues before claims go out.