No Soup for You: Claim Denials Explained
Are Denials All Bad?
You go to the doctor. Everything seems routine. The bill gets sent to your insurance, and you don’t think much more about it.
Then, about 30-60 days later, a letter shows up in the mail or a message in the insurance portal, and BAM, there it is
“DENIED”. (Dramatic music 🎶)
It feels a lot like a “no soup for you” moment. Shut out from something you thought was going to be paid for. And now it appears that you may be left footing the bill that you thought would be covered.
We’re going to cover what this term means, what else it could be called, and how you can find more information so you are more equipped to do something about it.
So what does “denied” actually mean? It isn’t always a final “no”; with insurance, it may mean “try again”.
What is a Denial (and What Else It Might Be Called)?
At its simplest, a denial means your insurance company has decided not to pay the claim the way it was sent to them (or submitted).
That does not always mean the service won’t be covered at all; sometimes it’s a paperwork issue, sometimes it’s a benefit or coverage issue, and sometimes it means more information is needed.
You might also see denials described with other terms.
Rejection
Adjustment
Non-payable
Not medically necessary
Basically, insurance has a whole thesaurus for telling you ‘not like that.’
In short, whether it says “denial”, “rejection”, or “adjustment”, the result is that your bill didn’t get paid in full. The key is figuring out why.
Insurance Claim Denial
Why Do Denials happen?
Sometimes I feel like I’m in denial about my denial. I’m looking at my Explanation of Benefits (EOB), trying to understand why the insurance didn’t pay the way I thought. And I’m not alone here; in fact, 45% of working-age adults report receiving a bill or copay for a service they believed should have been fully covered (AHA/Commonwealth Fund, 2024). That’s nearly half of us being surprised by costs we didn’t expect.
Typically, denials occur because something didn’t align with what was billed, what your insurance covers, or what their systems expect to see.
Sometimes, a denial is simply saying, “Hey, we need more information to decide the payment on this claim (or service).”
That information could be a variety of things, such as:
Eligibility or Incorrect coverage (e.g., insurance changed, and the claim was sent to the wrong insurance)
More information is needed (e.g., medical records)
Typo on the claim
The claim was “coded” incorrectly (e.g., wrong procedure code, diagnosis code)
And here’s another wrinkle: many payer systems are designed to deny first, ask questions later.
That doesn’t mean they’re out to get you (although it sometimes feels that way); it means the actual software can’t hold a claim open while it waits for additional details. Instead, it kicks the claim back as “denied” until more information comes in.
So when you see a denial, it isn’t always a dead end. Sometimes it’s just the system’s way of saying: “I need more data before I can process this.”
Let’s move from my denial spiral to the actual data. Here are the top five reasons claims get denied.
Top 5 Reasons for Claim Denials
(Source: Becker’s Hospital Review, 2024)
We will review these in more detail later in this blog.
Top Insurance Denials
That’s 60% of denials explained in 5 issues!
Translation: most denials are less about your health and more about your paperwork. 🤦♀️
This isn’t about whether care “should” be covered, but whether the correct information was put on the claim in the first place, or at the right time.
In other words, we could think of denials more about the administration and paperwork side of things and less about “care” or “health”.
According to the same report, 43% of providers report being understaffed, which explains the errors in submissions. In my opinion, AI (Artificial Intelligence) and Automation can help with certain aspects, but they don’t solve this problem entirely. AI can help you see what’s possible, but humans still need to validate what’s appropriate.
Okay, enough about that part; let’s dig a little deeper now into how you can determine what the denial means.
How to Figure Out Why?
When you see the word “Denied,” the first question is always “why” (sometimes accompanied by an expletive).
The answer is usually not hidden, but you do need to know where to look.
Start with your Explanation of Benefits (EOB).
This is the insurance company’s receipt for how they processed the claim. Somewhere on it, you’ll see a code and a short note about the denial reason or reduced payment.
Check the denial or adjustment codes.
These are codes that look like “CO-16” or “PR-204”. These are standardized claim adjustment reason codes (CARCs, pronounced Carck, rhymes with shark) or remark codes (RARCs, pronounced rarck, rhymes with lark).
Translation: insurance shorthand for “something is missing” or “something isn’t covered.”
So, you’ve got your EOB, your codes, and your confusion. What's next? Let’s break it down.
Check the details.
Sometimes the claim wasn’t entirely denied; it was partially paid. This could mean that your deductible was applied, the service was included in another payment, or there was an error in the billing.
💡Pro Tip: Look for those adjustments for in-network providers. This suggests to me that the insurance was processed, but there’s something else going on.
When I see a $0.00 in the adjustment, that usually clues me in that more information is needed.
A previous CoView blog on reading your EOB is available for more detailed information.
Don’t assume the code is the final word.
Many payer systems are designed to initially deny claims, then process additional information later.
Most payers have a list of their adjustment, remark, and denial codes on their website, but may draw from standardized national codes.
For anyone wanting to see the complete list, it’s in these links 🤓
CARC: https://x12.org/codes/claim-adjustment-reason-codes
RARC: https://x12.org/codes/remittance-advice-remark-codes
Common Denials or Reductions in Payment
So, once you’ve found the code and the reason, what does it usually come down to?
Where is our Duolingo for healthcare terms?!
In my opinion, this is one of the most confusing areas. Cryptic codes that have descriptions are often challenging to determine“why” something is happening, and more, what you can or should do about it. Talk about reading between the lines. (Hopefully, we’ll have systems that make this better soon!)
Here are some of the most common denial or reduction scenarios patients (and providers) run into:
Eligibility errors: Your insurance ID didn’t match, coverage wasn’t active, or the wrong plan was billed.
Example: Your coverage was renewed in January, but the doctor’s office accidentally billed your old plan ID. The insurer says, “no active coverage,” even though you’re insured.
EOB Example: CO-27 - Insurance coverage terminated.
Authorization issues: The insurance required pre-approval, but it wasn’t obtained, or wasn’t properly documented.
Example: You had a MRI ordered by your doctor, but the insurance company required pre-approval. Because the provider’s office didn’t request it, the claim comes back denied.
This could also happen if the authorization number was not included on the claim when it was submitted to the insurance.
EOB Example: CO-197 - Pre-certification / authorization absent.
Medical necessity: The payer determined the diagnosis did not support the service, or that it may not have been needed yet.
Example: You get a second physical therapy session in the same week. The payer decides it wasn’t “necessary” under their policy, so they deny that visit even though your doctor recommended it.
EOB Example: CO-50 These are non-covered services because this is not deemed a medical necessity.
Coding errors: The wrong procedure code, modifier, or place of service was used.
Example: The doctor’s office enters the wrong procedure code instead of a screening colonoscopy; it gets billed as a diagnostic colonoscopy. The insurer kicks it back as “not covered.”
EOB Example: CO-16 - Claim/Service lacks information that is needed for adjudication.
Timely filing: The claim was submitted too late (sometimes 90 days, sometimes 6 months, sometimes 12 months, depending on the insurance)
EOB Example: The hospital waited too long to send the bill to the insurer, 120 days instead of 90. Even though the care was valid, the claim times out.
Duplicate claims: The system thought the service was already processed on a different claim.
Example: Your provider submits what appears to be the same claim twice by mistake, an administrative error. The insurer pays one and denies the second as a “duplicate.”
EOB Example: CO-18 - Duplicate claim/service
Adjustments/Bundling: Instead of paying for each service separately, the insurance company packages the services and reduces the amount.
Example: During your surgery, two related services are billed separately. The insurer says they’re already included in the main procedure’s payment, so they “bundle” them and pay less.
💡 Important note: Just because an insurance company denies a claim doesn’t automatically mean the patient will be liable for the bill.
Sometimes, the provider is not allowed to “balance bill” you, depending on your contract and whether the provider is in-network.
At other times, the claim can be corrected and resubmitted, or it can be appealed and overturned.
In short, you are denied, but that does not mean you owe everything.
Now that we’ve seen the usual suspects, let’s ask the big question: are all denials really “bad”?
Are All Denials Bad?
From the patient's side, a denial always feels bad. It’s stressful, confusing, and often shows up without warning. Nobody likes opening a letter that says “Denied.” Well, unless it’s jury duty, but we’re not talking about that kind of denial.
The information provided is neither intuitive nor straightforward. It takes some understanding and sometimes some follow-up with the provider and the insurance company to get it resolved. But “denied” does not always mean that the claim won’t eventually be paid.
Here’s some encouraging news: more than 50% of claim denials are overturned on appeal (American Hospital Association, 2024). In some states, it’s even higher, over 70%. That means many denials weren’t a true “no” in the first place.
The catch? Most patients never appeal. Not because they’re wrong, but because they don’t know how, or they assume the doctor’s office will handle it. I have seen several posts where patients are encouraged to “wait it out” or told to “threaten” action.
That’s where things get stuck. Denials aren’t always dead ends; often, they’re fixable, if you know the steps.
Don’t worry, we’re going to give you the information and tools to help you take action and help get your claim resolved. That’s coming in the next blog.
Tips For Patients
Don’t panic. A denial doesn’t always mean you owe the full bill. Many denials are fixable or appealable.
Read your EOB carefully. Look for the denial code and reason. Write them down and understand them; they’ll matter later.
Call your provider’s billing office. Often, the provider can resubmit with corrected information or missing documentation.
Know your rights. More than half of the appealed denials are overturned (that means they get processed and at least partially paid. You may be able to appeal through your insurance.
Watch the deadlines. Appeals usually have strict timelines (30–180 days).
Tips For Teams
Design with clarity. Don’t just show “Denied” in a portal — show the reason code and a plain-language explanation.
Make EOBs user-friendly. Patients shouldn’t need a coding degree to understand what happened. Consider grouping denials, highlighting appeal options, or linking to FAQs.
Track denial data. Identify the top 5–10 recurring denial codes in your system and create alerts, edits, or workflows to prevent them.
Bridge communication. Providers, payers, and patients often use different terms to describe the same concept. Build tools that standardize and translate the language.
Prioritize preventable denials. Approximately 80–90% of denials are avoidable through improved intake, coding, automation, or documentation. Focus your design and operations fixes there.
Wrap Up
Whether you’re a patient, provider, or part of a healthcare team, a denial doesn’t have to be the end of the story. The key steps are:
Know your plan (what’s covered, what needs pre-approval).
Read your EOB; the denial codes and notes matter.
When possible, ask questions early with your provider’s billing office or insurer.
Remember: many denials are preventable, and more than half of appealed denials get overturned.
If you want a refresher on how to read an EOB, check out my earlier blog [“This is NOT a Bill?! Well, It Sure Looks Like One. Or if you want to see how claims really move through the system, revisit [“Your Claims Post-Visit Adventure”]. Or review the previous blogs for more details on terms and concepts.
Thank you for reading,
Bonnie
📚 Missed the earlier posts in this series?
Catch up here: https://coviewconsulting.substack.com/
Why I Started CoView: Navigating Both Sides of Healthcare
Speaking the Same Language in Healthcare
Meet the Players: Patient, Provider, Payer
Cracking the Code
Your Claims Post Visit Adventure
This is Not A Bill? Reading your EOB
Who Pays For What? Part 1: Medicare & Medicaid
Choose Your Own Adventure: Commercial Insurance Explained
Copay, Coinsurance, Deductible Oh My!
What’s Next: Appealing Denied Claims. Become the Claims Whisperer
We’ll dig into what to do when you get a denial and how you can help get your claim appealed or reconsidered.
I’ll walk you through:
What to ask your provider and your insurance
The timelines and deadlines that actually matter
Step-by-step strategies for filing an appeal
Think of this post as your “Denials 101.” Next time, we’ll get into “Denials in Action”, tips to appeal and get your claim reconsidered.
References
https://www.beckershospitalreview.com/finance/whats-to-blame-for-claim-denials
💡 If this post helped clarify your coverage chaos, share it with a friend or colleague! And if you have questions or want to see a specific topic covered, drop me a line. I’d love to hear from you.
Note from the Author: This blog is for educational purposes only and reflects my experience. This is not intended as legal, financial, or medical advice, nor is it a preparation for any medical coding exam. Always confirm details with your insurance company, healthcare provider, or HR department. It’s designed to help cross-functional teams in the healthcare industry work together more effectively, and to help you feel more confident advocating for yourself and your loved ones in your personal healthcare matters.
