Top 5 Reasons Insurance Denies Claims
According to CMS data, these are the most common denial reasons and how likely you are to successfully appeal each:
1. Missing or Incomplete Documentation
High Appeal SuccessWhy it happens: Provider didn't include required clinical notes, lab results, or operative reports supporting medical necessity.
How to fix: Request provider submit missing documentation. Appeal success rate: 60-70% if documentation exists.
2. Medical Necessity Not Established
Medium Appeal SuccessWhy it happens: Insurance claims service wasn't medically necessary based on their guidelines (different from medical standard of care).
How to fix: Provider must submit clinical justification referencing insurance medical policies and peer-reviewed evidence. Success rate: 40-50%.
3. Prior Authorization Not Obtained
Low Appeal SuccessWhy it happens: Insurance requires pre-approval for certain procedures/medications. Provider didn't request before service.
How to fix: Difficult to appeal retroactively. Some insurance allows after-the-fact authorization if service was emergency. Success rate: 15-20%.
4. Coding or Billing Errors
Very High Appeal SuccessWhy it happens: Wrong CPT code, incorrect modifier, unbundling violations, duplicate billing.
How to fix: Provider corrects and resubmits claim with proper codes. Success rate: 80-90% (these are clerical errors, not coverage issues).
5. Service Not Covered Under Policy
Very Low Appeal SuccessWhy it happens: Your policy explicitly excludes this service (e.g., cosmetic procedures, experimental treatments).
How to fix: Appeal unlikely to succeed unless denial was based on misreading policy. Check "Summary of Benefits" to verify coverage. Success rate: 5-10%.
Analyze Your Denied Claim
Enter the CPT codes from your denial notice into our Bill Checker to see common denial reasons for those codes and whether your denial is likely a coding error.
Check Denied Codes →How to File a Successful Appeal
Step 1: Get Your Denial Letter and EOB
You need two documents:
- Denial Letter: Explains why claim was denied (denial code + reason)
- Explanation of Benefits (EOB): Shows what was billed vs. what insurance processed
If you only have one, call insurance and request both.
Step 2: Decode the Denial Code
Common denial codes and what they mean:
| Code | Meaning | Action |
|---|---|---|
| CO-50 | Not medically necessary | Provider must submit clinical justification |
| CO-16 | Missing information | Submit requested documentation |
| CO-197 | Prior authorization required | Request retroactive auth (low success) |
| CO-4 | Incorrect procedure code | Provider corrects code and resubmits |
| CO-151 | Service not covered | Check policy exclusions (hard to appeal) |
Step 3: Determine Who Should Appeal
Important: Most appeals must come from your provider, not you.
- Provider appeals: Coding errors, documentation issues, medical necessity determinations
- Patient appeals: Coverage disputes, policy interpretation, claims processing errors
Best approach: Contact your provider's billing department first. They handle appeals daily and know the process.
Step 4: Gather Supporting Documentation
For a strong appeal, include:
- Denial letter and EOB
- Complete medical records from the visit
- Clinical notes documenting medical necessity
- Relevant lab results, imaging, or test reports
- Insurance medical policy citation (if applicable)
- Peer-reviewed studies supporting treatment (for experimental denials)
Step 5: Write the Appeal Letter
Appeal Letter Template
[Insurance Company Name]
[Appeals Department Address]
Re: Appeal of Claim Denial - [Claim Number]
Dear Appeals Department,
I am writing to appeal the denial of claim #[claim number] for [procedure/service] performed on [date]. The denial reason stated was [denial code and reason].
Why this denial should be reversed:
[Specific reason - e.g., "Medical documentation attached demonstrates medical necessity based on [clinical findings]. This meets your medical policy [policy number] criteria."]
Supporting documentation enclosed:
- Complete medical records
- Clinical notes documenting [specific findings]
- [Other relevant documents]
I request a review of this claim and reversal of the denial. Please respond within the timeframe required by [state] law.
Sincerely,
[Your Name]
[Member ID]
Tip: Keep appeal letters factual and clinical. Avoid emotional language or blame. Focus on policy criteria and medical evidence.
Step 6: Submit and Track Your Appeal
- Send via certified mail (proof of delivery)
- Keep copies of everything submitted
- Note the deadline - typically 60-90 days for first appeal
- Follow up in 2-3 weeks if no response
Step 7: Escalate If Denied Again
If your appeal is denied, you have additional options:
- Second-level appeal: Internal review by senior medical director
- External review: Independent third-party review (required by ACA)
- State insurance department complaint: File regulatory complaint
- Legal action: Small claims court for amounts under state limits
Common Denial Code Reference
Quick reference for frequently seen denial codes:
CO-50
Not medically necessary per payer guidelines
CO-16
Claim lacks information for processing
CO-197
Prior authorization required but not obtained
CO-4
Procedure code inconsistent with modifier/date/etc
CO-151
Payment adjusted - service not covered
CO-109
Claim not covered by this payer
For complete denial code lists, see our Top 10 Medical Billing Denial Codes guide.
For Healthcare Providers: Prevent Denials at the Source
80% of denials are preventable with complete documentation. OrbDoc automatically captures clinical details that support medical necessity, reducing denials before claims are submitted.
Evidence-Linked Documentation
Generate audit defense packages in 60 seconds; total response 90-120 minutes with claim-level audio timestamps
Learn more →Medicare Billing Optimization
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