Insurance claim denials are one of the most common hurdles for small practices. They slow down payments, increase administrative burden, and force teams to deal with repetitive tasks that could be automated or easily avoided. The good news is that many denials arise from predictable errors issues you can identify and fix with the right approach.
This article walks you through the top 10 denial codes small healthcare practices encounter. For each, we explain what it means, why it happens, and how you can address or prevent it. There’s no unnecessary jargon, no complicated processes, just practical solutions you can apply right away.
If denied claims have caused delays or frustration in your practice, this guide is for you. Let’s dive into the denial codes that cost time and money and how you can take control.
Why Understanding Denial Codes Matters
A denial isn’t just an administrative setback; it directly affects your practice’s cash flow. Every denied claim means more work and a longer wait before you’re reimbursed. In smaller practices, where teams are lean and processes are stretched, denial management becomes a critical part of day-to-day operations.
Most small practices experience denial rates higher than industry averages simply because they lack dedicated resources. However, denial codes are not random. They follow patterns. Whether it’s a missing diagnosis code, incomplete documentation, or an expired authorization, the same mistakes occur repeatedly across practices.
Learning the common denial codes helps you reduce errors before claims are submitted. It also helps you respond quickly when a claim is rejected. By addressing root causes, you avoid chasing paperwork and focus on what matters most—providing care.
How Automation Works
- Delayed reimbursements: Denials extend the time it takes to receive payments, sometimes by weeks or months.
- Increased workload: Staff spend more hours correcting, resubmitting, and following up on claims.
- Reduced revenue: Some denied claims are never corrected, resulting in lost income.
- Patient dissatisfaction: Billing errors create confusion and frustration, affecting the patient experience.
Understanding why claims are denied allows you to resolve issues faster, reduce stress on your team, and protect your revenue. Below are the top denial codes that cause the most trouble—and how you can fix them.
The Top 10 Denial Codes Small Practices Face (and Fixes)
1. CO-11: Diagnosis Code Invalid
What it means: The diagnosis code you submitted doesn’t match the procedure or date of service.
Why it happens: Coding updates happen every year. If your system isn’t updated or if someone enters the wrong code, the claim gets rejected.
How to fix it:
- Keep your ICD-10 code sets updated.
- Validate diagnosis codes against procedures before submission.
- Train staff regularly and audit claims for errors.
Prevention: Use billing software that automatically flags invalid codes during entry. This ensures accuracy without manual review.
2. CO-16: Claim/Service Lacks Information
What it means: Some required fields are missing, whether it’s prior authorization, patient demographics, or supporting documents.
Why it happens: Forms are incomplete, documents are overlooked, or data entry errors occur under time pressure.
How to fix it:
- Create a checklist for required information before submitting claims.
- Automate eligibility checks to verify coverage details instantly.
- Assign responsibility for verifying documentation at intake.
Prevention: Systems that highlight missing fields in real time prevent claims from being submitted before errors are corrected.
3. CO-18: Duplicate Claim Submission
What it means: The claim has already been submitted for the same service on the same date.
Why it happens: Manual resubmissions, unclear tracking, or software glitches result in the same claim being sent twice.
How to fix it:
- Review claim status reports before resubmitting.
- Implement claim tracking software to avoid duplicates.
- Ensure staff are trained to handle pending claims before resubmission.
Prevention: Automated workflows that prevent duplicate entries save time and reduce confusion.
4. CO-29: Timely Filing Limit Expired
What it means: The claim was submitted after the allowed filing window.
Why it happens: Missed deadlines, unclear processes, or staffing shortages delay claim submissions.
How to fix it:
- Track filing deadlines by payer.
- Submit claims within 24-48 hours of service.
- Create automated reminders for urgent submissions.
Prevention: Software that tracks deadlines and flags claims nearing expiration helps avoid time-sensitive errors.
5. CO-50: Not Medically Necessary
What it means: The insurance provider believes the treatment wasn’t justified for the patient’s condition.
Why it happens: Documentation is incomplete, or procedures aren’t linked to appropriate diagnosis codes.
How to fix it:
- Ensure medical necessity is clearly documented in patient records.
- Cross-reference insurance policies before submitting claims.
- Prepare supporting documents for appeals when needed.
Prevention: Use templates and standardized documentation practices to explain medical necessity upfront.
6. CO-97: Service Already Paid or Included
What it means: The service is considered part of another procedure and won’t be paid separately.
Why it happens: Coding errors or a lack of clarity on bundled payments result in denied claims.
How to fix it:
- Review bundling rules and apply appropriate modifiers.
- Check payer-specific guidelines before submission.
- Use claim scrubbing tools to detect potential conflicts.
Prevention: Integrating coding rules into claim preparation processes ensures compliance without guesswork.
7. CO-109: Claim Not Covered by Payer
What it means: The insurance plan doesn’t cover the service provided.
Why it happens: Coverage limitations, outdated insurance information, or patient eligibility issues.
How to fix it:
- Verify coverage at the point of care.
- Use automated eligibility checks.
- Inform patients of coverage limitations ahead of time.
Prevention: Providing patients with upfront clarity reduces disputes and improves satisfaction.
8. CO-151: Information Not Credible
What it means: There’s a discrepancy or missing detail in the claim, incorrect provider ID, mismatched patient information, etc.
Why it happens: Data entry errors, missing fields, or conflicting information between systems.
How to fix it:
- Validate provider and patient details before submission.
- Standardize data entry processes.
- Perform audits to catch common mistakes.
Prevention: Automated validation tools ensure claims meet requirements before they leave your system.
9. CO-170: System or Formatting Issue
What it means: The claim was rejected because of a technical problem file formatting, missing segments, or transmission errors.
Why it happens: Software incompatibility, clearinghouse issues, or incorrect file formats.
How to fix it:
- Ensure your billing system conforms to accepted formats (like 837P).
- Work with clearinghouses that offer real-time error feedback.
- Monitor submissions and resubmit corrected files quickly.
Prevention: Use integrated platforms that handle technical validation before submission.
10. CO-204: Service Requires Authorization
What it means: The service required prior approval, which was missing or expired.
Why it happens: Lack of communication between scheduling and billing teams, or delays in authorization processing.
How to fix it:
- Automate prior authorization workflows.
- Track authorization numbers in your patient records.
- Confirm authorization status before scheduling procedures.
Prevention: Real-time checks reduce the chances of authorization-related denials.
How to Approach Denial Prevention and Resolution
The best way to handle denials is to prevent them before they occur. However, even with the best practices, some claims will be rejected. A structured approach helps you resolve issues quickly and consistently.
Step 1 – Identify Common Denial Patterns
Track denial codes regularly. See which ones repeat most often and focus on improving those processes.
Step 2 – Train Your Team
Billing errors are often rooted in miscommunication or a lack of clarity. Regular training ensures that everyone understands required documentation, coding updates, and workflows.
Step 3 – Automate Where Possible
Manual processes invite mistakes. Automating eligibility checks, claim validation, and reminders prevents errors at the source.
Step 4 – Audit and Improve
Run periodic audits to catch errors before they result in denied claims. Use feedback loops to refine your processes continuously.
Step 5 – Appeal Strategically
Not every denial is avoidable. Some claims need appeals backed by strong documentation. Create templates and guidelines for submitting appeals efficiently.
How Technology Supports Small Practices
Small practices don’t have the luxury of large billing teams, which is why technology plays a crucial role. AI-powered solutions like Claimity can help with:
- Real-time validation: Catch errors before submission.
- Automated workflows: Reduce manual tasks.
- Predictive insights: Identify patterns that lead to denials.
- Faster resolution: Streamline corrections and resubmissions.
Using AI doesn’t replace human expertise it amplifies it, helping practices handle billing efficiently without hiring extra staff.
Final Thoughts
Insurance claim denials are a common challenge, but they don’t have to be a recurring headache. By understanding the most frequent denial codes and applying practical solutions, small practices can reduce delays, protect revenue, and improve operational efficiency.
You don’t need complex systems or large teams to stay on top of denials. With structured workflows, automated tools, and a focus on prevention, you can keep claims moving and focus on delivering care.
If denied claims have been holding your practice back, taking action today can make a real difference. Clear processes, the right tools, and targeted fixes are all it takes to stay ahead, and that’s exactly what Claimity helps you do.
FAQs on Denial Codes for Small Practices
Industry averages range between 5-10%, but many small practices experience higher rates due to limited resources.
CO-16 (missing information) is among the top across most payers.
Not always. Some denials, like expired filing deadlines, cannot be reversed.
On average, 15-45 days, depending on the payer and issue. AI solutions can shorten this significantly.
Yes. Preventing denials upfront through validation and automation is more cost-effective than fixing them after the fact.
