Quick Answer: Medical billing denial codes are standardized reason codes used by insurance payers to explain why a claim was denied or adjusted. The main categories are Contractual Obligation (CO), Patient Responsibility (PR), Other Adjustment (OA), and Payer Initiated Reductions (PI). Understanding these codes is essential to recovering denied revenue quickly.
When a claim comes back denied, the Explanation of Benefits (EOB) or Electronic Remittance Advice (ERA) will contain one or more reason codes that explain what went wrong. Knowing how to read and act on these codes is one of the most critical skills in medical billing.
Understanding the Denial Code System
Medical billing denial codes follow the ANSI X12 standard, maintained by the Washington Publishing Company (WPC). They are divided into:
| Group Code | Meaning | Who Bears Responsibility |
| CO | Contractual Obligation | Provider writes off the amount |
| PR | Patient Responsibility | Patient may be billed |
| OA | Other Adjustment | Neither party; informational |
| PI | Payer Initiated Reduction | Payer adjusts; no action usually needed |
| CR | Correction/Reversal | Reversal of a prior payment |
Each denial will show a Group Code + Reason Code + optional Remark Code (CARC/RARC) for more detail.
Most Common Medical Billing Denial Codes (With How to Respond)
CO Denial Codes (Contractual Obligations)
CO-4 — The procedure code is inconsistent with the modifier What it means: The modifier used doesn’t match what the code requires or payer allows. Action: Review CPT code + modifier pairing. Correct and resubmit if modifier was applied in error.
CO-11 — Diagnosis is inconsistent with the procedure What it means: The ICD-10 diagnosis code doesn’t support the CPT procedure billed. Action: Verify the diagnosis and procedure pairing. Update diagnosis if clinical documentation supports it; may require physician clarification.
CO-16 — Claim/service lacks information or has submission/billing error What it means: Required information is missing from the claim (NPI, referral number, date of injury, etc.). Action: Review the attached remark codes for specifics. Correct the missing data and resubmit.
CO-22 — This care may be covered by another payer per coordination of benefits What it means: Payer believes another insurance is primary. Action: Verify the patient’s COB information. Update primary/secondary payer order and resubmit to the correct payer first.
CO-45 — Charge exceeds fee schedule/maximum allowable What it means: Provider billed above the contracted rate; the excess is a write-off per contract. Action: No resubmission needed. Write off the contractual adjustment. If rate seems incorrect, verify the contracted fee schedule.
CO-97 — The benefit for this service is included in the payment/allowance for another service What it means: The service was already bundled into another billed code. Action: Check NCCI edits. If unbundling was appropriate (modifier applies), append the correct modifier (e.g., -59, – XU) and resubmit.
CO-109 — Claim not covered by this payer/contractor What it means: Wrong payer was billed. Action: Identify the correct payer and resubmit. Verify insurance information at the time of service.
CO-167 — This (these) diagnosis(es) is (are) not covered What it means: The diagnosis code is not covered under the patient’s plan. Action: Review payer-specific coverage policies. If another diagnosis applies, update with documentation. If truly excluded, notify the patient.
PR Denial Codes (Patient Responsibility)
PR-1 — Deductible Amount What it means: Applied to patient’s annual deductible. Action: Bill patient for the deductible amount per your financial policy.
PR-2 — Coinsurance Amount What it means: Patient’s percentage responsibility (e.g., 20% after deductible). Action: Bill patient for coinsurance.
PR-3 — Co–payment Amount What it means: Fixed co-pay amount owed by patient at time of service. Action: Collect at time of service going forward; bill if unpaid.
PR-96 — Non-covered charge(s) What it means: Service is not a covered benefit under the patient’s plan. Action: Issue Advance Beneficiary Notice (ABN) for Medicare patients before non-covered services. Bill patient with proper notice.
PR-204 — This service/equipment/drug is not covered under the patient‘s current benefit plan What it means: Similar to PR-96; specific to benefit plan exclusions. Action: Verify benefit coverage before service. Bill patient if ABN/waiver was signed.
OA Denial Codes (Other Adjustments)
OA-18 — Exact duplicate claim/service What it means: A claim for the same service, date, and patient already exists. Action: Verify whether the original claim was paid. If so, no action needed. If original was denied, appeal with documentation showing difference or void/resubmit original.
OA-23 — Payment adjusted due to a prior claim adjustment What it means: A previous overpayment is being recouped. Action: Review the recoupment notice and compare to original EOB. Dispute if the recoupment amount is incorrect.
Remark Codes: CARC vs. RARC
Denial codes are often paired with Remark Codes that provide additional detail:
| Code
Type |
Full Name | Purpose |
| CARC | Claim Adjustment Reason Code | Explains the reason for the adjustment (same as denial codes above) |
| RARC | Remittance Advice Remark Code | Provides additional detail or instructions (e.g., “N30 — Patient cannot be held responsible for payment for this service”) |
Example: A denial showing means: the claim has a billing error (CO-16), and
specifically the NPI is missing or invalid (MA130 remark code).
Top 10 Most Frequent Denial Codes in 2024–2025
Based on industry claims data:
| Rank | Code | Description | Avg. % of Denials |
| 1 | CO-16 | Missing/incomplete information | ~18% |
| 2 | CO-4 | Modifier inconsistency | ~12% |
| 3 | CO-22 | COB/other payer issue | ~10% |
| 4 | CO-97 | Bundled service | ~9% |
| 5 | PR-1/2/3 | Patient responsibility | ~8% |
| 6 | CO-11 | Diagnosis/procedure mismatch | ~7% |
| 7 | OA-18 | Duplicate claim | ~6% |
| 8 | CO-45 | Exceeds fee schedule | ~6% |
| 9 | CO-109 | Wrong payer | ~5% |
| 10 | CO-167 | Diagnosis not covered | ~4% |
How to Reduce Denial Rates Using This Reference
Train your team to look up denial codes immediately upon EOB receipt — don’t let denials age
Track denial codes by payer — patterns reveal whether a specific payer has a systemic issue or your billing team needs retraining on a specific area
Set a denial follow–up SLA — industry best practice is to respond to all denials within 7 business days of receipt
Use denial code dashboards in your practice management system to spot trends early Know your timely filing windows — most payers allow 90–180 days to appeal; some as
little as 60 days
Frequently Asked Questions
What is the difference between a denial code and a remark code?
Denial codes (CARC) explain the reason for an adjustment. Remark codes (RARC) provide additional instructions or clarification. Both appear on the ERA/EOB and should be reviewed together.
What does CO-45 mean and do I need to resubmit?
CO-45 means your charge exceeded the contracted fee schedule rate. The excess is a contractual write-off — you do not resubmit. If you believe the rate is wrong, verify with your payer contract first.
Can I bill the patient for a CO denial?
Generally, no. CO denials indicate the provider has agreed to write off the amount per a contracted rate. Billing the patient for CO adjustments is a contract violation and potentially illegal (balance billing).
