Top 10 Reasons Medical Insurance Claims Get Denied (and How to Prevent Them)

Last updated: September 2026 · Written by Alex Trent, MA, MS, psychologist and mental health billing specialist

Quick answer: Medical insurance claims are usually denied for one of three types of mistakes: administrative (inactive coverage, missing information, no prior authorization), coding (codes that don’t match, bundled services billed separately, the wrong level of service), or documentation (records that don’t prove medical necessity). Most of these can be prevented. Verify eligibility and benefits before the first visit, get authorizations in writing, code from complete session notes, and scrub every claim before you submit it. If a claim is still denied, you can appeal it with supporting documentation.

Key Takeaways

• HealthCare.gov insurers denied 19% of in-network claims in 2024, yet fewer than 1% of denials were appealed (KFF).
• 41% of providers now have denial rates of 10% or higher. The top cause is missing or inaccurate claim data (Experian Health, 2025).
• Most denials come from process problems, not clinical ones. That means a front-end checklist prevents most of them.
• Every denial comes with a reason code (CARC) on your EOB or ERA. Read it first, because it tells you whether to correct and resubmit or to file an appeal.

Table of Contents

1. What is a claim denial?
2. Top 10 denial reasons, with CARC codes, examples and fixes
3. CARC denial codes quick reference table
4. Other common denial triggers
5. How to appeal a denied insurance claim
6. Insurance claim appeal checklist
7. How to prevent claim denials in your practice
8. Frequently asked questions
9. Get a free denial audit

What Is a Medical Insurance Claim Denial?

A claim denial happens when an insurance company processes a claim and refuses to pay all or part of it. A claim rejection is different. A rejected claim is returned before processing, usually because of formatting or data errors, and you can fix and resubmit it. A denied claim was adjudicated, so you usually need to correct and resubmit it or file a formal appeal.

Almost every denial falls into one of three categories:

• Administrative mistakes: eligibility, demographics, authorization, filing deadlines.
• Coding mistakes: CPT and ICD-10 mismatches, bundling errors, the wrong level of service.
• Documentation mistakes: notes that don’t support medical necessity or the billed service.

Top 10 Reasons Medical Insurance Claims Get Denied

Each reason below matches a Claim Adjustment Reason Code (CARC) you’ll see on the EOB or ERA. For every code you get what it means, a real-world mental health example, and the fix: how to prevent it and what to do if the denial has already happened. Jump to a code:

CO-16 · CO-18 · CO-22 · CO-27 · CO-29 · CO-50 · CO-97 · CO-109 · CO-151 · CO-197

1. Missing or Incorrect Claim Information (CO-16)

What the code means: “Claim/service lacks information or has submission/billing error(s).” It is the most common denial in the industry. In Experian Health’s 2025 survey, 50% of providers named missing or inaccurate data as a top denial cause. CO-16 almost always comes with a RARC (remark code) that points to the exact field that’s wrong.

Mental health example: A therapist bills 90837 for a video session but leaves off the rendering provider NPI and uses place of service 11 (office) instead of 10 (telehealth in the patient’s home). The payer denies with CO-16 and remark code N290 (missing rendering provider).

The fix: Scan the insurance card at intake and enter the name exactly as it appears. Run every claim through a scrubber that checks NPIs, taxonomy, place of service and modifiers. If the denial already happened, don’t appeal. Fix the field named in the RARC and send a corrected claim (frequency code 7) with the original claim number.

2. Duplicate Claim or Service (CO-18)

What the code means: “Exact duplicate claim/service.” The payer already has a claim for the same client, provider, date of service and code.

Mental health example: A practice hasn’t been paid for a 90834 session after 30 days, so the biller submits the same claim again as a new claim. The original was still in process. The second claim comes back CO-18. The same thing happens when a practice fixes an error and sends a brand-new claim instead of a corrected one.

The fix: Check claim status in the payer portal or with a 276/277 inquiry before you resubmit anything. When you change a claim that already processed, send it as a replacement claim (frequency code 7), not a new one (frequency code 1). If a true duplicate was denied, no action is needed. Just confirm the original claim paid.

3. Coordination of Benefits (CO-22)

What the code means: “This care may be covered by another payer per coordination of benefits.” The payer thinks another plan should be billed first, or the client hasn’t updated their COB information.

Mental health example: A 14-year-old client is covered by both parents’ employer plans. The practice bills the mother’s plan, but under the “birthday rule” the father’s plan is primary because his birthday falls earlier in the year. The claim is denied CO-22. Adult clients who have Medicare plus an employer plan hit the same problem.

The fix: Ask about every active insurance plan at intake, and apply the birthday rule and Medicare Secondary Payer rules to set the right order. If the denial says the client’s COB file is out of date, the client usually has to call their insurer and update it. Then bill the primary plan, and send the secondary claim with the primary EOB attached.

4. Coverage Terminated (CO-27)

What the code means: “Expenses incurred after coverage terminated.” The policy ended, lapsed for non-payment, or changed before the date of service.

Mental health example: A client in weekly therapy loses their job in March and doesn’t elect COBRA. The practice keeps billing the old plan for April and May sessions, and eight claims come back CO-27 weeks later.

The fix: Check eligibility before the first session and again at the start of every month, not only at intake. Re-verify every client in January, when plans change the most. Ask clients to tell you right away when their insurance changes. If it’s already denied, run eligibility for the date of service. If the client has new coverage, bill the new plan. If not, the balance becomes the client’s responsibility under your financial policy.

5. Timely Filing Limit Expired (CO-29)

What the code means: “The time limit for filing has expired.” Medicare allows 12 months from the date of service. Many commercial and Medicaid plans allow only 90 to 180 days, and some contracts are shorter.

Mental health example: A solo psychologist finds that a batch of 90791 intake claims was rejected by the clearinghouse and never reached the payer. By the time anyone notices, the payer’s 90-day filing window has closed.

The fix: Submit claims within a few days of the session, and check clearinghouse acceptance reports (999 and 277CA) every week so rejected claims don’t sit unnoticed. Keep a list of each payer’s filing limit. If you’re denied, you can only win an appeal with proof of timely filing, such as a clearinghouse acceptance report or a payer acknowledgment dated inside the window.

6. Not Medically Necessary (CO-50)

What the code means: “These are non-covered services because this is not deemed a ‘medical necessity’ by the payer.” The payer decided the service wasn’t needed based on its clinical criteria.

Mental health example: A client with generalized anxiety disorder (F41.1) has had 24 sessions of 90837. The payer reviews the records and denies further sessions because the notes repeat “client doing well” without describing symptoms, functional impairment or progress toward goals. Payers also target 90837 when the notes don’t justify a 53+ minute session over a 45-minute 90834.

The fix: Make every note connect symptoms, functional impairment, treatment goals and measurable progress, and keep an up-to-date treatment plan. Learn each payer’s criteria for ongoing care. This denial needs a formal appeal, not a corrected claim. Send the treatment plan, recent notes, standardized scores (like PHQ-9 or GAD-7) and a letter of medical necessity. You can also ask for a peer-to-peer review with the payer’s clinician.

7. Bundled Service Billed Separately (CO-97)

What the code means: “The benefit for this service is included in the payment/allowance for another service/procedure that has already been adjudicated.” The payer treats the service as part of another code, usually because of an NCCI edit.

Mental health example: A clinician bills the interactive complexity add-on 90785 with the crisis psychotherapy code 90839. NCCI doesn’t allow that pair, so 90785 is denied CO-97. The same happens when a psychiatric prescriber bills a psychotherapy add-on (90833) without documenting separate, distinct time from the E/M visit.

The fix: Check code pairs against current NCCI edits and payer policy before you submit. Use modifiers such as 59 or XU only when your notes support a truly separate service, because modifier misuse is an audit risk. If the edit was applied correctly, write off the bundled line. If it wasn’t, send a corrected claim or an appeal with the notes that show a distinct service.

8. Claim Sent to the Wrong Payer (CO-109)

What the code means: “Claim/service not covered by this payer/contractor. You must send the claim/service to the correct payer/contractor.”

Mental health example: This one is especially common in behavioral health because of “carve-outs.” A client’s medical plan is Blue Cross, but their mental health benefits are managed by a separate behavioral health company. The practice bills Blue Cross and gets CO-109. Medicaid managed care creates the same problem when the claim goes to state fee-for-service Medicaid instead of the client’s managed care plan.

The fix: Read the back of the insurance card for a separate “behavioral health” or “mental health” phone number or payer ID, and confirm it during benefit verification. Once denied, you don’t need an appeal. Send a new claim to the correct payer, and keep the CO-109 EOB in case that payer’s filing deadline becomes an issue.

9. Frequency or Service Limit Exceeded (CO-151)

What the code means: “Payment adjusted because the payer deems the information submitted does not support this many/frequency of services.”

Mental health example: A client returns to therapy after a four-month break, and the clinician bills a second 90791 diagnostic evaluation. The client’s plan allows one 90791 per 12 months, so the claim is denied CO-151. Billing two 90837 sessions in the same week or more psychological testing units than the plan allows triggers the same code.

The fix: During verification, ask about visit limits, per-code frequency limits and testing unit caps, and track each client’s used visits. For a returning client, bill a regular psychotherapy code unless the plan allows another evaluation. If extra sessions were clinically needed, appeal with documentation that explains why, such as a crisis, a hospitalization or a new diagnosis.

10. No Prior Authorization (CO-197)

What the code means: “Precertification/notification/authorization/pre-treatment absent.” Authorization problems are the second most common denial cause in Experian Health’s 2025 survey.

Mental health example: A psychologist completes an ADHD evaluation and bills 96130 and 96136 psychological testing codes. The client’s plan requires prior authorization for testing, and none was requested, so every line is denied CO-197. Intensive outpatient programs, TMS and sessions beyond an authorized visit count are frequent triggers too.

The fix: Check authorization rules during benefit verification for every code you plan to bill. Record the authorization number, approved units, dates and rendering provider, and set reminders before approved visits run out. Some payers accept a retro-authorization request within a short window, so call right away. If they won’t, appeal with proof that the service was urgent or that the payer’s own policy didn’t require authorization.

Denial Reasons, CARC Codes and Fixes: Quick Reference

CARC means Claim Adjustment Reason Code, shown on the EOB or 835 remittance. The prefix tells you who is responsible: CO (contractual obligation) means the provider can’t bill the client for the amount, while PR (patient responsibility) means the client can be billed. You’ll also see OA (other adjustment) and PI (payer-initiated reduction).

Other Common Denial Triggers to Watch

• Out-of-network provider (CARC 242): HMO and EPO plans generally don’t pay for out-of-network care. Confirm network status for the client’s specific plan, not just the insurance company.
• Diagnosis doesn’t support the procedure (CARC 11): A Z-code as the primary diagnosis for psychotherapy is a common trigger, because many payers need an F-code to establish medical necessity.
• Lower level of service (CARC 150): 90837 is downcoded to 90834 when notes don’t record start and stop times that support 53+ minutes.
• Non-covered benefit (CARC 96 or 204): Couples counseling without an identified patient diagnosis is often excluded. Get a signed financial agreement before treatment.
• Telehealth errors: A wrong place-of-service code (02 or 10) or a missing modifier 95, which some payers require. Read our guide to telehealth billing for mental health.
• Credentialing gaps: This happens when you bill under a clinician who isn’t credentialed or linked to the group contract yet. Don’t schedule insurance clients with a new clinician until their effective date is confirmed.

How to Appeal a Denied Insurance Claim

If a claim comes back with a denial, first decide whether it needs a corrected claim or an appeal. Correctable errors (CO-16, CO-18, CO-22, CO-109) are fixed by rebilling. Clinical and coverage decisions (CO-50, CO-151, CO-197 and some CO-29 and CO-97 denials) need a formal appeal. Depending on the insurance company, you may appeal with a form, a letter, or an online portal.

Appeals are worth the effort. KFF found that insurers overturned about one-third of the internal appeals filed in 2024, but fewer than 1% of denials are ever appealed. ACA-compliant and employer plans generally allow 180 days from the denial notice for an internal appeal (HealthCare.gov). If the internal appeal fails, you can request an external review by an independent third party.

Insurance Claim Appeal Checklist

Work through this list before you send any appeal:

• ☐ Read the EOB or ERA and write down the CARC, the RARC and the claim number.
• ☐ Confirm it really needs an appeal. If the fix is a data correction, send a corrected claim instead.
• ☐ Check the deadline. Note the appeal window from the denial date and put a reminder in your calendar.
• ☐ Get the payer’s policy. Pull the medical policy, clinical criteria or authorization rule the payer used, and quote it in your appeal.
• ☐ Gather the records: session notes, the current treatment plan, assessment scores, the authorization record and a copy of the original claim.
• ☐ Write a letter of medical necessity for CO-50 and CO-151 denials. Tie the diagnosis, symptoms and functional impairment to the service billed.
• ☐ Include proof for technical denials, such as clearinghouse acceptance reports for CO-29 or the primary EOB for COB issues.
• ☐ Use the payer’s appeal form if it has one, and include the client’s name, member ID, date of service, claim number and the amount in dispute.
• ☐ Consider mental health parity. If the payer’s limits on mental health care are stricter than on comparable medical care, say so. The Mental Health Parity and Addiction Equity Act restricts that.
• ☐ Submit with proof of delivery (portal confirmation, fax receipt or certified mail) and save a copy of the full packet.
• ☐ Follow up in 30 days. Log every call with the date, the representative’s name and a reference number.
• ☐ Escalate if needed: second-level appeal, external review, then a complaint to your state insurance department.

When you’re dealing with insurance recoupments rather than denials, the process is different. Get expert help before you respond.

How to Prevent Claim Denials in Your Practice

Denials are much cheaper to prevent than to fix. Use this checklist at the front end:

• Verify eligibility, benefits, network status and authorization before the first appointment.
• Re-verify coverage monthly and at the start of each calendar year.
• Document time, medical necessity and treatment goals in every note.
• Scrub claims for demographic, coding and modifier errors before submission.
• Track denial reasons by payer so you can fix the root cause, not just the claim.
• Work denials within days, not months, to stay inside filing and appeal deadlines.

For more practical fixes, see our mental health billing tips and our guide to common insurance billing challenges for mental health professionals.

If denials keep taking up your time, a specialist can take the work off your plate. Learn how a mental health billing company reduces claim denials, explore our mental health billing services, or see how much mental health billing services cost.

Frequently Asked Questions

What is the most common reason medical insurance claims are denied?

Missing or inaccurate claim information is the most common reason, including wrong patient demographics, invalid member IDs and missing provider details. Authorization problems are the second most common cause, according to Experian Health’s 2025 State of Claims survey.

What is the difference between a rejected claim and a denied claim?

A rejected claim is returned before the payer processes it, usually because of formatting or data errors, and it can be corrected and resubmitted. A denied claim has been processed and refused, so it needs a corrected claim or a formal appeal.

How long do I have to appeal a denied insurance claim?

Most ACA-compliant and employer-sponsored plans allow 180 days from the date of the denial notice for an internal appeal. Medicare, Medicaid and some commercial payers have different deadlines, so always check the EOB and the payer contract.

Can a denied claim be resubmitted?

Yes. If the denial was caused by a correctable error, such as a wrong code or missing information, you can submit a corrected claim. If the payer disputes medical necessity or coverage, you usually need to file an appeal with supporting documentation.

Can insurance deny a claim because of a pre-existing condition?

ACA-compliant health plans can’t deny coverage for pre-existing conditions. Grandfathered individual plans, short-term health plans and some limited-benefit policies can still exclude them.

How can mental health practices reduce claim denials?

Verify benefits and authorizations before treatment, document session time and medical necessity in every note, scrub claims before submission, and track denial trends by payer. Many practices use an insurance billing service to handle this full cycle.

What does the CO prefix on a denial code mean?

CO stands for contractual obligation. It means the adjustment is the provider’s responsibility under the payer contract, so you can’t bill the client for that amount. PR (patient responsibility) means the client can be billed, for example for a deductible or copay.

Get a Free Denial Audit

ePsych Billing is run by a psychologist who understands both the clinical and the billing side of mental health practice. We verify benefits, submit clean claims, and work every denial so you can focus on your clients.

Start with a free denial audit. We’ll review your recent denials and ERAs, break them down by CARC code and payer, estimate how much revenue you can still recover, and give you a short list of fixes for your front desk and billing workflow. There’s no cost and no obligation.

Get My Free Denial Audit