Insurance Claim Denials: Common Reasons and How to Appeal

Why Claims Get Denied

Insurance claim denials are one of the most frustrating aspects of running a therapy practice. Understanding why denials happen is the first step toward preventing them and knowing how to respond when they occur.

Verify with your payer: Denial policies, appeal deadlines, and required documentation vary by payer. Always check the specific denial notice or contact your payer's provider services line for instructions specific to your claim.

Most Common Denial Reasons

1. Timely Filing (CO-29)

The claim was not submitted within the payer's filing deadline. Most commercial payers require claims within 90 to 365 days of the date of service. Medicare requires submission within 12 months.

Prevention: Submit claims within 48 hours of the session. Track submission confirmations from your clearinghouse.

2. Prior Authorization Not Obtained (CO-15)

The service required prior authorization, and it was not obtained before the session occurred — or the authorization expired.

Prevention: Verify authorization requirements for each client before their first session and track authorization expiration dates. See our prior authorization guide.

3. Medical Necessity Not Established (CO-50)

The payer determined that the documentation did not support the medical necessity of the service. This is common for extended sessions (90837), high-frequency sessions, and ongoing treatment beyond the payer's expected duration.

Prevention: Document measurable symptoms, functional impairments, and treatment progress in every note. See our medical necessity documentation guide.

4. Incorrect or Mismatched Codes (CO-4, CO-11)

The CPT code, ICD-10 code, or modifier is incorrect, or the diagnosis does not support the procedure. For example, billing couples therapy (90847) with only an individual diagnosis code.

Prevention: Verify code combinations before submitting. Ensure the ICD-10 code supports the CPT code billed.

5. Duplicate Claim (CO-18)

The payer already processed an identical claim for the same service, date, and provider.

Prevention: Check your claims history before resubmitting. If the original claim was not paid, submit a corrected claim rather than a duplicate.

6. Coordination of Benefits (CO-22)

The patient has multiple insurance plans, and the claim was sent to the wrong payer or the other plan's information is missing.

Prevention: Verify primary and secondary insurance at every session. Update coordination of benefits information with the payer.

7. Eligibility Issues (CO-27)

The patient was not covered under the plan on the date of service — the policy was terminated, the member ID was wrong, or the plan had not yet become active.

Prevention: Verify eligibility before every session, not just the first one.

8. Non-Covered Service (CO-96)

The service is not covered under the patient's specific plan. This is different from a medical necessity denial — the plan simply does not include this benefit.

Prevention: Verify benefits before beginning treatment. Inform the client in writing if a service may not be covered.

Understanding Denial Code Categories

Denial codes follow standardized categories that indicate who is responsible:

Prefix	Category	Who Is Responsible
CO	Contractual Obligation	Payer or provider (cannot bill patient)
PR	Patient Responsibility	Patient owes this amount
OA	Other Adjustment	Varies — may be informational
PI	Payer Initiated	Payer-side adjustment

When you see a CO code, the provider generally cannot bill the patient for that amount. When you see a PR code, the patient is responsible. Understanding this distinction is critical for proper billing.

Step-by-Step Appeal Process

Step 1: Review the Denial Notice

Read the EOB or denial notice carefully. Identify:

• The specific denial reason code and remark code
• The appeal deadline
• The address or portal for submitting appeals
• What documentation is requested

Step 2: Gather Supporting Documentation

Depending on the denial reason, you may need:

• Medical necessity denials: Treatment plan, progress notes showing symptoms and functional impairment, clinical rationale for the service
• Authorization denials: Proof that authorization was obtained, or that the service met emergency/urgent criteria
• Coding denials: Corrected claim with proper codes and supporting notes
• Timely filing denials: Proof of original submission (clearinghouse confirmation, electronic submission records)

Step 3: Write the Appeal Letter

A strong appeal letter includes:

Step 4: Submit the Appeal

• Follow the payer's specific submission method — some require portal submission, others accept mail or fax
• Include all supporting documentation referenced in your letter
• Keep copies of everything you submit
• Note the submission date and set a follow-up reminder for 30 days

Step 5: Follow Up

If you have not received a response within 30 days:

1. Call the payer's provider services line
2. Reference the appeal and claim number
3. Ask for the status and expected resolution date
4. Document the call (date, representative name, reference number)

Step 6: Escalate If Necessary

If the first-level appeal is denied, most payers offer a second-level appeal. Beyond that:

• External review: Under the ACA, patients can request an independent external review
• State insurance department: File a complaint if you believe the denial violates state insurance regulations
• Provider ombudsman: Some payers have an ombudsman or provider dispute resolution process

Preventing Future Denials

The most effective approach to claim denials is prevention:

• Verify eligibility and benefits before every session
• Obtain and track authorizations when required
• Submit claims promptly — within 48 hours is ideal
• Document medical necessity in every progress note
• Double-check codes before submission
• Use a clearinghouse that provides claim scrubbing (catches common errors before submission)
• Track denial patterns — if you see the same denial code repeatedly, address the root cause

When to Get Help

Consider working with a billing specialist or consultant if you experience:

• A denial rate consistently above 5-10%
• Complex or recurring denials you cannot resolve
• Payer audits or recoupment requests
• Difficulty navigating the appeal process for high-value claims