What is denial management in medical billing?

Denial management is the process of finding out why a payer refused to pay a claim, correcting or appealing it, and fixing the upstream cause so the same denial stops recurring. It covers three jobs: root-cause analysis, recovery of the dollars at stake, and prevention.

What is the difference between a CARC and a RARC?

A CARC tells you why the payment amount changed. A RARC adds the specific detail you need to act. CARCs are categories; RARCs are instructions. A CO-16 on its own isn’t actionable, but its paired RARC tells you which field failed.

What does the group code on a denial mean?

The group code assigns financial responsibility. CO means the provider absorbs it. PR means it can be billed to the patient. OA covers other adjustments and PI covers payer-initiated reductions. Read it first, because it tells you whether the balance is collectible before you spend time appealing.

How long do I have to appeal a Medicare claim denial?

For Original Medicare, 120 days from receipt of the initial determination for a Level 1 redetermination, with receipt presumed five days after the notice date. Level 2 allows 180 days from the redetermination decision. Levels 3 through 5 each allow 60 days. Source: CMS.

What percentage of claims get denied?

Insurers on HealthCare.gov denied 19% of in-network and 37% of out-of-network claims in 2024, per KFF analysis of CMS data, with in-network rates ranging from 3% to 36% by insurer. Employer plans, Medicare, and Medicaid aren’t reported the same way, so no single national figure covers all payers.

What is the most common reason claims are denied?

Among reasons HealthCare.gov plans reported to CMS for 2024, unspecified “other” led at 36%, then administrative reasons at 25%, excluded services at 13%, missing prior authorization at 9%, and medical necessity at 5%. Administrative causes are the largest identifiable group.

Denial Management in 2026: The Top 10 Codes and the Appeal Playbook for Each

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