Denial

A denial is a claim that an insurance payer refuses to pay, in full or in part, after adjudication. Initial claim denial rates hit 11.8% across U.S. providers in 2024, up from 10.2% just a few years earlier per the Experian State of Claims Report. Five categories account for 75% of all denials: eligibility issues (CARC CO-4, PR-1, PR-2 — about 25%), missing or incorrect information (CO-16 — 20%), authorization not obtained (CO-15 — 15%), coding errors including CO-97 bundling (15%), and timely filing violations (CO-29 — 10%). Every denial returns with at least one CARC (Claim Adjustment Reason Code) and frequently one or more RARCs (Remittance Advice Remark Codes) that pinpoint the specific issue. The cost to rework a single denial ranges from $25 to $118 in biller labor depending on complexity per CAQH and MGMA data — often more than the claim is worth. The result is that 65% of denied claims are never resubmitted at all, representing $25-50 billion in legitimate provider revenue written off annually across the U.S. industry. Per Premier Inc., 70% of denials are ultimately overturned when actually appealed, but only about 35% are ever appealed. The gap between overturnable and actually-overturned denials is the labor cost problem at the heart of denial management — and the single largest recoverable revenue opportunity for most practices.