Claim Denial
Definition
A claim denial is a payer's decision to refuse payment for a submitted medical claim. The payer returns the claim with a CARC code (Claim Adjustment Reason Code) explaining the denial reason. In 2023, the average commercial payer denial rate was 13.9%. UnitedHealthcare denied 33% of in-network claims. $262 billion in claims are initially denied each year across the U.S. healthcare system.
Why Claim Denials Matter
Each denied claim costs $57.23 to rework. 47% of denied claims are never appealed. 85% of denials are preventable. Denials grew 20.2% year-over-year from 2022 to 2023. For a practice processing 2,000 claims per month, that is approximately 236 denials costing $16,000+ per month in lost or delayed revenue.
Types of Denials
Hard denials cannot be reversed (e.g., timely filing expired, non-covered service). Soft denials can be corrected and resubmitted (e.g., missing modifier, incorrect patient information). The CARC code group prefix indicates responsibility: CO (Contractual Obligation — payer's responsibility), PR (Patient Responsibility), OA (Other Adjustment), PI (Payer Initiated). See CARC code definition.
Related Terms
CARC code — the standardized code explaining the denial reason. Appeal process — how to contest a denial. Remittance advice — the document containing the denial details. Clean claim — a correctly submitted claim that avoids denial.
Common Questions
Is a denied claim the same as a rejected claim?
No. A rejected claim never entered the payer's adjudication system — it was returned for a formatting or data error (wrong payer ID, invalid member number). A denied claim was processed and the payer decided not to pay. Rejections are fixed and resubmitted; denials are appealed.
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This glossary is for informational purposes. Consult official billing guidelines and payer policies for definitive definitions. Last updated: 2026-04-06.