A denial is a payer’s adjudication decision. A rejection prevents a claim from entering processing. Knowing which occurred determines the next step.
A PRACTICAL QUESTION
How is denial rate calculated?
Quick answer
For a remittance-based claim-count measure, divide actionable denied claims by all claims remitted in the same reporting population, then multiply by 100. A submission-based or dollar-based rate answers a different question.
Example
Illustrative calculation: 45 actionable denied claims out of 900 remitted claims gives 5%. These are teaching numbers, not client results.
Common mistake
Dividing remittance denials by this month’s submissions mixes populations. Comparing that result with a differently defined benchmark can be misleading.
What else to consider
Use the full HFMA counting rules, including partial denials and exclusions, before benchmarking. There is no universal good rate independent of the population and methodology.
Official guidance and references
The explanation and example are provided to make the topic easier to understand. They are not quotations from the linked sources or claims about a specific client result.
A PRACTICAL QUESTION
How do CARCs and RARCs help explain a payment adjustment?
Quick answer
A claim adjustment reason code explains an adjustment; a remittance advice remark code adds detail. Read both with the adjustment group, claim information and payer instructions before choosing the next action.
Example
Illustrative review: a team sees an adjustment, reads the accompanying remark, checks the submitted claim and then identifies the missing information. The response—not a code in isolation—guides the investigation.
Common mistake
Treating every zero payment as a denial or turning one code into a universal appeal instruction.
What else to consider
CMS explains Medicare remittances. For a different product, verify that payer’s current process. A reference page cannot decide what a particular account requires.
Official guidance and references
The explanation and example are provided to make the topic easier to understand. They are not quotations from the linked sources or claims about a specific client result.
Begin with the actual response
Read the remittance, the claim and the supporting account history together. Adjustment reason codes and remark codes provide different pieces of the explanation. A zero payment alone does not establish that the account is an actionable denial.
Choose the appropriate route
The account may need a corrected claim, missing information, a reconsideration, an appeal or a different action under the payer’s rules. Verify the applicable instructions and deadline before acting. Resubmitting without understanding the response can create duplicate work.
Keep recovery and prevention connected
Group recurring issues by cause and by the team able to change the process. Record the corrective action, an accountable owner and a date to review the pattern. Count work recovered and work prevented separately so one does not hide the other.
Questions to take into the work
- Was the claim rejected before processing or denied after adjudication?
- What do the full remittance and payer instructions say?
- Who can prevent this reason from recurring?
Primary references
My explanations and review questions are practical guidance, not official payer instructions. For a specific account or service, always check current payer and program requirements.