Denials follow a power law. A small set of CARC and RARC codes accounts for most of the dollars, which makes grouping by code far more productive than working the queue in order — a handful of fixes clears a disproportionate share of the money.
Open a denial queue and it looks like chaos — dozens of reason codes, no obvious order, hundreds of claims. It is not chaos. Denials are distributed like almost everything else in business: a small number of causes account for most of the money.
Codes are not evenly expensive
Every denial carries a claim adjustment reason code and often a remittance advice remark code. Sorted by count, the list looks flat. Sorted by dollars, it usually is not: a handful of codes carry the balance, and they are frequently not the most numerous ones.
This is why working a queue chronologically underperforms. Chronological order is a proxy for urgency that ignores value entirely, and it spreads effort evenly across causes that are not evenly worth solving.
The groups worth separating
- Eligibility and coverage. Preventable at the front desk, and they recur until somebody changes the intake process.
- Authorization. Also preventable, also upstream, and frequently the highest-balance group because authorized services tend to be expensive ones.
- Bundling and coding edits. Fixable in coding, and they repeat systematically rather than occasionally.
- Medical necessity. A documentation problem, and the group where appeals actually change outcomes.
- Timely filing. Not recoverable. Worth counting only to prove the process failed.
The report to ask for
Denials by reason code, by payer, sorted by dollars rather than count, for a rolling quarter. That single view usually names your top three problems in one glance — and two of them will turn out to live outside the billing office.
Sort by dollars, then by count
The highest-dollar codes tell you where to spend recovery effort. The highest-count codes tell you where to spend prevention effort. Practices that only look at one pick the wrong project about half the time.
Both lists come from the same export and take minutes to produce.
Read the remark code, not just the reason code
The CARC is often generic — the RARC is where the specific reason lives. Two claims with the same adjustment reason can need entirely different fixes, and only the remark code distinguishes them.
Track the top codes monthly
Once you have fixed the leading cause, the next one becomes the leading cause. Watching the top five each month turns denial management into a rolling program rather than a one-off project.
It also shows whether a fix actually worked, which is the part most improvement efforts never verify.
Common questions
- What are CARC and RARC codes?
- Claim Adjustment Reason Codes explain why an adjustment was made; Remittance Advice Remark Codes add detail. Together they tell you what actually happened to the claim.
- Which denial codes cost practices the most?
- It varies by specialty and payer mix, but eligibility, authorization, medical necessity and duplicate or bundling denials dominate most practices’ dollars.
- How do I analyze denial codes?
- Group by code, sort by dollars rather than count, and identify the top handful. Those are where process changes pay off.
- Should I sort denials by count or by dollars?
- By dollars for prioritizing recovery, by count for prioritizing prevention. They frequently point at different codes.
- Do I need software to do this?
- No. A spreadsheet of a month of denials with code, count and dollars answers the question. Tooling helps at volume, not at the start.
Denials Piling Up?
We handle the revenue cycle end to end — coding by certified coders, claim submission, denial management and appeals, and A/R follow-up, with six reported numbers every month.