Reference
The Denials Glossary.
Plain-English definitions of the terms that decide whether your claims get paid. No coder-speak, just what each one means for your practice's money.
- 837 Claim File
- The 837 is the standard electronic file format your billing system uses to send claims to payers. Think of it as the digital envelope that carries everything about the visit: patient details, diagnosis codes, procedure codes, and charges. When someone says a claim "went out on the 837," they mean it was submitted electronically rather than on paper. Errors inside this file are a common reason claims get rejected before a payer ever reviews them, so file quality directly affects how fast you get paid.
- ADR (Additional Documentation Request)
- An ADR is a payer formally asking for records before it will pay a claim, most often from Medicare and its audit contractors. The claim sits in a suspended state until you respond, and if you miss the deadline the claim is denied automatically, regardless of whether the care was appropriate. ADRs are time-sensitive and easy to lose in a busy office, which is why practices with no ADR tracking process quietly bleed revenue. Treat every ADR like an invoice with a due date, because functionally that is what it is. Related: Denial Management →
- Aged AR
- Aged AR is the money owed to your practice that has been sitting unpaid, typically bucketed by how long it has been outstanding: 30, 60, 90, or 120-plus days. The older a balance gets, the harder it is to collect, because deadlines pass, staff move on, and payers count on you giving up. A growing 90-plus bucket is one of the clearest warning signs that revenue is leaking somewhere upstream. Working aged AR is tedious detective work, but it is often the fastest way to recover cash you have already earned. Related: Aged AR Recovery →
- ALJ Hearing
- An ALJ hearing is the third level of Medicare appeals, where your case is heard by an Administrative Law Judge rather than reviewed on paper by a contractor. It is the first point in the process where a genuinely independent decision-maker looks at your claim, and success rates historically improve here for well-documented cases. There is a minimum dollar threshold to qualify, and the wait can be long, so it makes the most sense for high-value claims or patterns of similar denials. Practices that stop appealing before this level often leave winnable money on the table. Related: Appeals Management →
- Allowed Amount
- The allowed amount is the maximum a payer agrees to pay for a service under your contract, regardless of what you billed. If you charge $200 and the contract allows $120, the payer bases its payment and the patient's share on the $120, and the rest becomes a contractual adjustment. This number is the anchor for spotting underpayments: if the payer pays less than the contracted allowed amount, you are owed the difference. Many practices never reconcile payments against their fee schedules, which means they cannot tell an underpayment from a normal adjustment. Related: Underpayment Recovery →
- Appeal (Levels of Appeal)
- An appeal is your formal challenge to a payer's decision to deny or underpay a claim, and most payers have multiple levels you can escalate through. A typical path starts with a first-level internal appeal, moves to a second internal review, and can end at an external review by an independent party; Medicare has its own five-level track. Each level has its own deadline and documentation requirements, and missing a deadline usually forfeits your right to continue. The uncomfortable truth is that a large share of denials are overturned when appealed properly, yet most practices appeal only a small fraction of them. Related: Appeals Management →
- Bundling / Claim Edits
- Bundling happens when a payer's automated edit rules decide that two services you billed separately should be paid as one, so one line gets denied or absorbed into another. These edits come from rule sets like Medicare's NCCI, plus each payer's own proprietary logic. Sometimes bundling is correct, but payers also apply edits more aggressively than the rules require, and a modifier or documentation can legitimately unbundle the services. If you never review bundling denials, you are letting software make final decisions about your revenue. Related: Denial Prevention Analytics →
- CARC Codes
- CARC stands for Claim Adjustment Reason Code, the standardized code a payer uses to explain why it paid less than you billed or paid nothing at all. Examples include codes for duplicate claims, lack of prior authorization, or services deemed not medically necessary. CARCs are the raw material of denial analytics: tally them across your remittances and you get a map of exactly where and why your revenue is leaking. The catch is that payers do not always apply them consistently, so the code is the starting point of an investigation, not the final answer. Related: Denial Prevention Analytics →
- Clean Claim
- A clean claim is one that has everything a payer needs to process it on the first pass: correct patient information, valid codes, required authorizations, and no missing fields. Clean claims get paid faster and cheaper, because every claim that needs rework costs staff time and delays cash. Your clean claim rate is one of the most useful health metrics for a billing operation; a low rate means problems are being created at the front desk or in charge entry, long before a payer sees anything. Fixing root causes upstream is almost always cheaper than fighting denials downstream. Related: Denial Prevention Analytics →
- Clearinghouse
- A clearinghouse is the middleman between your billing system and the payers: it takes your outbound claim files, checks them for basic errors, translates them into each payer's required format, and routes them along. It also passes back rejections, acknowledgments, and remittance files. A good clearinghouse catches obvious mistakes before the payer sees them, which protects your clean claim rate. The important operational habit is checking clearinghouse rejection reports daily, because a claim rejected at this stage was never received by the payer at all and no clock is running in your favor.
- Contractual Adjustment
- A contractual adjustment is the portion of your charge you agreed to forgo when you signed the payer's contract; it is the gap between your billed charge and the contracted allowed amount. It is a normal, expected part of in-network billing and is not lost revenue in itself. The danger is that adjustment codes become a dumping ground: staff sometimes write off underpayments, denials, or unworked balances as "contractual" to clear them from the books. Auditing what actually gets posted under adjustment codes is one of the quickest ways to find money that should never have been given away. Related: Underpayment Recovery →
- Coordination of Benefits (COB)
- Coordination of benefits is the process of sorting out which insurance pays first when a patient has more than one plan, such as a spouse's plan plus their own, or Medicare plus a supplement. Payers deny or delay claims constantly over COB, often just because the patient has not updated their other-coverage information with the insurer. These denials are usually fixable: the patient confirms their coverage details with the payer, and the claim is reprocessed. The practical defense is verifying all active coverage at check-in rather than discovering the problem on a denial weeks later. Related: Denial Management →
- Corrected Claim
- A corrected claim is a resubmission that fixes an error on a claim the payer already processed, such as a wrong code, date, or modifier. It must be flagged as a correction and reference the original claim number; simply sending the same claim again gets it denied as a duplicate. Payers have their own deadlines and submission rules for corrections, and getting the mechanics wrong wastes weeks. Knowing when a corrected claim is the right tool, versus an appeal or a reconsideration, is a small distinction that has a big effect on how fast denials get resolved. Related: Denial Management →
- Credentialing Denial
- A credentialing denial happens when a payer refuses to pay because the rendering provider was not enrolled or fully credentialed with that plan on the date of service. It is common when a new clinician starts seeing patients before their payer enrollments are complete, and the denials can pile up silently for months. Some payers allow retroactive effective dates or billing under a supervising provider during the gap; others do not, and that revenue is simply gone. The fix is process, not billing: track every provider's enrollment status by payer and do not schedule them into plans they cannot bill. Related: Denial Management →
- Denial vs. Rejection
- These sound interchangeable but they are different problems. A rejection means the claim never made it into the payer's system, usually because of a formatting or data error caught by the clearinghouse or the payer's front-end; you fix it and resubmit, and no appeal is needed. A denial means the payer received and processed the claim and decided not to pay, which requires investigation, a corrected claim, or a formal appeal. Confusing the two leads to real losses, because a rejected claim that nobody notices was effectively never filed, and the timely filing clock keeps running the whole time. Related: Denial Management →
- Downcoding
- Downcoding is when a payer unilaterally changes the code you billed to a cheaper one, most often knocking a higher-level office visit down a level, and pays you the lower rate. Payers increasingly do this with automated algorithms rather than by reviewing your chart. If your documentation supports the level you billed, downcoding is a payment dispute you can and should contest with records in hand. Left unchallenged, systematic downcoding quietly compresses your reimbursement across thousands of visits, which makes it one of the most expensive things to ignore. Related: Underpayment Recovery →
- EOB (Explanation of Benefits)
- An EOB is the statement a payer sends explaining how it handled a claim: what was billed, what was allowed, what it paid, and what the patient owes. Despite the fine print saying "this is not a bill," it is the document that tells you whether you were paid correctly. For the practice, the EOB (or its electronic equivalent) is where denials, adjustments, and patient responsibility amounts first become visible. Reading EOBs line by line, rather than just posting the payment total, is where underpayments and improper denials get caught.
- ERA / 835
- An ERA, delivered in the 835 file format, is the electronic version of the paper EOB: it tells your billing system exactly how each claim was paid, adjusted, or denied, with standardized reason codes attached. Because it is machine-readable, payments can post automatically and denials can be sorted and worked systematically instead of one envelope at a time. If any of your payers still send paper remits, moving them to ERA is low-hanging fruit for both speed and accuracy. The 835 is also the data source that makes denial analytics possible at all. Related: Denial Prevention Analytics →
- External Review / IRO
- External review sends a denied claim to an Independent Review Organization, a third party with no financial stake in the outcome, after you have exhausted the payer's internal appeals. It exists precisely because internal appeals are decided by the same company that denied the claim in the first place. External review is most powerful for medical necessity and experimental-treatment denials, where an independent clinician's judgment can override the payer's, and the decision is generally binding on the insurer. It takes persistence to get there, but it is often where stubborn, high-value denials finally get overturned. Related: Appeals Management →
- Medical Necessity
- Medical necessity is the payer's standard for whether a service was appropriate for the patient's condition, and "not medically necessary" is one of the most common and most contestable denial reasons. The payer is not saying the care was bad; it is saying your documentation, as submitted, did not justify the service under its coverage policy. These denials are won with records: the note, the history, the failed conservative treatment, the clinical guidelines that support the decision. Because the judgment call is subjective, medical necessity denials are exactly the category where a well-built appeal changes the outcome. Related: Appeals Management →
- Medicare Advantage vs. Fee-for-Service Medicare
- Fee-for-service (traditional) Medicare is run directly by the government with relatively uniform rules, while Medicare Advantage plans are private insurers paid by Medicare to manage the same benefits. That difference matters operationally: Advantage plans impose their own prior authorizations, networks, and payment policies, and they deny and downcode at rates traditional Medicare does not. A practice can see identical patients with identical services and get very different payment behavior depending on which flavor of Medicare is on the card. Tracking your denial and payment patterns separately by plan type is essential, because the fixes are different. Related: Denial Prevention Analytics →
- Prior Authorization
- Prior authorization is the payer's requirement that you get approval before performing certain services, or the claim will be denied no matter how appropriate the care was. Missing-authorization denials are among the most preventable and the most painful, because many payers refuse retroactive authorizations and the write-off lands entirely on the practice. The defense is a front-end process: know each payer's auth-required list, verify before scheduling, and document the authorization number on the claim. When an auth denial does slip through, appeal quickly; some payers will make exceptions for urgent care or administrative errors if you push. Related: Denial Prevention Analytics →
- RARC Codes
- RARC stands for Remittance Advice Remark Code, the supplementary codes that ride along with CARC codes on a remittance to add detail about why a claim paid the way it did. If the CARC is the headline, the RARC is the explanatory footnote: it might specify which document was missing or which policy applied. Working denials effectively means reading the CARC and RARC together, because the combination often points to a specific fix. Practices that ignore remark codes end up guessing at denial causes and sending appeals that miss the actual issue. Related: Denial Management →
- Recoupment
- Recoupment is a payer taking back money it already paid you, usually by demanding a refund or by deducting the amount from your future payments. It typically follows a post-payment audit or the payer's discovery of what it considers an overpayment. You have appeal rights here too, and deadlines matter: responding quickly can pause the clawback while the dispute is reviewed, whereas silence lets the payer simply start withholding. Unexplained negative adjustments on your remittances deserve immediate attention, because recoupments are easy to miss when payments are posted in bulk. Related: Appeals Management →
- Remittance Advice
- Remittance advice is the payer's payment report to the practice, the provider-side counterpart of the patient's EOB. It arrives either on paper or electronically as an 835 file, and it itemizes every claim in the payment batch: amounts allowed, paid, adjusted, and denied, with reason codes for each. It is the single most information-dense document in your revenue cycle, and how carefully it gets reconciled determines whether underpayments and improper denials are caught or buried. If your team only confirms that the deposit matches the check, the remittance is telling you things nobody is hearing.
- Timely Filing Limit
- The timely filing limit is the deadline for submitting a claim to a payer, counted from the date of service, and it varies widely: some contracts allow a year, others as little as 90 days. Miss it and the payer denies the claim with essentially no obligation to pay, which is why timely filing denials are among the most painful, since the care was delivered and the money is simply forfeited. These denials can sometimes be appealed if you can prove the claim was originally submitted on time, so keep your submission and rejection records. Old, untouched claims sitting in aged AR are usually racing this clock whether anyone is watching or not. Related: Aged AR Recovery →
- Underpayment
- An underpayment is when a payer pays a claim, but pays less than your contract says it should, and it is far more common than most practice owners assume. Because the claim shows as "paid," underpayments rarely trigger any follow-up; the shortfall gets posted as an adjustment and disappears. Catching them requires loading your contracted fee schedules and comparing every payment against the expected allowed amount, line by line. Individually the amounts look small, but across a year of claims, systematic underpayment by even one payer adds up to real money that you are contractually entitled to recover. Related: Underpayment Recovery →
- Write-Off
- A write-off is a balance the practice removes from its books as uncollectible, and it comes in two very different flavors. Contractual write-offs are the expected, agreed-upon discounts from your payer contracts; those are normal. Avoidable write-offs, by contrast, are denials nobody appealed, deadlines nobody met, and underpayments nobody noticed, all quietly absorbed as the cost of doing business. Reviewing what actually gets written off, and why, is one of the most revealing exercises a practice owner can do, especially when winding down or transitioning a practice, when every remaining dollar of AR either gets collected or written off for good. Related: AR Wind-Down →
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