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Billing Terms Glossary

Claim Denial Terms: Definitions for Therapists and Psychiatrists

These claim denial terms are defined in plain English for therapists and psychiatrists. Denials and appeals terms describe why claims are refused and how to challenge the decision. These definitions cover rejections, denial codes, appeal levels, and medical necessity.

In this section

33 terms defined
Written for psychotherapists and psychiatrists
Source organization linked on every entry

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Quiet behavioral health practice office with a desk and armchairs, the setting for our claim denial terms glossary

Administrative Law Judge (ALJ) Hearing

General (all payers)

Also called: ALJ hearing; third-level Medicare appeal

Definition: The third level of the Original Medicare appeal process, a hearing before an administrative law judge, generally subject to a minimum amount in controversy.
Why it matters: Higher levels have thresholds and stricter timelines.
Illustrative example: A provider requests an ALJ hearing after QIC review.

Verify: confirm thresholds and deadlines.

Reference source CMS (Centers for Medicare & Medicaid Services) · CMS Medicare Learning Network (MLN)

Categories Denials & AppealsMedicare & Medicaid Terms

Adverse Benefit Determination

General (all payers)

Also called: ABD; adverse determination

Definition: A plan decision to deny, reduce, or terminate a benefit or payment, which triggers notice and appeal rights under law.
Why it matters: Starts the clock for appeals and external review.
Illustrative example: A plan denies coverage for a level of care and issues a notice.

Reference source U.S. Department of Labor, EBSA · CMS (Centers for Medicare & Medicaid Services)

Categories Denials & AppealsAudits & Compliance

Appeal

General (all payers)

Also called: claim appeal; payer appeal; appeal process

Definition: A formal request that a payer review and reverse a denial or reduced payment, usually with supporting documents and a deadline.
Why it matters: Most payers set short appeal windows; missing one can end the dispute.
Illustrative example: A practice appeals a medical necessity denial with progress notes and a letter.

Reference source CMS (Centers for Medicare & Medicaid Services)

Categories Denials & Appeals

Appeal Deadline

General (all payers)

Also called: appeal filing limit; appeal window

Definition: The deadline by which an appeal must be filed, set by the payer, contract, or law.
Why it matters: Missing it often forfeits appeal rights.
Illustrative example: A denial letter states appeals must be filed within a set number of days.

Verify: payer-, plan-, and program-specific.

Related terms Appeal Timely Filing Denial Letter

Reference source CMS (Centers for Medicare & Medicaid Services)

Categories Denials & Appeals

Authorization Denial

General (all payers)

Also called: no authorization denial; missing auth denial

Definition: A denial because a required prior authorization was missing, invalid, or did not match the service.
Why it matters: Often not fixable after the fact, so it must be prevented.
Illustrative example: A claim denies because the units exceeded the authorization.

Reference source CMS (Centers for Medicare & Medicaid Services)

Categories Denials & AppealsPrior Authorization Terminology

CARC (Claim Adjustment Reason Code)

General (all payers)

Also called: CARC; claim adjustment reason code; denial code

Definition: A standard code on an ERA that explains why a claim payment was adjusted or denied.
Why it matters: Reading CARCs correctly points to the fix: correct and resubmit, appeal, or write off.
Illustrative example: CARC 16 signals missing or incorrect information on the claim.

Verify: confirm code meanings on the current X12 list.

Reference source X12

Categories Denials & AppealsEDI & Clearinghouse Terms

Claim Denial

General (all payers)

Also called: denied claim; claim denials

Definition: A claim the payer processed and refused to pay, for reasons such as medical necessity, eligibility, or coding, which can be appealed.
Why it matters: Denials require investigation and, often, an appeal or correction with a deadline.
Illustrative example: A claim is denied because the service was not authorized.

Reference source CMS (Centers for Medicare & Medicaid Services)

Categories Denials & Appeals

Coding Denial

General (all payers)

Also called: invalid code denial; bundling denial

Definition: A denial because a code, modifier, diagnosis, or code combination is invalid or not payable under payer edits.
Why it matters: Fixed by correcting the code or appealing with documentation.
Illustrative example: A claim denies for a diagnosis that does not support the CPT code.

Related terms NCCI Edits Modifier Medical Necessity

Reference source CMS (Centers for Medicare & Medicaid Services) · CMS National Correct Coding Initiative (NCCI)

Categories Denials & AppealsClaims Processing

Denial Letter

General (all payers)

Also called: adverse benefit determination; notice of denial

Definition: A written notice explaining a denial, including reasons, appeal rights, and deadlines.
Why it matters: The letter is the source for appeal deadlines and required documents.
Illustrative example: A biller logs the date and appeal deadline from each letter.

Reference source CMS (Centers for Medicare & Medicaid Services) · U.S. Department of Labor, EBSA

Categories Denials & Appeals

Denial Management

General (all payers)

Also called: denial workflow; denial follow-up

Definition: A process for tracking, categorizing, fixing, and preventing denials.
Why it matters: Good denial management raises first-pass resolution and cuts write-offs.
Illustrative example: A biller works denial reports weekly, by reason code and payer.

Related terms Denial Rate Root Cause Analysis Appeal

Reference source HFMA

Categories Denials & AppealsRevenue Cycle Metrics

Denial Prevention

General (all payers)

Also called: front-end denial prevention

Definition: Process steps that stop denials before they happen, such as eligibility checks, authorization tracking, and claim scrubbing.
Why it matters: Preventing denials costs less than appealing them.
Illustrative example: A practice adds a required eligibility check to intake.

Reference source HFMA

Categories Denials & AppealsRevenue Cycle Metrics

Downcoding

General (all payers)

Also called: payer downcoding; code downgrade

Definition: A payer's change of the billed code to a lower-paying code, often for time or level of service reasons.
Why it matters: Contracts may allow downcoding under policy; documentation is the main defense.
Illustrative example: A payer pays a 90834 rate for a claim billed as 90837.

Reference source CMS (Centers for Medicare & Medicaid Services)

Categories Denials & Appeals

Eligibility Denial

General (all payers)

Also called: no coverage denial; inactive coverage denial

Definition: A denial because the payer says the patient was not covered on the date of service.
Why it matters: Prevented by verifying eligibility before each visit and checking for retroactive changes.
Illustrative example: A claim denies for coverage terminated before the date of service.

Reference source CMS (Centers for Medicare & Medicaid Services)

Categories Denials & AppealsEligibility & Benefits

External Review

General (all payers)

Also called: independent review organization; IRO review

Definition: A review by an independent third party of a plan's denial, often available for medical necessity denials after internal appeal.
Why it matters: Can overturn plan decisions, including some behavioral health denials.
Illustrative example: A member requests external review after an internal denial.

Verify: process differs by plan type and state.

Related terms Internal Appeal Medical Necessity ERISA

Reference source CMS (Centers for Medicare & Medicaid Services) · U.S. Department of Labor, EBSA

Categories Denials & Appeals

Group Code CO

General (all payers)

Also called: CO group code; contractual obligation

Definition: A group code on an ERA meaning the adjustment is a contractual obligation, generally not billable to the patient.
Why it matters: Helps determine if a balance can be billed to the patient.
Illustrative example: A CO adjustment is written off.

Reference source X12

Categories Denials & AppealsPayment & Reimbursement

Group Code OA

General (all payers)

Also called: OA group code; other adjustment

Definition: A group code on an ERA for adjustments not classified as CO, PR, or PI.
Why it matters: Requires reading the CARC to decide next steps.
Illustrative example: An OA adjustment appears with a reason code that requires review.

Reference source X12

Categories Denials & Appeals

Group Code PI

General (all payers)

Also called: PI group code; payer-initiated reduction

Definition: A group code on an ERA for a payer-initiated reduction not attributed to the provider's contract or the patient.
Why it matters: Signals a payer decision that may be appealable.
Illustrative example: A PI adjustment is reviewed for appeal potential.

Related terms Group Code CO Group Code OA

Reference source X12

Categories Denials & Appeals

Group Code PR

General (all payers)

Also called: PR group code; patient responsibility group

Definition: A group code on an ERA meaning the adjustment is the patient's responsibility, such as copay, deductible, or coinsurance.
Why it matters: Drives patient billing.
Illustrative example: A PR line for $30 is billed to the patient.

Reference source X12

Categories Denials & AppealsPatient Financial Responsibility Terms

Internal Appeal

General (all payers)

Also called: plan internal review; first-level plan appeal

Definition: A member or provider appeal handled inside the health plan, the first step under many plans and laws.
Why it matters: Exhausting internal appeals is usually required before external review.
Illustrative example: A plan upholds its denial on internal appeal.

Related terms External Review Appeal

Reference source CMS (Centers for Medicare & Medicaid Services)

Categories Denials & Appeals

Letter of Medical Necessity

General (all payers)

Also called: LMN; medical necessity letter

Definition: A letter from a clinician explaining why a service is needed for a patient's condition, used in prior authorization and appeals.
Why it matters: Specific, patient-focused letters carry more weight than generic ones.
Illustrative example: A therapist writes an LMN describing symptoms, prior treatment, and treatment goals.

Reference source CMS (Centers for Medicare & Medicaid Services)

Categories Denials & Appeals

Medical Necessity

General (all payers)

Also called: medically necessary; medical necessity denial

Definition: The standard payers use to decide whether a service is appropriate for diagnosis or treatment and meets accepted standards of care.
Why it matters: The most common reason behavioral health claims and authorizations are denied.
Illustrative example: A payer denies continued weekly therapy as not medically necessary.

Reference source CMS (Centers for Medicare & Medicaid Services)

Categories Denials & AppealsBehavioral Health Specific Terms

Medicare Appeals Council

General (all payers)

Also called: MAC appeal; fourth-level appeal

Definition: The fourth level of Medicare appeals, reviewing ALJ decisions.
Why it matters: Part of the full appeal ladder.
Illustrative example: A party appeals an ALJ decision to the Council.

Reference source CMS (Centers for Medicare & Medicaid Services) · CMS Medicare Learning Network (MLN)

Categories Denials & AppealsMedicare & Medicaid Terms

Payment Dispute

General (all payers)

Also called: payer dispute; provider dispute resolution

Definition: A formal process to challenge how a payer paid or denied a claim, often set out in the provider contract, which may include mediation or arbitration.
Why it matters: Contract dispute steps and deadlines differ from standard appeals.
Illustrative example: A practice files a payment dispute over consistent underpayment under its contract.

Verify: check the contract; consult counsel where exposure is real.

Reference source CMS (Centers for Medicare & Medicaid Services)

Categories Denials & AppealsPayment & Reimbursement

Peer-to-Peer Review

General (all payers)

Also called: peer to peer; P2P

Definition: A conversation between the treating clinician and the payer's reviewer, used to discuss medical necessity of a denied or pending service.
Why it matters: Often the fastest way to reverse a medical necessity denial, but usually within a short window.
Illustrative example: A psychiatrist calls the payer's medical director to discuss a denial.

Reference source CMS (Centers for Medicare & Medicaid Services)

Categories Denials & AppealsPrior Authorization Terminology

Proof of Timely Filing

General (all payers)

Also called: timely filing proof; clearinghouse acceptance report

Definition: Documentation showing a claim was received by the payer before the deadline, such as an acceptance report or payer acknowledgment.
Why it matters: It is the main tool to overturn a timely filing denial.
Illustrative example: A practice attaches a 277CA showing acceptance dates.

Reference source CMS (Centers for Medicare & Medicaid Services)

Categories Denials & Appeals

Qualified Independent Contractor (QIC) Reconsideration

General (all payers)

Also called: QIC; second-level Medicare appeal

Definition: The second level of appeal in Original Medicare, decided by a QIC.
Why it matters: Follows redetermination.
Illustrative example: A provider escalates to a QIC after redetermination is unfavorable.

Verify: confirm at cms.gov.

Reference source CMS (Centers for Medicare & Medicaid Services) · CMS Medicare Learning Network (MLN)

Categories Denials & AppealsMedicare & Medicaid Terms

RARC (Remittance Advice Remark Code)

General (all payers)

Also called: RARC; remark code

Definition: A code that adds detail to a CARC on an ERA, maintained by CMS.
Why it matters: Provides specifics that guide the fix.
Illustrative example: A RARC explains which missing item caused a denial.

Verify: confirm current code list.

Reference source CMS (Centers for Medicare & Medicaid Services)

Categories Denials & AppealsEDI & Clearinghouse Terms

Reconsideration

General (all payers)

Also called: payer reconsideration; first-level appeal; claim review request

Definition: A request that the payer re-review a claim decision, often the first step before a formal appeal or, in Medicare Part B, a step after redetermination.
Why it matters: Some payers treat reconsideration as a lighter step, and it may not preserve formal appeal rights.
Illustrative example: A practice sends a reconsideration request with a corrected diagnosis.

Verify: terms differ by payer.

Reference source CMS (Centers for Medicare & Medicaid Services)

Categories Denials & Appeals

Redetermination

General (all payers)

Also called: Medicare redetermination; first-level Medicare appeal

Definition: The first level of appeal in Original Medicare, decided by the MAC.
Why it matters: Knowing the Medicare appeal levels prevents skipping steps.
Illustrative example: A provider requests redetermination of a denied Part B claim.

Verify: confirm current deadlines and levels at cms.gov.

Reference source CMS (Centers for Medicare & Medicaid Services) · CMS Medicare Learning Network (MLN)

Categories Denials & AppealsMedicare & Medicaid Terms

Retroactive Denial

General (all payers)

Also called: retro denial; post-payment denial

Definition: A denial applied after a claim was initially paid, often due to eligibility, authorization, or audit findings.
Why it matters: Leads to takebacks and requires quick review of appeal rights.
Illustrative example: A claim is paid then denied months later for a lapsed authorization.

Related terms Takeback Recoupment Post-Payment Review

Reference source CMS (Centers for Medicare & Medicaid Services)

Categories Denials & Appeals

Root Cause Analysis

General (all payers)

Also called: denial root cause; denial trend analysis

Definition: Looking at denial patterns to find the underlying reason, such as a front-desk process or a payer rule change, and fix it at the source.
Why it matters: Prevents repeated denials.
Illustrative example: A spike in eligibility denials leads to a change in verification steps.

Related terms Denial Management Denial Rate

Reference source HFMA

Categories Denials & AppealsRevenue Cycle Metrics

State Fair Hearing

Medicaid (state-specific)

Also called: Medicaid fair hearing; state fair hearing appeal; Medicaid member hearing

Definition: A state fair hearing is a Medicaid enrollee's right to ask a state for a hearing after a denial, reduction, or termination of services or eligibility.
Why it matters: Members can use it after a plan's internal appeal. Providers may assist a member but the right belongs to the member.
Illustrative example: A member appeals a denial of therapy hours with the plan and then requests a state fair hearing.

Verify: State rules and timelines vary.

Reference source Medicaid.gov · CMS (Centers for Medicare & Medicaid Services)

Categories Denials & AppealsMedicare & Medicaid Terms Medicaid

Timely Filing Denial

General (all payers)

Also called: late claim denial

Definition: A denial because the claim was received after the filing deadline.
Why it matters: Overturned only with proof of timely filing or a valid exception.
Illustrative example: A claim denies as untimely and the practice supplies an acceptance report.

Reference source CMS (Centers for Medicare & Medicaid Services)

Categories Denials & Appeals