Rejection in medical billing is more than just an inconvenience—it’s a revenue disruptor, a productivity killer, and often, a red flag of deeper workflow issues. If you’ve ever received a “claim rejected” notice from a payer, you know the frustration. But here’s the thing: rejections are preventable. You just need to understand what they are, why they happen, and how to tackle them at the root.
In this guide, we’ll go beyond the obvious to uncover real causes, smart solutions, and best practices to avoid rejection in medical billing. Whether you’re a seasoned medical biller or a healthcare provider trying to make sense of billing chaos, this article is for you.
What Is Rejection in Medical Billing?
A rejection occurs when a payer—usually an insurance company—refuses to process a claim because of errors or missing information. Unlike a denial (which means the claim was processed and then refused), a rejection means the claim never made it through the front door.
Quick Definition:
Rejection = Pre-adjudication issue
Denial = Post-adjudication decision
Understanding this distinction is key. Rejected claims are not logged in the payer’s system, so they must be corrected and resubmitted—they can’t be appealed.
Common Reasons for Medical Billing Rejection
Here’s where things often go wrong:
1. Invalid or Missing Patient Information
Misspelled names, incorrect dates of birth, or wrong insurance IDs will lead to instant rejection.
2. Incorrect Payer ID or Insurance Plan
Submitting to the wrong clearinghouse or payer results in no one recognizing your claim.
3. Coding Errors
Unlisted CPT/HCPCS codes, mismatched ICD-10 codes, or use of obsolete modifiers = no payment.
4. Eligibility Issues
The patient might not have been eligible on the date of service, or their coverage may have lapsed.
5. Duplicate Claims
Submitting the same claim twice can trigger rejections if the first wasn’t corrected properly.
6. Missing Required Attachments
Some claims need operative reports, lab results, or referrals. Missing them means the payer says “no thanks.”
Below are a few most common rejections with resolution steps:
1) Policy ID invalid / Patient or Subscriber not identified:
- These rejections generally occur due to 2 reasons,
- When a claim is billed with an incorrect policy ID
- When a claim is billed to an incorrect payer ID
I) When a claim is billed with an incorrect policy ID:
- In the clearing house, there is already a policy ID format set up related to an insurance company that needs to be followed when billing claims.
- For Example – The format for the policy ID of UHC is 9 digits number, so if the claim is billed with 10 digits number then it gets rejected for invalid policy ID format.
- Resolution: You can utilize the payer website to find out the correct policy ID and resubmit the claim with the correct policy ID.
- If the website access is not available then you can check the insurance history or payment history to find out the correct policy ID.
- If you are unable to find the correct policy ID then check your insurance history for another active primary insurance.
- If you are able to find another insurance then check the eligibility and resubmit the claim to the new insurance if it is active.
- If another insurance is not active on DOS then release the claim to the patient. (Follow your client update before releasing the claim to the patient)
- Below is the list with the correct policy ID format of payers that will be helpful to identify the correct policy ID,
| Insurance | Policy ID Format | Policy ID Examples |
| 1199 SEIU FUNDS | 10 digits number | 1234567890 |
| AARP | 11 digits number | 12345678901 |
| Aetna | 10 digits alphanumeric characters (1st character always a letter “W”) | W123456789 |
| Aetna Medicare | 8 digits alphanumeric characters | ABCDEF1G OR ABCDE1FG OR ABCDE12F OR ABCD123E OR ABCD12EF OR ABCDEFGH |
| Affinity Health Plan | 11 digits number | 12345678901 |
| All Saver | 9 digits alphanumeric characters (1st character always a letter “C”) | C12345678 |
| Amerigroup | 9 digits number | 123456789 |
| AVMED | 11 digits alphanumeric characters (1st character always a letter “A”) | A1234567890 |
| Bankers Fidelity Life OR Bankers Life & Casualty | 10 digits number | 1234567890 |
| BCBS | 12 digits alphanumeric characters (1st 3 characters are always letters) | ABC123456789 |
| BCBS | 14 digits alphanumeric characters (1st 3 characters are always letters) | ABC12345678901 |
| BCBS FEP | 9 digits alphanumeric characters (1st character always a letter “R”) | R12345678 |
| Cigna | 9 digits alphanumeric characters (1st character always a letter “U”) | U12345678 |
| Colonial Life | 9 digits number | 123456789 |
| Emblem Health | 9 digits alphanumeric characters (1st character always a letter “K”) | K12345678 |
| Fidelis Care | 11 digits alphanumeric characters (1st digit always a letter “7”) | 7123456789 |
| Fox Everett | 9 digits alphanumeric characters (1st 2 characters are always letters “FE”) | FE1234567 |
| Freedom Health | 11 digits alphanumeric characters (1st character always a letter “P”) | P1234567890 |
| GEHA | 8 digits number | 12345678 |
| GHI | 9 digits number | 123456789 |
| Golder Rule | 9 digits number | 123456789 |
| Humana | 9 digits alphanumeric characters (1st character always a letter “H”) | H12345678 |
| Mail Handlers Benefit Plan | 11 digits number | 12345678901 |
| Medicaid AK | 10 characters in length, containing only numbers | 1234567890 |
| Medicaid AL | 13 characters in length, containing only numbers | 1234567890123 |
| Medicaid AR | 10 characters in length, containing only numbers | 1234567890 |
| Medicaid AZ | 9 characters in length, containing both letters and numbers. 1st character is always a letter (compulsory “A”). | A12345678 |
| Medicaid CA | It has 2 formats, I – 14 characters in length, and contains both letters and numbers. The 9th character is always a letter. II – 9 characters in length, containing both letters and numbers. The 9th character is always a letter. | 12345678A01234 OR 12345678A |
| Medicaid CO | 7 characters in length, containing both letters and numbers. 1st character is always a letter. | A123456 |
| Medicaid DC | 8 characters in length, containing only numbers | 12345678 |
| Medicaid FL | 10 characters in length, containing only numbers | 1234567890 |
| Medicaid GA | 12 characters in length, containing only numbers | 123456789012 |
| Medicaid HI | 10 characters in length, containing both letters and numbers. 2nd character is always a letter. | 1A234567890 |
| Medicaid ID | 10 characters in length, containing only numbers | 1234567890 |
| Medicaid IL | 9 characters in length, containing only numbers | 123456789 |
| Medicaid IN | 12 characters in length, containing only numbers | 123456789012 |
| Medicaid KY | 10 characters in length, containing only numbers | 1234567890 |
| Medicaid LA | 13 characters in length, containing only numbers | 1234567890123 |
| Medicaid MA | 12 characters in length, containing only numbers | 123456789012 |
| Medicaid MD | 11 characters in length, containing only numbers | 12345678901 |
| Medicaid MI | 10 characters in length, containing only numbers | 1234567890 |
| Medicaid MN | 8 characters in length, containing only numbers | 12345678 |
| Medicaid MS | 9 characters in length, containing only numbers | 123456789 |
| Medicaid NC | 10 characters in length, containing both letters and numbers. The 10th character is always a letter. | 123456789A |
| Medicaid NH | 10 characters in length, containing only numbers | 1234567890 |
| Medicaid NJ | 12 characters in length, containing only numbers | 123456789012 |
| Medicaid NM | 14 characters in length, containing only numbers | 12345678901234 |
| Medicaid NV | 11 characters in length, containing only numbers | 12345678901 |
| Medicaid NY | 8 characters in length, containing both letters and numbers. 1st, 2nd, and 8th characters are always letters. | AB34567C |
| Medicaid OH | 12 characters in length, containing only numbers | 123456789012 |
| Medicaid OR | 8 characters in length, containing both letters and numbers. 1st, 2nd, 6th and 8th characters are always letters. | AB345C6D |
| Medicaid PA | 10 characters in length, containing only numbers | 1234567890 |
| Medicaid TX | 9 characters in length, containing only numbers | 123456789 |
| Medicaid UT | 10 characters in length, containing only numbers | 1234567890 |
| Medicaid VA | 12 characters in length, containing only numbers | 123456789012 |
| Medicaid WA | 11 characters in length, containing both letters and numbers. 10th and 11th characters are always letters (compulsory “WA”). | 123456789WA |
| Medicaid WV | 11 characters in length, containing only numbers | 12345678901 |
| Medicaid WY | 10 characters in length, containing only numbers | 1234567890 |
| Medicare | 11 digits alphanumeric characters ((1st, 4th, 7th, 10th & 11th characters are always numbers) (2nd, 5th, 8th & 9th characters are always letters) & (3rd & 6th characters are either numbers or letters)) | 1AB2CD3EF34 OR 1A23B45CD67 OR 1A23CD4EF56 OR 1AB2C34EF56 |
| Meritain Health | 10 digits number | 1234567890 |
| Optimum Health | 11 digits alphanumeric characters (1st character always a letter “T”) | T1234567890 |
| Oxford | 10 digits number | 1234567890 |
| UHC | 9 digits number | 123456789 |
| UMR | 8 digits number OR 9 digits alphanumeric characters (1st character always a letter “Y”) | 123456789 OR Y12345678 |
Impact of Rejection on Medical Billing Revenue
Rejections aren’t just annoying—they’re costly.
- Time Lost: Every rejection delays payment. Resubmission takes time.
- Staff Burnout: Constant reworking of claims exhausts your billing team.
- Revenue Leakage: Some rejected claims never get refiled, slipping through the cracks completely.
- Audit Risk: Frequent rejections may invite scrutiny from payers or regulators.
When left unchecked, a high rejection rate can quietly drain your practice’s profitability.
Medical Billing Rejection vs Denial: Know the Difference
| Factor | Rejection | Denial |
|---|---|---|
| Occurs at | Clearinghouse/Payer front-end | After claim is adjudicated |
| Can be appealed? | ❌ No (must be corrected and resubmitted) | ✅ Yes (formal appeal process) |
| Common cause | Technical/data errors | Coverage or medical necessity issues |
| Resolution method | Edit and resubmit | Appeal or reconsideration |
Top Solutions for Medical Billing Rejection Issues
1. Implement a Pre-submission Scrubbing Tool
Automated scrubbing software scans claims for coding or demographic errors before they hit the payer.
2. Verify Insurance Eligibility Before Every Visit
Use real-time eligibility tools to catch problems before the patient is even seen.
3. Train Staff Thoroughly
Include front-desk staff. They collect most of the demographic data that leads to rejection if entered incorrectly.
4. Standardize Claim Review Checklists
Create a custom checklist by specialty—certain fields and attachments are more critical in fields like cardiology vs dermatology.
5. Use Updated Billing Software
Look for tools with built-in edit engines, alerts for missing fields, and payer-specific rules.
Comparison of Medical Billing Rejection Rates by Specialty
Some specialties have a tougher time than others due to complexity and pre-auth requirements:
| Specialty | Avg. Rejection Rate | Common Issues |
|---|---|---|
| Orthopedics | 8–12% | Modifiers, documentation gaps |
| Radiology | 10–14% | Technical component billing |
| Behavioral Health | 12–15% | Coverage limits, missing authorizations |
| Primary Care | 5–8% | Demographic errors, routine check-up coding |
How to Handle Rejection in Medical Billing
When a rejection hits your inbox:
- Review the Rejection Message or EOB
- Most clearinghouses offer codes or messages explaining the error.
- Correct the Issue Promptly
- Fix typos, update codes, attach missing documents, or verify eligibility.
- Resubmit the Claim
- Don’t delay; rejections often have tighter timelines than denials.
- Track It
- Don’t assume resubmission = success. Monitor status until payment posts.
Guide to Reducing Rejection in Medical Billing
Here’s a quick step-by-step internal workflow checklist:
Before the Visit
- Verify insurance eligibility
- Confirm demographic info
- Review pre-auth requirements
During the Visit
- Collect accurate documentation
- Note special procedures needing modifiers
After the Visit
- Scrub the claim with software
- Manually review for high-risk errors
- Submit via correct payer and clearinghouse
Benefits of Minimizing Rejection in Medical Billing
- ⏱️ Faster Payments
- 💸 Less Revenue Leakage
- 😌 Improved Staff Morale
- 🔒 Lower Risk of Audits
- 📊 Healthier Financial Metrics
Actionable Takeaways
- Rejection ≠ denial. It’s a front-door stop—not a decision.
- Most rejections are preventable with better training, tools, and workflows.
- Tracking and analyzing rejection data helps eliminate repeat errors.
- Use scrubbers, eligibility checks, and claim templates to cut rejections dramatically.