E/M claim denials are some of the most common challenges AR Callers encounter during insurance follow-up. Evaluation and Management services can be denied for bundling, medical necessity, coding issues, provider enrollment problems, patient status errors, and payer-specific billing policies.
Knowing what an E/M code means is only the beginning.
For an AR Caller, the more important question is:
Why did the payer deny this particular E/M claim, and what action will actually resolve the denial?
A successful AR follow-up process requires more than simply calling the payer and asking for a reprocessing. You need to understand the denial reason, review the claim and documentation, determine whether the claim requires correction or an appeal, and then take the appropriate action.
This guide explains the most common E/M denial scenarios and provides a practical workflow for working them from an AR perspective.
If you need to learn the fundamentals of E/M services first, see our Evaluation and Management (E/M) Services Explained guide.
What Is an E/M Denial?
An E/M denial occurs when a payer does not make the expected payment for an Evaluation and Management service.
The denial may occur because:
- The E/M service was bundled with another service.
- Modifier 25 was missing or not supported.
- The payer determined that the service was not medically necessary.
- The billed level was not supported by the documentation.
- The patient was incorrectly classified as new or established.
- The provider information did not meet payer requirements.
- Incident-to requirements were not satisfied.
- The claim contained incorrect coding or billing information.
- A payer-specific policy or edit prevented payment.
The denial code on the ERA or EOB is the starting point, not the complete explanation.
CMS explains that remittance advice may contain a Group Code, CARC, and RARC, with the CARC explaining the general reason for the adjustment and the RARC providing additional information when applicable.
First Rule: Never Work an E/M Denial From the CARC Alone
Before deciding what to do, review the complete remittance information.
For example, look at:
- Group code
- CARC
- RARC
- CPT/HCPCS code
- Modifier
- Diagnosis codes
- Date of service
- Other services billed on the same claim
- Payer message
- Claim history
This matters because the same general denial category can require different actions depending on the payer’s specific policy and the other codes billed on the claim.
For example, a bundling-related denial may require a coding correction in one situation and documentation-supported reconsideration in another.
Denial #1: E/M Bundled With Another Procedure or Service
Common CARC: CO-97
A CO-97 adjustment generally indicates that the payment for the service is included in the allowance for another service or procedure.
Do not automatically assume that every CO-97 E/M denial is a global-surgery denial.
The payer’s specific edit, RARC, claim history, procedure code, modifier combination, and payment policy should be reviewed before deciding the next action. CMS remittance guidance explains that CARCs communicate the general reason for an adjustment and may be supplemented by RARCs.
Why Does This Happen?
Common possibilities include:
- The E/M is considered part of another procedure.
- A global surgery rule applies.
- An NCCI-related edit is involved.
- Modifier 25 was not reported when appropriate.
- Modifier 25 was reported but the documentation does not support a separate E/M service.
- The payer has a specific bundling policy.
- The procedure and E/M combination does not qualify for separate reimbursement.
How Should an AR Caller Work It?
Step 1: Review the claim
Identify:
- E/M CPT code
- Procedure CPT/HCPCS code
- Modifiers
- Date of service
- Diagnosis codes
- Payment/denial message
Step 2: Check whether Modifier 25 was submitted
If an E/M was billed with another procedure on the same date, determine whether modifier 25 was reported.
However, do not add modifier 25 simply because the E/M denied.
CMS states that modifier 25 is used when the E/M service is significant and separately identifiable from the other service.
Step 3: Review the medical record
Determine whether the provider performed a separately identifiable E/M service beyond the work inherent in the procedure.
For Medicare global-surgery situations, CMS states that the documentation must support the medically necessary E/M service and the procedure.
Step 4: Determine the correct action
If the claim was incorrectly submitted, route it for coding correction and submit a corrected claim when appropriate.
If the claim was correctly billed and the documentation supports the separate E/M service, determine whether the payer’s process requires reconsideration, appeal, or another review.
Important Modifier 25 Reminder
Modifier 25 does not mean:
“Two services were performed, so add modifier 25.”
It means the E/M was significant and separately identifiable from the other service.
CMS also states that different diagnoses are not required simply to report modifier 25.
AR Call Script
“I’m calling regarding claim number XXXXX for date of service XX/XX/2026. The E/M line was denied with CO-97. Can you please provide the exact edit or policy applied to the E/M line and confirm whether the denial is related to bundling, global surgery, or another payment rule?”
If modifier 25 was submitted:
“Modifier 25 was reported on the E/M service. Can you confirm whether the payer reviewed the modifier and documentation, or was the claim denied through an automated edit?”
Denial #2: Medical Necessity
Common CARC: CO-50
CO-50 is commonly associated with a determination that the service is not considered medically necessary under the applicable coverage criteria.
For an E/M claim, this does not automatically mean the provider billed the wrong CPT code.
The AR Caller must determine whether the issue is:
- Diagnosis-to-service coverage
- Medical policy
- Documentation
- Level-of-service support
- Payer-specific policy
- Missing information
- Incorrect diagnosis coding
How Should an AR Caller Work It?
Step 1: Read the RARC
Do not stop at CO-50.
The accompanying remark code may provide additional information about why the service was denied.
Step 2: Identify the payer policy
For Medicare, check the applicable:
- NCD
- LCD
- Medicare Administrative Contractor guidance
- Medicare Claims Processing Manual
- NCCI guidance, when applicable
For commercial insurance or Medicaid, use the applicable payer or state Medicaid policy.
Step 3: Review the documentation
Compare the billed service with the medical record.
Ask:
- What problem did the provider evaluate?
- What was documented?
- What was the assessment?
- What was the treatment or management plan?
- Does the documentation support the billed service?
- Are the diagnosis codes accurate and supported?
Step 4: Determine whether correction or appeal is appropriate
If the claim contains an incorrect diagnosis or other billing error, a corrected claim may be appropriate when allowed.
If the claim was correctly coded and the documentation supports medical necessity, an appeal or reconsideration may be appropriate depending on payer procedures.
Important AR Principle
Do not appeal simply because:
“The provider performed the service.”
The appeal should explain why the service meets the payer’s applicable coverage and documentation requirements.
Denial #3: E/M Level Not Supported
Sometimes the payer’s issue is not whether an E/M service occurred, but whether the level billed is supported.
For office/outpatient E/M services, selection can be based on medical decision making or total time, depending on the applicable code-family rules.
How Should an AR Caller Work It?
Review:
- CPT code billed
- Medical record
- Medical decision-making documentation, when applicable
- Total time documentation, when time is used for code selection
- Diagnosis and treatment information
- Payer-specific requirements
If the documentation supports a lower level than billed, the claim may need coding review and correction.
If the documentation supports the billed level and the payer incorrectly processed it, an appeal or reconsideration may be appropriate.
Important Distinction
An AR Caller should not independently change the provider’s E/M level simply to obtain payment.
The claim should be routed through the organization’s coding/compliance process when a coding-level review is required.
Denial #4: Incident-To or Supervision Issue
Incident-to billing can create complicated E/M and professional-service denials, particularly when a nonphysician practitioner or auxiliary personnel is involved.
For Medicare, incident-to requirements include conditions involving the patient’s treatment, the physician or other eligible practitioner’s involvement, supervision, setting, and who is permitted to bill the service. CMS’s current incident-to guidance states that applicable services must meet the specified requirements and that the supervising physician or other listed practitioner must meet the applicable supervision requirements.
Why Can This Denial Occur?
Possible issues include:
- Incorrect billing provider
- Incorrect rendering provider information
- Supervision requirements not met
- Provider enrollment issue
- Incident-to requirements not satisfied
- State-law requirements
- Payer-specific credentialing rules
- Incorrect provider identifiers
How Should an AR Caller Work It?
Step 1: Identify the actual rendering provider
Determine who performed the service.
Step 2: Identify the billing provider
Determine which provider or entity submitted the claim.
Step 3: Verify enrollment
Check the provider’s enrollment/credentialing status for the applicable payer and date of service.
Step 4: Review incident-to requirements
For Medicare, confirm whether the service meets the applicable incident-to requirements.
Step 5: Check the 2026 supervision rules
CMS finalized a 2026 policy allowing real-time audio/video virtual presence for direct supervision for applicable services, excluding audio-only and subject to the applicable service/global-surgery limitations.
Therefore, do not automatically assume that physical presence in the same office is required for every service where Medicare direct supervision applies.
AR Action
If the claim was billed incorrectly, route it for correction.
If the billing was appropriate and the payer incorrectly denied the claim, gather the applicable enrollment, supervision, and documentation evidence and follow the payer’s appeal or reconsideration process.
Denial #5: New Patient vs. Established Patient
This is an important area for E/M claims.
For Medicare, CMS defines a new patient as someone who has not received professional services from the physician or physician group practice of the same physician specialty within the previous 3 years, subject to the specific rules and exceptions in the Medicare guidance.
Why Does This Denial Happen?
A provider may bill a new-patient E/M code, while the payer’s history shows a previous qualifying professional service.
The payer may then:
- Reprocess the claim as established
- Deny the difference
- Request a coding correction
- Apply a payer-specific edit
How Should an AR Caller Work It?
Step 1: Review payer history
Check the patient’s prior claims under the applicable provider/group and specialty.
Step 2: Identify the previous service
Determine:
- Date of previous service
- Rendering provider
- Billing provider/group
- Provider specialty
- Type of service
Step 3: Compare with the payer’s rule
Do not assume every commercial payer uses exactly the same methodology as Medicare.
Step 4: Determine the correct action
If the patient meets the payer’s definition of an established patient, the claim may require correction.
If the payer’s history is incorrect, request a review and provide supporting claim information when appropriate.
Example
Suppose a Medicare claim is submitted with a new-patient E/M code.
The payer’s history shows a qualifying professional service from the same physician group and same specialty 18 months earlier.
The AR Caller should not automatically appeal simply because the current provider considers the patient “new.”
The Medicare three-year rule and the applicable provider/group/specialty history need to be reviewed first.
Denial #6: Global Surgery E/M Denial
A same-day E/M service can be denied when it is considered part of a procedure’s global surgical payment.
CMS identifies global surgery indicators such as:
- 000 — same-day global period
- 010 — 10-day global period
- 090 — 90-day global period
- XXX — global concept does not apply
CMS states that E/M services associated with the included work of a global surgical package are generally not separately payable.
When Can Modifier 25 Matter?
For an appropriate same-day E/M service, modifier 25 may be reported when the E/M is significant and separately identifiable from the procedure.
However, the modifier should not be used simply to bypass a denial.
CMS specifically emphasizes that the documentation must support the separate E/M service.
AR Workflow
Denied E/M
↓
Check procedure performed same day
↓
Check global surgery status
↓
Check modifier 25
↓
Review documentation
↓
Determine whether E/M was separately identifiable
↓
Correct claim OR submit appropriate appeal/reconsideration
Denial #7: NCCI or Procedure-to-Procedure Edit
An E/M service may encounter an NCCI-related edit when reported with another service.
CMS explains that modifier 25 may be appropriate for an E/M service reported with another procedure or service when the E/M is significant and separately identifiable. CMS also emphasizes that NCCI-associated modifiers should only be used when appropriate.
How Should an AR Caller Work It?
Check:
- The two CPT/HCPCS codes
- Modifier 25
- NCCI edit information
- Correct Coding Modifier Indicator
- Payer-specific processing
- Medical record documentation
Do not automatically add a modifier to bypass an edit.
The underlying clinical circumstances must support the modifier.
Denial #8: Provider Enrollment or Credentialing
An E/M service may also deny because of a provider enrollment or credentialing issue.
Possible causes include:
- Rendering provider not enrolled
- Billing provider mismatch
- Incorrect NPI
- Provider specialty mismatch
- Effective-date issue
- Terminated enrollment
- Payer credentialing issue
AR Workflow
Verify:
- Rendering provider
- Billing provider
- NPI
- Tax ID
- Specialty
- Effective date
- Payer participation status
- Claim provider information
If the payer confirms the provider was active but the claim processed incorrectly, document the representative’s information and follow the payer’s correction or appeal process.
The AR Call Workflow for Any E/M Denial
Use this workflow before making the payer call.
Step 1: Read the ERA or EOB
Identify:
- Group code
- CARC
- RARC
- Denied CPT
- Amount denied
- Payer message
Step 2: Review the claim
Check:
- CPT
- Modifier
- Diagnosis
- POS
- Rendering provider
- Billing provider
- Date of service
- Other services on the claim
Step 3: Review the documentation
Determine whether the medical record supports:
- The service
- The level
- Medical necessity
- Modifier usage
- Separate E/M service, if applicable
Step 4: Check the payer policy
For Medicare, use applicable CMS and MAC guidance.
For Medicaid, use the applicable state Medicaid program and MCO policy.
For commercial insurance, use the payer’s current provider manual and medical/coding policies.
Step 5: Classify the denial
Ask:
Is this a billing error?
→ Correct the claim if appropriate.
Is this a coding issue?
→ Send it for coding review.
Is documentation needed?
→ Prepare the required records.
Is the payer’s processing incorrect?
→ Consider reconsideration or appeal.
Is there an enrollment issue?
→ Verify provider enrollment and credentialing.
Step 6: Call the Payer
Have these details ready:
- Patient name
- Member ID
- Date of birth, when required
- Date of service
- Claim number
- CPT code
- Modifier
- Billed amount
- Denial code
- Provider information
Step 7: Ask Targeted Questions
Instead of asking:
“Why was the claim denied?”
Ask:
“Can you explain the exact edit applied to CPT 99214 and identify the policy or processing rule responsible for the denial?”
Then ask:
“What documentation or correction is required for reconsideration?”
And:
“Does the claim need to be corrected, or can it be submitted for reconsideration with medical records?”
Step 8: Obtain the Reference Number
Always document:
- Representative name or ID
- Call date
- Call time
- Reference number
- Denial reason
- Required action
- Submission method
- Filing deadline
- Expected turnaround time
Sample E/M Denial Call Script
AR Caller:
“Hi, I’m calling from the provider’s office regarding a claim. I have the claim number, date of service, and member information available.”
After verification:
“The E/M service was denied with CO-97. Can you please explain the exact edit applied to the E/M line?”
If the payer says it was bundled:
“Can you confirm which procedure the E/M was considered included with?”
If modifier 25 was submitted:
“Modifier 25 was reported on the E/M line. Can you confirm whether the modifier was considered during adjudication?”
Then:
“If documentation supports a significant and separately identifiable E/M service, what is the payer’s process for reconsideration or appeal?”
Finally:
“Could you provide the call reference number and confirm the applicable submission timeframe?”
Corrected Claim vs. Appeal: How to Decide
This is one of the most important skills for an AR Caller.
Use a Corrected Claim When:
The claim contains a genuine billing error, such as:
- Incorrect modifier
- Incorrect provider information
- Incorrect diagnosis
- Incorrect CPT
- Incorrect patient information
- Other correctable claim data
Always follow the payer’s corrected-claim requirements.
Consider an Appeal or Reconsideration When:
The original claim was correctly submitted, but:
- The payer incorrectly applied a policy
- Documentation supports the billed service
- The payer failed to consider submitted information
- The claim was incorrectly processed
- Medical necessity is supported by the record
The exact process varies by payer.
Why This Distinction Matters
Sending an appeal when the claim actually needs correction can waste a turnaround cycle.
Likewise, submitting a corrected claim when the original billing was correct can create unnecessary changes to a properly coded claim.
The AR Caller should identify the root cause before choosing the action.
Documentation Checklist for E/M Denials
When documentation is required, review whether the record supports:
- Date of service
- Provider identity
- Reason for encounter
- Relevant history
- Examination when applicable
- Medical decision making
- Problems addressed
- Data reviewed/analyzed
- Risk assessment
- Time, when time is used for code selection
- Assessment
- Plan
- Medical necessity
- Separately identifiable E/M service when modifier 25 is involved
The exact documentation requirements depend on the service, code family, payer, and applicable coding rules.
Common AR Caller Mistakes
Mistake 1: Automatically Adding Modifier 25
A denied E/M does not automatically justify modifier 25.
The service must actually qualify.
Mistake 2: Appealing Without Reading the RARC
The CARC may provide only the general reason.
The RARC can provide additional information.
Mistake 3: Assuming Every Payer Follows Medicare
Medicare rules are not automatically identical to commercial insurance or Medicaid rules.
Always verify the applicable payer policy.
Mistake 4: Changing Coding Without Proper Review
AR staff should not independently change clinical coding simply to obtain payment.
When coding judgment is required, route the account to the appropriate coding/compliance team.
Mistake 5: Failing to Document the Payer Call
A call without a reference number, representative information, and clear next action is difficult for the next AR Caller to follow.
E/M Denial Prevention Tips
Denial management begins before the claim is submitted.
Front-End Prevention
Verify:
- Eligibility
- Benefits
- Provider participation
- Referral requirements
- Authorization requirements
Coding Prevention
Check:
- CPT
- ICD-10-CM
- Modifier
- POS
- New vs. established status
- NCCI edits
- Global surgery rules
Documentation Prevention
Make sure documentation supports:
- Medical necessity
- E/M level
- Time when applicable
- Modifier 25 when applicable
- Services actually performed
Post-Billing Prevention
Track recurring denial patterns.
For example:
| Denial Pattern | Root Cause to Investigate |
|---|---|
| CO-97 E/M denials | Bundling/modifier/global surgery workflow |
| CO-50 | Medical necessity or documentation |
| New-patient denials | Patient-status verification |
| Provider denials | Enrollment/credentialing |
| NCCI-related edits | Coding and modifier review |
| Level-of-service denials | Documentation/coding review |
This allows the AR team to move from reactive denial follow-up toward denial prevention.
E/M Denial Decision Tree
E/M denied
↓
Read CARC + RARC
↓
Identify other services on claim
↓
Check CPT + modifier
↓
Review documentation
↓
Check payer policy
↓
Is claim information incorrect?
Yes → Correct the claim if permitted
No → Continue review
↓
Does documentation support the billed service?
No → Coding/documentation review
Yes → Reconsideration/appeal as appropriate
↓
Call payer
↓
Document reference number + action + deadline
↓
Follow up within payer timeframe
Frequently Asked Questions
Does every E/M-plus-procedure denial require modifier 25?
No.
Modifier 25 should be used only when the E/M service is significant and separately identifiable from the other service. It should not be added simply to overcome a denial.
Do the E/M and procedure need different diagnosis codes for modifier 25?
Not necessarily.
CMS states that different diagnoses are not required simply to report modifier 25. The E/M service still must be significant, separately identifiable, medically necessary, and supported by documentation.
Can every CO-97 denial be appealed?
No.
First determine why the service was considered included. The appropriate action may be a corrected claim, coding review, reconsideration, appeal, or no further action depending on the circumstances.
What does CO-50 mean?
CO-50 generally indicates that the payer determined the service was not medically necessary under the applicable coverage criteria.
Review the complete remittance information, including any RARC, and verify the applicable payer medical policy before deciding whether to correct or appeal.
Does the Medicare new-patient rule always use three years?
For Medicare, CMS uses a three-year lookback for the definition of a new patient, with the applicable physician/group practice and specialty considerations described in its guidance.
Commercial payers may have different rules, so verify the specific payer policy.
Can an AR Caller change a denied E/M code?
An AR Caller should identify the denial and coordinate the resolution, but coding changes should follow the organization’s coding and compliance process.
Do not change clinical coding merely to obtain payment.
How long does an E/M appeal take?
There is no single universal turnaround time for every payer and appeal type.
Always verify the payer’s current filing and processing timeframe and document the information provided during the call.
Should I appeal every medical-necessity denial?
No.
First determine whether the documentation and coding actually support the billed service.
If the claim contains an error, correction may be more appropriate. If the claim is correctly billed and the medical record supports the service, an appeal or reconsideration may be appropriate.
Final Takeaway for AR Callers
E/M denial management is not simply about calling the insurance company and requesting payment.
A strong AR Caller follows a structured process:
Read the denial → identify the root cause → review the claim → review documentation → verify payer policy → determine correction vs. appeal → call the payer → document the outcome → follow up.
For E/M denials, pay particular attention to modifier 25, global surgery rules, NCCI edits, medical necessity, documentation, provider enrollment, incident-to requirements, and new-versus-established patient status.
Most importantly, do not treat every denial with the same solution.
The goal is not simply to get a claim paid. The goal is to identify why it denied, correct the underlying issue, and prevent the same denial from recurring.
For AR teams, that approach turns denial management from a repetitive follow-up task into a measurable revenue-cycle improvement process.
Learn more about US medical billing, denial management, Medicare, coding, and RCM at LearnMedicalBilling.in.