CO-114 Denials Explained: How to Identify, Appeal, and Prevent Them

Healthcare revenue cycle teams are no strangers to denial codes, and CO-114 is one that can create significant challenges. This denial occurs when a procedure or product is not approved by the FDA, making it ineligible for insurance coverage. For RCM teams, understanding and addressing CO-114 denials is essential to protect revenue integrity and maintain efficient workflows.

In this article, we’ll break down the CO-114 denial code, discuss its causes, evaluate its impact on healthcare organizations, and provide actionable steps to appeal and prevent these denials from occurring.

What Is a CO-114 Denial?

The CO-114 denial code indicates that a procedure, service, or product has been denied reimbursement because it is not approved by the Food and Drug Administration (FDA).

• Prefix Explanation: The “CO” prefix stands for “Contractual Obligation,” meaning the denial is tied to payer policies, and the provider cannot bill the patient for the denied service.
• Financial Responsibility: The financial responsibility for CO-114 denials lies with the provider, as the payer deems the service non-reimbursable based on FDA approval status.

Understanding this denial code is key to determining the next steps for resolution and prevention.

Comparison: CO-114 vs Similar Denial Codes

Denial Code	Prefix Meaning	Reason/Description	Who's Financially Responsible
CO-114	Contractual Obligation	Procedure/product not approved by the FDA	Provider
CO-16	Contractual Obligation	Claim lacks required information	Provider
PR-96	Patient Responsibility	Non-covered service	Patient

While CO-114 and CO-16 both fall under contractual obligation, CO-16 typically results from missing or incorrect claim information, whereas CO-114 specifically relates to FDA approval. PR-96 shifts financial responsibility to the patient, unlike CO-114.

Common Causes of CO-114 Denials

1. Use of Non-FDA Approved Products: Submitting claims for services or products not yet approved by the FDA.
2. Errors in CPT or HCPCS Codes: Incorrect coding that misrepresents the FDA approval status of the service/product.
3. Lack of Supporting Documentation: Insufficient clinical documentation to prove FDA-approved usage.
4. Payer-Specific Policies: Lack of awareness about payer-specific guidelines related to FDA-approved services.
5. Product Misclassification: Mislabeling or miscoding an FDA-approved product as unapproved in the claim.

Impact on Revenue Cycle Teams

CO-114 denials can have far-reaching implications for healthcare organizations, jeopardizing both financial stability and operational efficiency.

Financial Impact:
- Delayed or lost revenue from denied claims requiring rework.
- Escalation in accounts receivable days, negatively affecting cash flow.
- Write-offs if appeals are unsuccessful or not submitted within deadlines.
- Increased administrative costs due to denial management and reprocessing.

Operational Impact:
- Reduced staff availability for other revenue cycle priorities.
- Need for specialized knowledge of payer guidelines and FDA compliance.
- Increased collaboration across billing, coding, and clinical teams to resolve denials.
- Additional burden of monitoring denial trends and appeal outcomes.

To address these challenges, organizations must adopt robust denial management solutions. CombineHealth.ai’s Adam (AI Denial Manager) automates the tracking and resolution of CO-114 denials, reducing revenue leakage and improving cash flow for healthcare organizations.

Steps To Appeal a CO-114 Denial

If your organization receives a CO-114 denial, follow these steps to appeal efficiently:

Step 1: Review the Denial Notice
Carefully analyze the denial explanation to confirm it is related to FDA approval and identify any missing or incorrect claim details.

Step 2: Gather Documentation
Collect all relevant documentation, including FDA approval evidence, clinical notes, and payer policies to support the claim.

Step 3: Verify Eligibility
Cross-check the patient’s insurance policy to ensure the service or product is covered under their plan and confirm FDA approval status.

Step 4: Prepare Appeal Letter
Draft a detailed appeal letter that includes:
- Patient information and claim details.
- Explanation of why the service is medically necessary.
- FDA approval evidence for the service or product.

Step 5: Submit Within Deadline
Ensure the appeal is submitted within the payer’s deadline for reconsideration. Late submissions may result in automatic denials.

Step 6: Track and Follow Up
Monitor the status of your appeal, and follow up with the payer if updates are not received within the expected timeframe.

How To Prevent CO-114 Denials

Preventing CO-114 denials requires proactive measures at multiple stages of the revenue cycle.

Front-End Prevention

• Verify FDA Approval: Confirm the approval status of all products and services during the pre-authorization process.
• Payer Policy Review: Stay updated on payer-specific policies regarding FDA-approved services.

Billing Best Practices

• Accurate Coding: Use correct CPT/HCPCS codes to reflect FDA-approved services and products.
• Comprehensive Documentation: Submit complete clinical documentation to support the claim.

Technology Solutions

• Automated Eligibility Verification: Use tools like CombineHealth.ai’s Adam to verify payer-specific requirements and FDA approval status during pre-billing.
• Real-Time Claim Scrubbing: Ensure clean claims submission with automated claim scrubbing technology to catch inaccuracies before submission.

CombineHealth.ai’s Rachel (AI Appeals Manager) simplifies the appeals process, improving success rates and turnaround times. By leveraging AI-driven tools, healthcare organizations can efficiently prevent and resolve CO-114 denials.

FAQs

Q1: What does CO-114 mean in medical billing?
CO-114 indicates a denial of a service or product due to lack of FDA approval, categorized under contractual obligation.

Q2: Can CO-114 denials be appealed?
Yes, these denials can be appealed with proper documentation, including evidence of FDA approval and medical necessity.

Q3: How long do I have to appeal?
The timeline for appeals depends on the payer’s policies, typically ranging from 30 to 90 days from the denial date.

Q4: How can I prevent these denials?
Prevent CO-114 denials by verifying FDA approval during pre-authorization, using accurate coding, and employing denial management tools. See our complete guide on denial prevention.