CO-117 Denials Explained: How to Identify, Appeal, and Prevent Them

CO-117 denials are a common challenge faced by healthcare revenue cycle management (RCM) teams. These denials occur when transportation services are not covered beyond the closest facility capable of providing the necessary care. Misunderstanding payer policies or improper documentation can lead to costly claim rejections, impacting both operational efficiency and cash flow.

In this blog, we’ll break down what CO-117 denials mean, compare them to similar codes, explore their root causes, and outline actionable steps to appeal and prevent them. By the end, you’ll have a clear strategy to minimize these denials and protect your revenue cycle.

What Is a CO-117 Denial?

The CO-117 denial code indicates that transportation services are only covered to the nearest facility that can provide the required care. The "CO" prefix stands for "Contractual Obligation," meaning the payer deems the denial non-billable to the patient. Since this is a contractual issue between the provider and payer, the provider typically bears the financial responsibility.

Understanding the nuances of this denial code is critical for RCM teams to determine how to address the issue and mitigate future occurrences.

Comparison: CO-117 vs Similar Denial Codes

Denial Code	Prefix Meaning	Reason/Description	Who's Financially Responsible
CO-117	Contractual Obligation	Transportation only covered to the closest facility that can provide care.	Provider
PR-96	Patient Responsibility	Non-covered services based on payer policy.	Patient
OA-109	Other Adjustment	Claim not covered because the service is not medically necessary.	Provider

While CO-117 focuses specifically on transportation limits, PR-96 involves services entirely excluded by the payer’s policy, often shifting the cost to the patient. OA-109, on the other hand, relates to medical necessity, requiring additional clinical justification. Each denial requires different workflows, but clear documentation and proactive payer communication are key to resolution.

Common Causes of CO-117 Denials

1. Unverified Transportation Coverage: Failure to confirm payer policies regarding transportation limits before scheduling the service.
2. Incorrect Facility Selection: Transporting a patient to a farther facility when a closer, appropriate one is available.
3. Insufficient Documentation: Missing or incomplete records justifying why transportation to a farther facility was necessary.
4. Payer Policy Misinterpretation: Misunderstanding coverage rules related to transportation services.
5. Late Claim Submission: Missing payer deadlines for filing transportation-related claims.

Impact on Revenue Cycle Teams

CO-117 denials create significant financial and operational burdens for healthcare organizations.

Financial Impact:
- Revenue loss due to denied claims, requiring rework or resulting in write-offs.
- Delays in cash flow caused by extended accounts receivable (AR) days.
- Increased operational costs from dedicating resources to resolve denials.

Operational Impact:
- RCM staff must divert time from other critical tasks to address denials.
- Requires in-depth knowledge of payer policies and documentation requirements.
- Heightened need for coordination between billing, coding, and clinical teams.
- Necessitates tracking and analysis of denial trends and appeal outcomes.

Leveraging advanced denial management tools like CombineHealth.ai’s Adam (AI Denial Manager) can significantly reduce these challenges. Adam helps RCM teams identify CO-117 denials early, automates tracking, and streamlines resolution efforts to improve cash flow and operational efficiency.

Steps To Appeal a CO-117 Denial

Step 1: Review the Denial Notice
Carefully analyze the Explanation of Benefits (EOB) or Remittance Advice (RA) to confirm the reason for the denial.

Step 2: Gather Documentation
Collect all relevant records, including the patient’s medical necessity documentation, transportation logs, and correspondence with the payer.

Step 3: Verify Eligibility
Double-check the patient’s insurance benefits and the payer’s transportation coverage policy to ensure compliance.

Step 4: Prepare Appeal Letter
Draft a clear, concise appeal letter that includes:
- The denial reason and claim details
- Justification for why the transportation was necessary
- Supporting documentation

Step 5: Submit Within Deadline
Ensure the appeal is submitted before the payer’s deadline, typically outlined in the denial notice.

Step 6: Track and Follow Up
Monitor the appeal’s status regularly and follow up with the payer as needed to resolve the denial promptly.

When using Rachel (AI Appeals Manager) from CombineHealth.ai, RCM teams can automate much of the appeal process, ensuring timely submissions and improving success rates.

How To Prevent CO-117 Denials

Front-End Prevention

• Verify Coverage in Advance: Confirm the patient’s insurance benefits and transportation policies before scheduling services.
• Pre-Authorization Checks: Obtain prior authorization for transportation services when required by the payer.

Billing Best Practices

• Accurate Coding: Use the correct codes for transportation services to ensure claims are processed correctly.
• Submit Claims on Time: Adhere to payer-specific deadlines to avoid unnecessary denials.

Technology Solutions

• Automated Eligibility Verification: Use tools like CombineHealth.ai to verify coverage in real-time and flag potential issues.
• Claim Scrubbing: Leverage Adam to identify errors or missing information in claims before submission, reducing the likelihood of denials.

CombineHealth.ai’s intelligent platform simplifies denial prevention and management, allowing RCM teams to focus on optimizing revenue cycle outcomes.

FAQs

Q1: What does CO-117 mean in medical billing?
CO-117 indicates that transportation services are only covered to the nearest facility capable of providing necessary care.

Q2: Can CO-117 denials be appealed?
Yes, with proper documentation and a strong justification for the transportation, these denials can often be successfully appealed.

Q3: How long do I have to appeal?
Appeal timelines vary by payer but are typically outlined in the denial notice. Act promptly to avoid missing deadlines.

Q4: How can I prevent these denials?
Proactive front-end processes, accurate coding, and real-time eligibility verification can help prevent CO-117 denials. See our complete guide on denial prevention.