CO-170 Denials Explained: How to Identify, Appeal, and Prevent Them

Denied claims are a persistent challenge for healthcare revenue cycle management (RCM) teams, and the CO-170 denial code is among the most common. This denial occurs when services are deemed non-payable due to the type of provider performing the service. Left unaddressed, CO-170 denials can cause significant financial losses and operational bottlenecks.

In this blog, we’ll define the CO-170 denial, compare it to similar denials, highlight its most common causes, and provide actionable steps to appeal and prevent these rejections.

What Is a CO-170 Denial?

The CO-170 denial code indicates that a payer has denied payment for a service because it was performed or billed by a type of provider that is not covered under the patient’s insurance plan.

• Prefix Explanation: The “CO” prefix stands for Contractual Obligation, meaning the provider cannot bill the patient for the denied service. Instead, the financial responsibility lies with the provider.
• Key Details: The denial notice may reference the 835 Healthcare Policy Identification Segment (loop 2110 Service Payment Information REF), which provides additional policy details.

Understanding the CO-170 denial code’s implications is critical for ensuring accurate billing and reimbursement practices.

Comparison: CO-170 vs Similar Denial Codes

Denial Code	Prefix Meaning	Reason/Description	Who's Financially Responsible
CO-170	Contractual Obligation	Payment denied when performed by this type of provider.	Provider
CO-180	Contractual Obligation	Payment denied due to invalid or missing provider specialty information.	Provider
PR-96	Patient Responsibility	Service not covered under the patient’s benefit plan.	Patient

While CO-170 and CO-180 both result from provider-specific issues, CO-170 focuses on the type of provider, whereas CO-180 relates to inaccurate provider specialty details. PR-96, on the other hand, shifts financial responsibility to the patient due to benefit exclusions.

Common Causes of CO-170 Denials

1. Provider Type Not Credentialed: The provider is not credentialed with the payer for the services rendered.
2. Out-of-Network Provider: Services performed by a provider not included in the patient’s insurance network.
3. Service Outside Provider’s Scope: The billed service is outside the provider’s permitted scope of practice as per payer policies.
4. Policy Exclusions: The payer's policy excludes certain services when performed by specific provider types.
5. Incorrect Provider Taxonomy: Errors in provider taxonomy coding can lead to mismatches with payer requirements.

Impact on Revenue Cycle Teams

CO-170 denials can have far-reaching consequences for healthcare organizations, impacting both financial performance and operational efficiency.

Financial Impact:
- Revenue Loss: Denied claims directly reduce reimbursement rates, and unresolved denials may result in write-offs.
- Cash Flow Disruptions: Increased accounts receivable days hinder timely revenue collection.
- Appeals Costs: The time and resources required to resolve denials inflate operational expenses.

Operational Impact:
- Resource Allocation: Staff must dedicate significant time to denial resolution, diverting focus from other critical RCM functions.
- Policy Expertise: Teams must stay informed on payer-specific credentialing and coverage rules.
- Collaboration Demands: Effective resolution requires close coordination between billing, coding, and clinical teams.

Adopting robust denial management solutions like CombineHealth.ai’s AI-powered Adam (AI Denial Manager) can help RCM teams streamline workflows, reduce denial rates, and improve financial outcomes.

Steps To Appeal a CO-170 Denial

Successfully appealing a CO-170 denial requires a structured approach:

Step 1: Review the Denial Notice
Carefully examine the denial notice and the 835 Healthcare Policy Identification Segment for policy-related reasons.

Step 2: Gather Documentation
Collect all relevant documentation, including the patient’s insurance policy, provider credentials, and medical records.

Step 3: Verify Eligibility
Confirm that the patient’s insurance plan covers the service and that the provider meets payer requirements.

Step 4: Prepare Appeal Letter
Draft a detailed appeal letter addressing the payer’s denial reason with supporting documentation, such as credentialing records or evidence of prior authorizations.

Step 5: Submit Within Deadline
Adhere to payer-specific appeal deadlines to avoid automatic denial of reconsideration.

Step 6: Track and Follow Up
Monitor the appeal status and maintain consistent communication with the payer for updates.

By following these steps, RCM teams can improve the likelihood of reversing CO-170 denials and recovering lost revenue.

How To Prevent CO-170 Denials

Proactive measures can significantly reduce the occurrence of CO-170 denials. Here’s how:

Front-End Prevention

• Verify Provider Credentialing: Ensure all providers are credentialed and enrolled with payers prior to submitting claims.
• Confirm Eligibility: Use real-time tools to verify patient eligibility and check for provider coverage under the patient’s plan.

Billing Best Practices

• Accurate Taxonomy Codes: Verify that provider taxonomy codes match the payer’s requirements.
• Cross-Check Scope of Practice: Confirm that services billed align with the provider’s authorized scope of practice.

Technology Solutions

• Automated Eligibility Verification: Leverage solutions like CombineHealth.ai’s Adam to identify potential coverage issues before claims submission.
• Real-Time Claim Scrubbing: Prevent errors with tools that flag discrepancies in provider details or coding.

For denied claims, CombineHealth.ai’s Rachel (AI Appeals Manager) simplifies the appeals process by automating documentation gathering and tracking, ensuring faster resolution and reduced denial rates.

FAQs

Q1: What does CO-170 mean in medical billing?
CO-170 indicates that payment is denied because the provider type is not eligible to perform the billed service under the payer’s policy.

Q2: Can CO-170 denials be appealed?
Yes, CO-170 denials can be appealed by providing evidence of compliance with payer requirements.

Q3: How long do I have to appeal?
Appeal deadlines vary by payer, typically ranging from 30 to 120 days from the denial date.

Q4: How can I prevent these denials?
Implement robust credentialing processes, verify eligibility upfront, and use technology like CombineHealth.ai’s Adam for claim scrubbing and denial prevention. See our complete guide on denial prevention.