CO-27 Denials Explained: How to Identify, Appeal, and Prevent Them

CO-27 denials are a common challenge for healthcare revenue cycle management (RCM) teams. These denials occur when a claim includes expenses incurred after a patient’s coverage termination, leaving providers financially responsible for the charges. Failure to address these denials promptly can lead to lost revenue, operational inefficiencies, and prolonged accounts receivable cycles.

In this article, we’ll explore the meaning of the CO-27 denial code, compare it to similar codes, and identify its common causes. We’ll also outline actionable steps to appeal these denials and best practices to prevent them, ensuring smoother workflows and reduced revenue leakage for RCM teams.

What Is a CO-27 Denial?

The CO-27 denial code indicates that a claim includes expenses incurred after the patient’s insurance coverage has been terminated.

Prefix Breakdown

• CO (Contractual Obligation): The provider is financially responsible under the payer contract.
• PR (Patient Responsibility): Indicates the patient’s financial obligation.
• OA (Other Adjustment): Represents adjustments outside contractual or patient responsibilities.

For CO-27 denials, providers are responsible for the charges, as they occurred after the payer terminated coverage. Addressing these denials requires verifying eligibility and ensuring claims align with the coverage period.

Comparison: CO-27 vs Similar Denial Codes

Denial Code	Prefix Meaning	Reason/Description	Who's Financially Responsible
CO-27	Contractual Obligation	Expenses incurred after coverage terminated	Provider
CO-22	Contractual Obligation	Services exceed plan's benefit maximum	Provider
PR-26	Patient Responsibility	Expenses incurred before insurance coverage began	Patient

While CO-27 focuses on post-coverage expenses, CO-22 addresses claims exceeding benefit limits, and PR-26 relates to pre-coverage expenses. Understanding these distinctions helps streamline denial management processes.

Common Causes of CO-27 Denials

1. Coverage Termination: Claims submitted for services rendered after the patient’s insurance plan expired.
2. Incorrect Eligibility Verification: Failure to confirm coverage and eligibility dates during patient intake.
3. Delayed Claims Submission: Claims submitted beyond the payer’s filing deadline, leading to automatic denial.
4. System Errors: Practice management or billing system inaccuracies leading to incorrect coverage periods on submitted claims.
5. Incomplete Documentation: Missing proof of coverage or termination dates included in the claim submission.

Impact on Revenue Cycle Teams

CO-27 denials create complex challenges for RCM teams that affect both financial and operational performance.

Financial Impact

• Denied claims reduce revenue and increase rework costs.
• Extended accounts receivable (AR) cycles delay cash flow recovery.
• Unsuccessful appeals may result in costly write-offs.
• Increased operational expenses due to additional denial management efforts.

Operational Impact

• Staff resources are diverted to handle denials, reducing efficiency in other RCM functions.
• Teams must coordinate across billing, coding, and clinical departments to resolve issues.
• Monitoring denial patterns and outcomes requires specialized reporting and analytics tools.

Healthcare organizations can mitigate these impacts with advanced denial management solutions. CombineHealth.ai’s Adam, an AI-powered Denial Manager, enables teams to track, analyze, and resolve CO-27 denials effectively, improving cash flow and reducing operational burdens.

Steps To Appeal a CO-27 Denial

Step 1: Review the Denial Notice
Examine the explanation of benefits (EOB) or payer denial notice to understand the specific reason for denial and confirm the CO-27 code.

Step 2: Gather Documentation
Collect supporting documents, including patient eligibility records, coverage termination dates, and proof of service timelines.

Step 3: Verify Eligibility
Confirm the patient’s coverage period and ensure services were provided before termination. If discrepancies exist, contact the payer for clarification.

Step 4: Prepare Appeal Letter
Draft a detailed appeal letter explaining the case, attaching relevant documentation, and citing payer policies supporting your claim.

Step 5: Submit Within Deadline
File the appeal promptly, adhering to the payer’s submission deadline to avoid forfeiting the opportunity to appeal.

Step 6: Track and Follow Up
Monitor the appeal status regularly and maintain communication with the payer to ensure timely resolution.

How To Prevent CO-27 Denials

Front-End Prevention

• Verify Eligibility Early: Confirm coverage dates during patient registration and prior to rendering services.
• Maintain Accurate Records: Ensure patient demographics and insurance details are up-to-date in the system.

Billing Best Practices

• Submit Claims Promptly: Avoid delays in claims submission to prevent denials related to untimely filing.
• Include Supporting Documentation: Attach proof of eligibility and coverage periods with claims to prevent discrepancies.

Technology Solutions

• Automated Eligibility Verification: Use technology to perform real-time checks on patient coverage.
• Claim Scrubbing Tools: Deploy intelligent systems to identify errors or inconsistencies before submission.

CombineHealth.ai’s platform offers robust prevention tools, including automated eligibility verification and real-time claim scrubbing, to minimize CO-27 denials. For denials that still occur, Rachel, the AI Appeals Manager, simplifies the appeals workflow, improving resolution rates and reducing turnaround times.

FAQs

Q1: What does CO-27 mean in medical billing?
CO-27 denotes expenses incurred after the patient’s coverage termination, making the provider financially responsible.

Q2: Can CO-27 denials be appealed?
Yes, CO-27 denials can be appealed if the claim includes valid services rendered before coverage termination.

Q3: How long do I have to appeal?
Appeal deadlines vary by payer but typically range from 30 to 90 days after receiving the denial notice.

Q4: How can I prevent these denials?
Prevent CO-27 denials by verifying eligibility during patient registration and leveraging automated denial management tools. See our complete guide on denial prevention.