CO-55 Denials Explained: How to Identify, Appeal, and Prevent Them

CO-55 denials are a common challenge in healthcare revenue cycle management, often leading to delayed payments and financial strain for organizations. This denial code is triggered when payers classify a procedure, treatment, or drug as experimental or investigational, deeming it ineligible for coverage. For RCM teams, understanding CO-55 is essential to appeal denied claims effectively and implement strategies to prevent them.

In this article, you’ll learn what CO-55 denials signify, how to differentiate them from similar codes, common causes, their impact on revenue cycle operations, and actionable steps to appeal and prevent these denials.

What Is a CO-55 Denial?

CO-55 is a denial code indicating that a procedure, treatment, or drug has been classified as experimental or investigational by the payer and is consequently not covered. The prefix “CO” stands for Contractual Obligation, meaning the provider is responsible for the cost of the denied service, as it falls under the payer’s policy guidelines.

Understanding prefixes is crucial for denial management:
- PR (Patient Responsibility): The patient is financially responsible.
- CO (Contractual Obligation): The provider bears the financial obligation.
- OA (Other Adjustment): Adjustments not tied to patient or provider responsibility.

In CO-55 denials, the provider is typically responsible for addressing the issue, either through appeals or write-offs.

Comparison: CO-55 vs Similar Denial Codes

Denial Code	Prefix Meaning	Reason/Description	Who's Financially Responsible
CO-55	Contractual Obligation	Procedure/treatment/drug deemed experimental/investigational by the payer.	Provider
CO-50	Contractual Obligation	Non-covered services based on payer’s policy.	Provider
CO-96	Contractual Obligation	Charges not covered due to payer’s specific guidelines/non-covered items.	Provider

While CO-55 focuses on experimental or investigational services, CO-50 and CO-96 address broader non-covered services based on payer policies. The key difference lies in the nature of the denial reason, which helps pinpoint appeal strategies.

Common Causes of CO-55 Denials

1. Payer Classification of Services: The payer classifies the procedure or treatment as experimental/investigational based on internal policy guidelines.
2. Insufficient Clinical Evidence: Lack of sufficient documentation or clinical studies supporting the treatment’s efficacy.
3. Policy Exclusions: The service is explicitly excluded under the patient’s insurance plan.
4. Coding Errors: Incorrect or incomplete coding that flags the service as investigational.
5. Provider Non-compliance: Failure to adhere to payer-specific preauthorization or documentation requirements.

Impact on Revenue Cycle Teams

CO-55 denials significantly affect healthcare organizations' financial and operational performance:

Financial Impact

• Revenue Loss: Denied claims reduce immediate income and increase rework costs.
• Accounts Receivable Delays: Extended timelines for appeals add to days in accounts receivable, affecting cash flow.
• Write-offs: Unsuccessful appeals or missed deadlines may result in lost revenue.
• Denial Management Costs: Increased operational expenses due to dedicated resources for denial resolution.

Operational Impact

• Staff Resource Allocation: Denial management diverts staff from other critical revenue cycle tasks.
• Knowledge Gaps: Requires staff expertise in payer-specific policies and clinical documentation.
• Cross-Department Coordination: Involves collaboration between billing, coding, and clinical teams.
• Monitoring and Reporting: Tracking denial trends and appeal outcomes demands robust systems and processes.

Organizations can reduce these impacts by leveraging CombineHealth.ai’s AI-powered platform. Adam (AI Denial Manager) enables teams to efficiently identify, track, and resolve CO-55 denials, minimizing revenue leakage and improving operational efficiency.

Steps To Appeal a CO-55 Denial

Step 1: Review the Denial Notice
Carefully evaluate the explanation of benefits (EOB) or remittance advice to understand the payer’s rationale for the denial.

Step 2: Gather Documentation
Compile supporting materials, such as clinical records, evidence of medical necessity, and prior authorization documents.

Step 3: Verify Eligibility
Cross-check the patient’s policy for coverage exclusions or conditions that might classify the service as investigational.

Step 4: Prepare Appeal Letter
Draft a detailed appeal letter addressing the denial reason. Include clinical evidence, medical necessity justification, and supporting documentation.

Step 5: Submit Within Deadline
Ensure the appeal is submitted within the payer’s specified timeline to avoid forfeiture of rights.

Step 6: Track and Follow Up
Monitor the status of the appeal and follow up with the payer for updates or additional requirements.

How To Prevent CO-55 Denials

Front-End Prevention

• Eligibility Verification: Conduct thorough verification of patient coverage to identify policy exclusions.
• Preauthorization Procedures: Ensure payer-specific preauthorization requirements are met before rendering services.

Billing Best Practices

• Accurate Coding: Use precise and complete coding to avoid triggering investigational flags.
• Documentation Review: Ensure clinical documentation supports the medical necessity of services and aligns with payer policies.

Technology Solutions

• AI-Powered Claim Scrubbing: Utilize automated claim validation tools to flag potential errors before submission.
• Denial Prediction: Implement predictive analytics to identify services likely to be denied.

CombineHealth.ai’s platform offers advanced solutions to mitigate denial risks. Adam automates eligibility verification and real-time claim scrubbing, while Rachel (AI Appeals Manager) streamlines appeals to maximize success rates and reduce turnaround times.

FAQs

Q1: What does CO-55 mean in medical billing?
CO-55 indicates that a procedure, treatment, or drug has been deemed experimental/investigational by the payer and is not covered.

Q2: Can CO-55 denials be appealed?
Yes, these denials can be appealed by providing evidence of medical necessity and aligning documentation with payer policies.

Q3: How long do I have to appeal?
The appeal timeline varies by payer but is typically outlined in the denial notice or payer guidelines.

Q4: How can I prevent these denials?
Implement robust eligibility verification, preauthorization processes, accurate coding, and leverage AI-powered solutions like Adam and Rachel to streamline workflows. See our complete guide on denial prevention.