CO-90 Denials Explained: How to Identify, Appeal, and Prevent Them

Denial codes are a common pain point for healthcare revenue cycle management (RCM) teams, and CO-90 denials are no exception. These denials, specifically related to pharmaceutical ingredient cost adjustments, can create financial strain and operational inefficiencies if not addressed properly. Understanding the nuances of CO-90 denials is critical to maintaining steady cash flow and reducing revenue leakage.

In this article, you’ll learn what CO-90 denials mean, how they differ from other denial codes, and actionable strategies to appeal and prevent them.

What Is a CO-90 Denial?

The CO-90 denial code refers to an ingredient cost adjustment applied exclusively to pharmaceutical claims. The prefix “CO” stands for Contractual Obligation, which means that the payer is not financially responsible for the adjustment. Instead, it is a contractual adjustment based on the fee schedule or contract terms. In most cases, the provider bears the financial responsibility for this denial.

This denial typically occurs when the ingredient cost for a pharmaceutical claim exceeds the allowable amount set by the payer, prompting an adjustment.

Comparison: CO-90 vs Similar Denial Codes

Denial Code	Prefix Meaning	Reason/Description	Who's Financially Responsible
CO-90	Contractual Obligation	Ingredient cost adjustment. Usage: To be used for pharmaceuticals only.	Provider
CO-45	Contractual Obligation	Charge exceeds contract/fee schedule.	Provider
PR-96	Patient Responsibility	Non-covered charges under the patient’s plan.	Patient

While CO-90 and CO-45 both involve contractual adjustments, CO-90 is specific to pharmaceuticals, whereas CO-45 applies to general charges beyond the allowed amount. On the other hand, PR-96 shifts responsibility to the patient for non-covered services, distinguishing it from CO-90’s provider-centric financial responsibility.

Common Causes of CO-90 Denials

1. Incorrect Contract Terms: Errors in fee schedules or contract terms between providers and payers can lead to ingredient cost adjustments.
2. Outdated Fee Schedules: Using outdated reimbursement rates or ingredient cost data may result in denials.
3. Improper Coding: Inaccurate or incomplete coding for pharmaceutical claims can trigger a CO-90 denial.
4. Lack of Documentation: Insufficient supporting documentation for the pharmaceutical cost may result in payer adjustments.
5. Payer Policy Changes: Uncommunicated or misunderstood changes in payer policies regarding pharmaceutical reimbursements.

Impact on Revenue Cycle Teams

CO-90 denials can disrupt the revenue cycle process, leading to both financial and operational challenges for healthcare organizations.

Financial Impact:
- Loss of revenue due to claims being denied or adjusted.
- Extended accounts receivable (AR) days, delaying cash inflows.
- Increased risk of claim write-offs when appeals fail or deadlines are missed.
- Higher costs associated with reworking claims and managing denials.

Operational Impact:
- Heavy reliance on staff to review, appeal, and resolve denials.
- Need for precise coordination between billing, coding, and clinical teams to address pharmaceutical claims.
- Time diverted from other revenue-generating activities.
- Challenges in tracking and analyzing denial trends without robust tools.

To mitigate these issues, RCM teams can leverage CombineHealth.ai’s AI-powered solutions like Adam (AI Denial Manager) for efficient denial tracking and resolution, reducing revenue leakage and improving overall cash flow.

Steps To Appeal a CO-90 Denial

Appealing CO-90 denials requires a methodical approach to ensure successful outcomes. Follow these steps:

Step 1: Review the Denial Notice
Examine the explanation of benefits (EOB) or remittance advice (RA) to confirm the reason for the CO-90 denial.

Step 2: Gather Documentation
Collect all necessary supporting documents, including the original claim, pharmaceutical invoices, and cost details.

Step 3: Verify Eligibility
Ensure the pharmaceutical claim aligns with the payer’s fee schedule and reimbursement policy.

Step 4: Prepare Appeal Letter
Draft a detailed appeal letter outlining the issue, including evidence such as contracts, fee schedules, and any corrected claim details.

Step 5: Submit Within Deadline
File the appeal within the payer’s specified timeframe to avoid automatic rejection.

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

How To Prevent CO-90 Denials

Preventing CO-90 denials requires a proactive approach across the revenue cycle, from front-end processes to backend billing practices.

Front-End Prevention

• Ensure Accurate Contract Management: Regularly review payer contracts and fee schedules to prevent discrepancies.
• Verify Eligibility: Confirm pharmaceutical claims comply with payer policies during the pre-authorization process.

Billing Best Practices

• Update Fee Schedules Regularly: Stay aligned with current payer reimbursement rates for pharmaceuticals.
• Perform Thorough Documentation Reviews: Ensure all claims include complete and accurate supporting documentation.

Technology Solutions

• Leverage Real-Time Claim Scrubbing: Use automated tools to identify potential denial triggers before submission.
• Implement AI-Powered Denial Monitoring: CombineHealth.ai’s Adam can track and resolve CO-90 denials efficiently, reducing AR days and rework.

By adopting these strategies, healthcare organizations can significantly reduce the occurrence of CO-90 denials and maintain financial stability. In cases where denials do occur, Rachel (AI Appeals Manager) streamlines the appeals process, improving success rates and reducing turnaround times.

FAQs

Q1: What does CO-90 mean in medical billing?
CO-90 indicates a pharmaceutical ingredient cost adjustment based on payer contracts or fee schedules.

Q2: Can CO-90 denials be appealed?
Yes, providers can appeal CO-90 denials by submitting proper documentation and evidence supporting the claim.

Q3: How long do I have to appeal?
Timelines vary by payer, but appeals should typically be filed within 30-120 days from the date of denial.

Q4: How can I prevent these denials?
Implement robust contract management, ensure accurate documentation, and use technology solutions like Adam for real-time denial prevention. See our complete guide on denial prevention