CO-91 Denials Explained: How to Identify, Appeal, and Prevent Them

Denial codes like CO-91 can create significant bottlenecks in healthcare revenue cycle processes, particularly for pharmacy-related claims. These denials indicate a dispensing fee adjustment, often tied to contractual agreements or fee schedules. For revenue cycle management (RCM) teams, understanding CO-91 denials is critical to reducing revenue leakage and operational inefficiencies.

In this article, we’ll explore the meaning of the CO-91 denial code, its causes, how to appeal it, and actionable strategies to prevent it. By mastering these concepts, RCM professionals can streamline workflows, mitigate revenue loss, and improve overall financial performance.

What Is a CO-91 Denial?

The CO-91 denial code refers to a dispensing fee adjustment, which occurs when the dispensing fee for a pharmacy claim is adjusted based on the payer’s contract or fee schedule. The prefix CO stands for Contractual Obligation, meaning the adjustment is not billable to the patient and falls under the provider’s responsibility. This denial is typically applied when there is a discrepancy between the billed dispensing fee and the amount allowed by the payer.

In essence, CO-91 indicates that the provider must absorb the financial adjustment, as it reflects contractual terms rather than a billing error or patient responsibility.

Comparison: CO-91 vs Similar Denial Codes

Denial Code	Prefix Meaning	Reason/Description	Who's Financially Responsible
CO-91	Contractual Obligation	Dispensing fee adjustment.	Provider
CO-45	Contractual Obligation	Charge exceeds allowable amount.	Provider
PR-96	Patient Responsibility	Non-covered service or benefit.	Patient

While CO-91 and CO-45 both fall under Contractual Obligation, CO-91 is specific to pharmacy dispensing fees, whereas CO-45 is broader, involving charges exceeding the payer’s allowable amount. On the other hand, PR-96 indicates patient responsibility for non-covered services, making it distinct in terms of financial accountability.

Common Causes of CO-91 Denials

1. Contractual Limitations: The payer’s fee schedule or contract limits the allowable dispensing fee, resulting in an adjustment.
2. Incorrect Billing: Submitting claims with dispensing fees that exceed the payer’s allowable amount.
3. Outdated Fee Schedules: Using outdated or incorrect contract terms when billing.
4. Payer System Errors: Occasional payer processing errors or incorrect application of fee schedules.
5. Lack of Documentation: Missing or incomplete documentation supporting the billed dispensing fee.

Impact on Revenue Cycle Teams

CO-91 denials pose significant challenges for healthcare organizations, affecting both financial performance and operational efficiency.

Financial Impact

• Loss of revenue when claims are adjusted or denied.
• Increased accounts receivable days, delaying cash flow.
• Risk of claim write-offs if appeals are unsuccessful or missed.
• Higher administrative costs due to manual rework and denial management efforts.

Operational Impact

• Diversion of staff resources from other essential RCM tasks.
• Need for specialized payer contract knowledge and accurate documentation.
• Increased coordination between billing, coding, and clinical teams.
• Time-intensive tracking and resolution of recurring denial trends.

To address these challenges, healthcare organizations must invest in advanced denial management tools. CombineHealth.ai’s Adam (AI Denial Manager) enables RCM teams to identify, track, and resolve CO-91 denials efficiently, mitigating revenue leakage and improving cash flow.

Steps To Appeal a CO-91 Denial

Addressing CO-91 denials effectively requires a structured appeals process. Follow these steps to maximize your chances of success:

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

Step 2: Gather Documentation
Collect all relevant documents, including the original claim, billing details, payer contract terms, and any supporting evidence for the billed dispensing fee.

Step 3: Verify Eligibility
Ensure the patient’s coverage and the claim’s details align with the payer’s policies and fee schedules.

Step 4: Prepare Appeal Letter
Draft a clear and concise appeal letter, citing specific contract terms or fee schedule discrepancies. Include all supporting documentation.

Step 5: Submit Within Deadline
File the appeal promptly, adhering to the payer’s submission deadlines to avoid forfeiting your right to contest the denial.

Step 6: Track and Follow Up
Monitor the appeal status regularly and follow up with the payer if necessary to ensure timely resolution.

How To Prevent CO-91 Denials

Preventing CO-91 denials requires a proactive approach, leveraging front-end processes, billing best practices, and advanced technology.

Front-End Prevention

• Verify Contracts and Fee Schedules: Regularly update and review payer contracts to ensure accurate billing.
• Eligibility Verification: Confirm patient coverage and plan-specific fee schedules before submitting claims.

Billing Best Practices

• Claim Accuracy: Ensure claims are coded and billed correctly, reflecting the payer’s allowable dispensing fee.
• Routine Audits: Conduct regular audits of pharmacy claims to identify and correct discrepancies.

Technology Solutions

• Automated Claim Scrubbing: Use platforms like CombineHealth.ai to identify and correct errors before claim submission.
• AI-Powered Alerts: Leverage tools like Adam (AI Denial Manager) to flag potential CO-91 risks and recommend corrective actions.

CombineHealth.ai’s solutions, including Rachel (AI Appeals Manager), further streamline the appeals process, improving success rates and reducing turnaround times for denied claims.

FAQs

Q1: What does CO-91 mean in medical billing?
CO-91 refers to a dispensing fee adjustment based on the payer’s contract or fee schedule, with financial responsibility assigned to the provider.

Q2: Can CO-91 denials be appealed?
Yes, CO-91 denials can be appealed if there is evidence of incorrect fee schedule application or processing errors.

Q3: How long do I have to appeal?
The appeal timeline varies by payer but typically ranges from 30 to 90 days. Review the payer’s policies for specific deadlines.

Q4: How can I prevent these denials?
Prevent CO-91 denials by ensuring accurate contract management, verifying eligibility, and leveraging automated claim scrubbing tools. See our complete guide on denial prevention.