CO-97 Denials Explained: How to Identify, Appeal, and Prevent Them

Denial codes are a common hurdle for healthcare revenue cycle management (RCM) teams, and CO-97 is among the most frequent. This code indicates that the billed service is considered part of another service already reimbursed, creating confusion and delays in payment. Addressing CO-97 denials promptly is crucial to avoid revenue loss and operational inefficiencies.

In this article, we’ll break down what CO-97 denials mean, how to differentiate them from similar codes, and actionable steps for appealing and preventing them.

What Is a CO-97 Denial?

The CO-97 denial code indicates that the payer has determined the billed service is bundled into another service or procedure that has already been reimbursed. The prefix "CO" stands for "Contractual Obligation," meaning the provider is financially responsible for the adjustment and cannot bill the patient for the denied amount.

Understanding the prefix is critical:
- PR (Patient Responsibility): The patient is financially responsible.
- CO (Contractual Obligation): The provider is financially responsible.
- OA (Other Adjustment): Neither the patient nor provider is responsible; the adjustment is for information only.

In the case of CO-97, the provider must resolve the denial without transferring financial responsibility to the patient.

Comparison: CO-97 vs Similar Denial Codes

Denial Code	Prefix Meaning	Reason/Description	Who's Financially Responsible
CO-97	Contractual Obligation	The benefit for this service is included in the payment/allowance for another service/procedure	Provider
CO-45	Contractual Obligation	Charges exceed the contracted fee schedule/maximum allowable amount	Provider
PR-119	Patient Responsibility	Benefit maximum for this time period or occurrence has been reached	Patient

While CO-97 focuses on bundled services, CO-45 relates to exceeding fee schedules, and PR-119 pertains to patient benefit limits. Understanding these distinctions helps providers address denials more effectively.

Common Causes of CO-97 Denials

1. Incorrect Coding: Improper use of CPT or HCPCS modifiers can result in services being bundled incorrectly.
2. Lack of Documentation: Insufficient clinical documentation to justify billing separate services.
3. Payer Policies: Not adhering to payer-specific bundling or unbundling rules.
4. Duplicate Billing: Submitting claims for services already included in another procedure.

Impact on Revenue Cycle Teams

CO-97 denials create significant financial and operational challenges for healthcare organizations:

Financial Impact:

• Revenue Loss: Denied claims reduce cash flow and may lead to write-offs if unresolved.
• Accounts Receivable Delays: Increased AR days due to lengthy rework and appeals processes.
• Operational Costs: Higher expenses due to additional resources required for denial management.

Operational Impact:

• Staff Time: Teams spend valuable hours resolving denials instead of focusing on proactive RCM tasks.
• Knowledge Gaps: Denial resolution requires expertise in payer rules and clinical documentation.
• Process Complexity: Collaboration between billing, coding, and clinical teams becomes critical.
• Tracking Challenges: Monitoring and analyzing denial trends requires robust systems and processes.

Leveraging tools like CombineHealth.ai’s Adam (AI Denial Manager) reduces these impacts by automating denial identification, tracking, and resolution, saving time and improving cash flow.

Steps To Appeal a CO-97 Denial

Step 1: Review the Denial Notice
Carefully examine the explanation of benefits (EOB) or remittance advice (RA) to confirm the reason for the denial.

Step 2: Gather Documentation
Collect all relevant clinical notes, claim forms, and supporting documents to justify the billed service.

Step 3: Verify Eligibility
Ensure the service is covered under the patient’s plan and that the coding aligns with payer policies.

Step 4: Prepare Appeal Letter
Draft a detailed appeal letter, including:
- Patient and claim information
- Explanation of why the service should be reimbursed
- Supporting documentation and references to coding guidelines

Step 5: Submit Within Deadline
Appeals must be submitted before the payer’s deadline, which typically ranges from 30 to 180 days.

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

How To Prevent CO-97 Denials

Front-End Prevention

• Accurate Eligibility Verification: Confirm coverage details before rendering services.
• Preauthorization Processes: Secure preapprovals for procedures likely to involve bundling rules.

Billing Best Practices

• Modifier Usage: Apply appropriate modifiers (e.g., -59 or -25) to indicate services were distinct and separately billable.
• Code Validation: Use up-to-date coding tools to ensure compliance with payer-specific rules.

Technology Solutions

• Automated Claim Scrubbing: Tools like CombineHealth.ai’s real-time claim scrubbing feature flag potential bundling issues before submission.
• Denial Pattern Analysis: Use AI to identify recurring CO-97 denials and adjust processes accordingly.

CombineHealth.ai’s Rachel (AI Appeals Manager) streamlines denial appeals, reducing turnaround times and improving success rates. Adam (AI Denial Manager) proactively identifies potential denials, helping prevent them altogether.

FAQs

Q1: What does CO-97 mean in medical billing?
CO-97 indicates that the billed service is included in the payment for another service and cannot be separately reimbursed.

Q2: Can CO-97 denials be appealed?
Yes, CO-97 denials can be appealed with proper documentation and an explanation of why separate reimbursement is justified.

Q3: How long do I have to appeal?
Appeal deadlines vary by payer but typically range from 30 to 180 days. Check the denial notice for specific timelines.

Q4: How can I prevent these denials?
See our complete guide on denial prevention for detailed strategies, including front-end processes and technology solutions.

By understanding CO-97 denials and implementing proactive strategies, RCM teams can reduce revenue leakage, improve operational efficiency, and maintain financial health.