Claim denials can disrupt the revenue cycle of any healthcare practice. Even when a provider delivers the right care, a coding issue can delay payment and increase administrative work. One common reason for a denied claim is CO-97, which indicates that a service is included in the payment for another service.
For US healthcare practices, these denials create additional work for billing teams. Staff must review claims, check coding rules, gather supporting records, and determine whether to correct or appeal the denial.
The administrative burden is significant. According to recent reports, automating medical claim-status inquiries could save the US healthcare industry approximately $2.4 billion annually. This highlights the financial value of reducing manual billing work and improving claim management.
Understanding CO-97 helps providers identify coding issues, reduce avoidable rework, and maintain a more consistent cash flow.
What Is Denial Code CO-97?
CO-97 is a claim adjustment reason code (CARC) that means the benefit for this service is included in the payment or allowance for another service or procedure that has already been adjudicated.
The prefix CO stands for Contractual Obligation. It generally indicates that the adjustment is the provider’s responsibility under the applicable payer agreement. For example, a provider may bill separately for a procedure and a service that the payer considers an integral part of that procedure. If the services are bundled under the payer’s coding rules, the additional service may receive a CO-97 adjustment.
However, CO-97 does not automatically mean the claim was submitted incorrectly. The adjustment may be valid, or the payer may have processed the claim incorrectly. Reviewing the remittance advice and applicable billing rules is essential.
Common Causes of Denial Code CO-97
Several coding and billing issues can trigger CO-97. Identifying the exact reason helps determine the next step.
National Correct Coding Initiative (NCCI) Edits
The Centers for Medicare & Medicaid Services (CMS) uses the National Correct Coding Initiative (NCCI) to prevent improper payments for certain code combinations.
NCCI procedure-to-procedure edits identify services that generally should not be billed together for the same patient on the same date. When two codes are reported together, one service may be denied.
However, some code pairs allow an appropriate modifier when the services are distinct. Providers should check the applicable NCCI edits before submitting the claim.
Missing or Incorrect Modifiers
Modifiers provide additional information about a service. They can explain whether a procedure was performed at a different anatomical site or during a separate encounter.
If a claim requires a modifier and the billing team leaves it out, the payer may bundle the service into another procedure. For example, modifier 59 may identify a distinct procedural service when the circumstances support its use. However, modifiers should never be added simply to bypass an edit. The medical record must support the modifier.
Global Surgery Periods
Medicare’s global surgery package includes certain services provided before, during, and after a surgical procedure. For many procedures, the package covers related postoperative visits within a 10- or 90-day global period. Billing these included services separately may trigger CO-97.
However, some services can be billed separately when they meet specific requirements. For example, a significant, separately identifiable evaluation and management service may qualify for separate payment when the applicable rules are satisfied.
Duplicate or Incidental Billing
A provider may bill separately for a service that is already included in another billed procedure. This happens when a component of a service is reported as a separate line item. For example, a diagnostic service that is considered an integral part of a procedure may not qualify for separate reimbursement.
Although duplicate billing can lead to payment issues, a true duplicate claim may receive a different adjustment code. The billing team should review the exact reason stated by the payer.
Payer-Specific Rule Discrepancies
Commercial insurers, Medicare, and Medicaid may follow different payment policies.
A procedure combination that is separately payable under one plan may be bundled under another. Differences in contracts, coding policies, and claim-processing rules can lead to CO-97 adjustments. Billing teams should verify the payer’s current policies rather than relying on one universal coding rule.
How to Resolve and Prevent Denial Code CO-97
A clear denial management process helps practices resolve valid payment disputes and avoid unnecessary claim rework.
Review the Remittance Advice & EOB
Start with the electronic remittance advice (ERA) or explanation of benefits (EOB).
Check the following details:
- The denied procedure code and adjustment amount.
- The other service that the payer considers inclusive.
- Any accompanying remark codes.
- The original claim’s payment details.
- The payer’s explanation of the adjustment.
The ERA provides adjustment information at the claim or service-line level. Reviewing the associated remark codes helps clarify why the payer applied CO-97.
Verify Coding Rules and Modifiers
Compare the billed codes against the relevant coding guidelines. For Medicare claims, review the applicable NCCI procedure-to-procedure edits and their modifier indicators. Check the current policy version for the date of service. Next, review the medical records. Confirm whether the services were distinct and whether the documentation supports a modifier.
If the original coding was incorrect, correct it before resubmitting the claim. Do not add a modifier unless the clinical circumstances justify it.
Choose the Right Action Path
After investigating the denial, select the appropriate response.
Resubmit a corrected claim: If the claim contains a coding error, missing modifier, or incorrect procedure code, submit a corrected claim according to the payer’s requirements. Check whether the original claim must be formally replaced or adjusted.
File an appeal with medical records: If the services were separately payable and the payer applied the edit incorrectly, submit an appeal. Include relevant medical records, procedure notes, coding references, and a clear explanation of why separate reimbursement is appropriate. Follow the payer’s appeal deadline. For Medicare fee-for-service claims, the first-level redetermination deadline is generally 120 days from receipt of the initial determination.
Write off the balance: If the adjustment is valid under the payer contract and no further reimbursement is due, post the contractual adjustment. Document the reason and close the balance according to the practice’s policies.
Proactive Prevention
Prevention starts before claim submission. Healthcare practices reduce avoidable CO-97 adjustments by taking a few practical steps:
Use coding edits: Check code combinations before submitting claims.
Review modifiers: Confirm that modifiers match the documented service.
Track payer policies: Maintain updated billing guidelines for each major insurer.
Train billing teams: Provide regular education on bundling and global surgery rules.
Analyze denial trends: Track recurring CO-97 adjustments by payer, procedure, and provider.
Monitor claim performance: Review denial rates and correction outcomes to identify gaps.
CMS updates Medicare NCCI procedure-to-procedure edits quarterly. Practices should ensure their coding systems use the appropriate version for the date of service.
Conclusion
CO-97 indicates that a payer considers a service included in the payment for another procedure or service. It may result from NCCI edits, missing modifiers, global surgery rules, or payer-specific policies.
The key is to investigate each adjustment before taking action. Review the remittance advice, verify the coding, and determine whether to correct the claim, appeal, or write off the balance.
A consistent denial management process can reduce avoidable rework, support accurate reimbursement, and help healthcare practices maintain a healthier revenue cycle.
Frequently Asked Questions
CO-97 appears when the payer considers a service included in the payment for another service or procedure that has already been processed. Common reasons include bundled procedures, global surgery rules, and applicable coding edits.
Review the ERA or EOB to identify the affected service and the related procedure. Check the payer’s coding rules, NCCI edits, and modifier requirements. Then submit a corrected claim, file an appeal with supporting documentation, or write off the balance if the adjustment is valid.
Modifiers are relevant when they accurately describe circumstances that affect how a service should be reported. For example, modifier 59 may identify a distinct procedural service when the applicable requirements are met. The medical record must support its use.
No. The payer may have applied the correct bundling rule, or it may have processed the claim incorrectly. The services may also qualify for separate payment under an applicable exception. Review the claim, documentation, and payer policy before deciding.
Generally, no. The CO group code means contractual obligation, which assigns the adjustment to the provider. The amount should not automatically be transferred to the patient.
The ERA or EOB should be reviewed to determine the assigned financial responsibility. A patient may owe other valid amounts, such as applicable deductibles or copayments, when reported under the appropriate patient-responsibility rules. Follow the payer contract and applicable law.
