Did you know that approximately 60% of medical group leaders reported an increase in the denial rate in 2024? It is a serious concern. Why? Because a higher denial directly translates into an unsteady cash flow and a strained revenue cycle.
Simply put, when you are not reimbursed for the rendered services, it becomes challenging to meet the everyday expenses of running a practice, from staff wages to utility bills and so on.
Thus, this guide is dedicated to discussing everything you need to know about the CO 197 denial code. From prevention strategies to resolution steps
So, if you want to master denial 197, continue reading!
CO 197 Denial Code – Description
Denial code 197 indicates that payment was adjusted due to the absence of precertification or pre-authorization (pre-auth for short). Simply put, it is triggered when the healthcare provider fails to obtain the necessary approval from the payer before rendering the service.
Before we discuss what causes this denial or how to prevent it, let’s first review the pre-auth process.
- Identify the service or procedure.
- Review the patient’s insurance plan.
- Submit a pre-auth request to the payer.
- Follow up if needed.
According to a recent survey conducted by the American Medical Association (AMA), 61% of healthcare providers fear that payers’ use of unregulated AI is the culprit behind increased pre-auth denials.
What Causes the CO 197 Denial Code?
Discussed below are the main reasons behind the denial code 197:
Failure to Obtain Authorization
What happens when the staff is unaware that a specific service requires pre-authorization? Or maybe they failed to request it on time? It will result in a denial code CO 197.
Example:A physical therapist’s clinic schedules a UnitedHealthcare Medicare Advantage-enrolled patient for the initial 6 visits of the physical therapy plan of care. However, the newly appointed practice manager failed to acquire pre-auth before the encounters as per the payer’s guidelines.
Expired Authorization Number
Yes, the authorization number also expires, i.e., it is a time window within which you must render the service. Thus, if you failed to perform the procedure during the allowable time and then submit the claim, it will trigger the denial code 197.
Example 1: The insurance payer approved a patient for 10 sessions of speech-language pathology (SLP) therapy covered under CPT code 92507. The allowable time period for conducting these sessions was March 1 to May 31. However, the 10th session was performed outside that window (June 5) due to the patient’s illness.
Example 2:In the case of cardiology procedures, UnitedHealthcare has limited the validity of a prior authorization number to 45 calendar days. Therefore, the procedure must be complete within these 45 days.
Incorrect Authorization Number
If you submit a medical claim with an incorrect authorization number, it will also lead to a denial. That is, the insurance payer’s system fails to match the approval details on the file.
Example: The billing team submits a claim for a DXA scan (CPT 77080) using an authorization number from another patient’s file who received a similar service. As a result, it triggers the denial code 197.
Changing Payer Policies
Failure to stay current on evolving payer policies is another reason why the denial code CO 197 occurs.
Example: A physician always reported a chest X-ray, 2 views (CPT code 71046), without obtaining a pre-auth because the payer did not need it. However, the payer updated their policy and now even diagnostic X-rays require prior approval, especially if multiple X-rays were performed for a single treatment. However, the provider was unaware of the new policy.
How to Prevent CO 197 Denial Code?
The following are some best practices to avoid triggering the denial code CO 197:
Employ a Robust Pre-Authorization Process
Always obtain authorizations, precertifications, pre-treatment requirements, or notifications after scheduling an appointment and before rendering services.
One way to strengthen the verification process at scheduling is to establish clear guidelines and protocols for your staff to follow.
Coordinate with the Payer
Maintain open lines of communication with the payers to stay updated on their pre-authorization requirements and changing policies.
Invest in Continuous Staff Training
Train your staff on the benefits of acquiring pre-authorization and how it can help reduce the likelihood of triggering denial code 197.
Leverage Technology
Integrate electronic healthcare records (EHR) systems to automate the pre-authorization process. Besides, it can help you track pre-auth numbers, significantly reducing the occurrences of denial code 197.
Conduct Regular Audits
Another best practice to prevent denial code 197 is to carry out regular internal audits. It will not only help you identify denial trends but also find gaps in your documentation and coding workflow. Besides, you can leverage this data to streamline your revenue cycle.
How to Resolve Denial Code 197?
What happens when you get this denial? You can work to resolve it by following the steps below:
- The first step should always be to review the patient’s medical records to confirm that the denial was valid. That is, ensure that the necessary authorization, notification, precertification, or pre-treatment documentation was indeed missing.
- Next, try to identify the reason for the absence. There could be multiple reasons; some are listed below:
- Oversight during the initial patient intake process.
- Miscommunication between the physician and the payer.
- Any other administrative error.
- Proactively collaborate with the payer to discuss the denial code CO 197. Besides, inquire about the specific requirements to appeal it.
- Once you have clarity on how to appeal the denied claim, work on gathering the necessary documentation and resubmit it.
- Follow up on the claim status and keep a record of all the communication with the payer for future reference to ensure timely resolution.
Final Word
This guide offers a reflection of why working on denied claims is costly. It requires too much work and staff time. Thus, implementation of prevention strategies is the only wise decision one can make.
If we exclusively talk about the CO 197 denial code, it is triggered due to the missing precertification or pre-authorization number. Additionally, this guide explained some best practices to avoid this denial in the future and steps to resolve it.
However, if you are struggling to manage denials on your own, partner with experts like NeuraBill for professional denial management services.
