Medical billing is a complex process, and claim denials make it even more difficult. Medical claim denials are a significant roadblock for healthcare providers. Every year, hospitals and practices in the US lose billions of dollars because of denials. This disrupts cash flow and increases administrative burden.
One of the most frequently encountered denial codes is CO 16. But what is it? And how can you prevent and resolve CO 16 denials? Well, that’s what we are going to discuss in this blog.
In this guide, we will break down the CO 16 denial code, explore its causes, and discuss some strategies to prevent it. We will also discuss a step-by-step approach that you can use to resolve these denials. So, let’s start.
CO 16 Denial Code – Description
An insurer denies a claim with the CO 16 denial code when there is missing or incorrect information in the claim that is required for proper adjudication. Denial code 16 falls under the Contractual Obligation (CO) category of Claim Adjustment Reason Codes (CARCs).
However, unlike most other codes, CO 16 is a broad denial code. That is because the missing or incorrect billing information can be anything – from missing certificates to invalid provider names. That is why denial code CO 16 is accompanied by the Remittance Advice Remark Code (RARC). These additional remark codes specify what is missing in the claim. The following are some commonly used remark codes by insurance providers:
- M12 – Missing or incomplete information about purchased services in diagnostic tests.
- M60 – Missing Certificate of Medical Necessity (CMN) or DME MAC Information Form (DIF).
- N264 – Missing, incomplete, or invalid ordering provider name.
- N575 – There is a mismatch between the ordering provider’s name and the records on file.
- M124 – Missing identification of whether the patient owns the equipment requiring parts or supplies.
What Causes the CO 16 Denial Code?
The denial code CO 16 is a result of negligence and minor mistakes. The following are the most probable causes:
- Incomplete or missing information
- Billing and submission errors: Missing modifiers, inaccurate codes, and incorrect insurance details
- Missing prior authorization or Certificate of Medical Necessity (CMN).
- System errors or payer-specific issues
How to Prevent Denial Code CO 16?
Prevention is the best strategy to manage denial code CO 16. While you cannot prevent all denials, implementing the following suggestions can help a lot.
Verify Patient & Insurance Information
Thoroughly review important patient information like name, date of birth, and insurance details before submitting any claim. Also, ensure that the details of both primary and secondary insurance payers are accurate.
To do this, you can set up a secondary billing checkpoint where claims are reviewed before submission.
Use Claim Scrubbing Software
You can use claim scrubbing software to detect and correct errors before submission. These automated tools can catch mistakes more efficiently.
Train Billing & Coding Staff
No software can reduce denials if your billing and coding staff is not trained on the latest standards and billing guidelines.
Train your staff on payer-specific requirements. Also, keep them up to date with the latest changes in coding and payer guidelines by subscribing to industry newsletters, attending webinars, and participating in professional development programs.
Submit Claims Electronically
Instead of preparing and submitting your claims manually, use computer-based systems. Electronic claim submissions reduce errors compared to manual paperwork as they provide real-time validation.
Perform Regular Internal Audits
To prevent denial code 16 rejections, conduct regular audits in your billing department. Try to find any recurring patterns that may lead to a denial.
Monitor frequently occurring denials to address systemic issues and create corrective action plans tailored to reducing errors. It is better to conduct these audits every week. However, it can be hard for healthcare providers to manage them practically. So, try to do it at least once every month.
How to Resolve Denial Code CO 16?
Let’s look at some ways you can resolve denial code CO 16.
Review the Denial Details
The first step in resolving denial code CO 16 is determining why the claim was denied. So, check the Explanation of Benefits (EOB) or Electronic Remittance Advice (ERA) for the associated Remark Codes. The remark codes will help you understand what went wrong.
There can be two scenarios: either there will be missing information or incorrect patient/provider details.
Correct & Complete the Claim
Add missing details such as diagnosis codes, modifiers, or authorization numbers. Ensure the provider and patient details match the payer’s records.
Check for Additional Documentation Requirements
Verify that all relevant documents are attached. If the claim requires prior authorization or CMN, attach the necessary documents. Make sure that these documents are complete, up-to-date, and legible.
Check if the 835 Healthcare Policy Identification Segment (loop 2110 REF) provides further payer instructions. Also, look for any other denial codes that might be present. Attach the necessary documents to fulfill the requirements of these additional denial codes. If you have any confusion, contact the insurance company before resubmitting the claim.
Resubmit the Claim
Once everything is correct and all documents are attached, resubmit the claim electronically. Avoid manual submission of the claim to prevent any further complications. Use claim tracking tools to monitor resubmission status.
Follow Up with the Payer
Follow up with the payer every 15 days. If the claim remains denied, ask the insurance company for clarification. Also, request a peer-to-peer review if the dispute is related to medical necessity.
Final Word
86% of all medical denials can be avoided with just a little attention to detail and a systematic approach. Preventive measures like thorough documentation and efficient resolution processes can significantly boost your cash flow and overall revenue.
Creating a strong denial management strategy might have a high front cost. However, in the long run, it saves you a lot of money. On the contrary, dealing with denial code CO 16 can be time-consuming. That is why many healthcare providers now outsource their billing.
Our denial management services help healthcare providers reduce claim rejections, improve reimbursement rates, and streamline the revenue cycle.
