Insurance claims denials cause significant financial losses for healthcare providers. Every year, providers lose billions of dollars just because of claim denials. What is worse is that the rate of these denials is increasing.
As per recent data, 38% of all healthcare providers in the United States reported that 10% or more of their claims are denied. The denial code 167 is among the most common reasons for claim rejection.
In this blog, we will discuss how you can successfully resolve the CO 167 denial code. To do that, it is imperative to understand what denial code CO 167 is and its causes. So, let’s start.
CO 167 Denial Code Description
The CO 167 denial code is triggered when an insurance payer refuses to reimburse a claim because the submitted diagnosis is not covered under the patient’s insurance plan. Simply put, your insurance plan tier does not cover that specific diagnostic procedure.
This type of insurance denial falls under the category of Claim Adjustment Reason Codes (CARC). The CARC is a standard that helps identify why an insurance company rejected a claim.
Now, insurance policies can vary from payer to payer, and your coverage details can also vary based on many factors. Factors that have the most impact on your coverage are:
- Type of Insurance Plan – HMO, PPO, EPO, or POS plans have different coverage limitations.
- Policy Tiers – Bronze, Silver, Gold, or Platinum plans may include or exclude specific diagnoses.
- Medical Necessity Requirements – Some diagnoses require prior authorization or additional documentation to prove their necessity.
- Payer Policy Updates – Insurance payers frequently update policies, creating new exclusions.
What Causes the CO 167 Denial Code?
Let’s discuss some root causes that can become reasons for CO 167 denials.
Uncovered Diagnosis
As we discussed above, the primary reason insurance payers trigger a denial code 167 is submitting a claim for a diagnosis that is not covered under the patient’s insurance policy.
Details about this are always in the contract between the patient and the insurance company. This may be because the diagnostic test is deemed medically unnecessary or experimental.
Insufficient Documentation
Another reason for the CO 167 denial code is that you provided insufficient documents to the payer. Did you know that 85% of all denials are preventable? Minor errors like incomplete documentation and outdated information trigger denials.
It makes sense because every insurance company requires thorough documentation to justify medical necessity. So, if you do not attach relevant documents with your claim, like physician notes or diagnostic test results, you are most likely to get a denial.
However, in this case, the denials don’t necessarily have to be CO 167. It can be other codes, such as CO 16.
Incorrect or Outdated Coding
A frequent error that billers make is using incorrect or outdated codes. Medical billing relies on accurate coding. These codes are revised every year. So, if your billers are not up to date with the latest information, they will use the wrong codes.
Using incorrect, outdated, or vague codes can trigger denial code 167. You might think that these types of errors are rare. However, that is far from the truth. According to a survey by Experian Health, 42% of medical claim denials result from coding errors.
Changes in Payer Policies
Insurance payers frequently update coverage policies, which can cause previously approved diagnoses to be excluded. Regular updates to Medicare, Medicaid, and private insurance guidelines may impact claim approvals.
Mistakes in Prior Authorization
For some medical procedures, insurance companies require prior authorization. If you performed the service without pre-authorization, your claim will be denied, even if it is covered in the patient’s insurance policy. So, it becomes the provider’s responsibility to get the procedure authorized before performing the service.
How To Prevent Denial Code CO 167?
Verify Insurance Coverage in Advance
To avoid CO 167 denials, verify patient eligibility and benefits through payer portals or insurance representatives. You must do it before providing any medical services to the patient.
It will ensure that the medical procedure is covered under the patient’s insurance plan.
Stay Updated with Coding Changes
Keep your staff in the loop with the latest coding updates to minimize coding-related denials. It can be done by organizing a training session for your billers every year.
Billing mistakes can also be a result of human error. To prevent this from happening, implement automated billing software that can catch inaccuracies before submission.
Maintain Comprehensive Documentation
Maintaining proper documentation is of prime importance in the healthcare industry. It not only prevents CO 167 denials but also ensures rightful reimbursement collection. Ensure your billers attach complete and accurate medical records with every claim to support the diagnosis.
It should include:
- Physician’s notes
- Diagnostic test results
- Treatment plans
- Letters of medical necessity (if required)
Use Denial Management Services
Outsourcing medical billing and denial management to experts can help providers reduce denial rates and recover lost revenue. Healthcare providers that outsource these operations to third-party medical billing companies can see a significant improvement in their revenue collection.
How To Resolve Denial Code CO 167?
If you somehow get flagged with a denial code 167 even after implementing all the preventive measures, you can take the following steps to resolve it.
Review the Explanation of Benefits (EOB)
Before resolving any issue, you must know why it happened in the first place. Check the EOB or Electronic Remittance Advice (ERA) for details on why the claim was denied.
These documents contain all the information you need to identify the main problem.
If you are still doubtful about the reason, contact the insurance company and ask for further clarification. This should be done as soon as possible.
Verify Patient’s Insurance Coverage
Confirm whether the diagnosis is uncovered. Sometimes, incorrect insurance details or outdated policy information can cause an erroneous denial. If there is any discrepancy, let the patient know immediately.
If your billers had done this before the claim filing, you might have avoided the denial altogether.
Correct and Resubmit the Claim
If the denial was due to coding errors, missing documentation, or incorrect insurance details, rework the claim and resubmit it. Many payers allow reworked claims within a specified timeframe. So, you must be aware of all the payer deadlines.
Your claim will get denied with another denial code (CO 29) if you fail to submit it before the deadline.
File an Appeal
If the denial was unjust, submit an appeal letter with supporting medical records. A successful appeal should include:
- Justification of medical necessity
- Correct diagnosis codes (if applicable)
- Physician’s statement
- Payer policy references supporting the claim
Follow Up with the Insurance Payer
Following up is extremely vital in this scenario. Train your billers to follow up responsibly for each claim every week. Most payers process appeals within 30-45 days. However, some appeals get resolved in as little as 72 hours. So, you should make your first follow-up after 3 days.
If the issue remains unresolved, contact the insurer again next week.
Bill the Patient (If Necessary)
If all resolution attempts fail, notify the patient of their financial responsibility and provide payment options.
Final Word
CO 167 denials are common but can be easily prevented. If you fail to implement the preventive strategies, your organization can face severe financial losses. Therefore, providers must adopt proactive measures to prevent and resolve these denials effectively.
Healthcare providers never resubmit 65% of the denied claims because they don’t know how to handle it. That is why outsourcing denial management services can help you. Our expert medical billing and coding consultants can identify, prevent, and resolve issues like the CO 167 denial code to ensure maximum reimbursement.
