Not many things can disrupt the revenue cycle of healthcare providers as badly as claim denials. Every year, hospitals and independent practices lose billions of dollars due to insurance denials. While there are hundreds of reasons for denials, the CO 96 denial code is particularly frustrating. That is because it directly impacts both your bottom line and potentially your relationship with patients.
So, what can you do about it? Well, that is what this guide is all about. In this guide, we will explain in detail what the CO 96 denial code is, its causes, and the steps that you can take to prevent it. So, let’s start.
CO 96 Denial Code Description
CO 96 Definition: “Non-covered charge(s)”
When a claim is denied with the CO 96 denial code, it means the insurance company has determined that the service provided falls outside the scope of the patient’s coverage benefits. The “CO” prefix stands for “Contractual Obligation.” It means that, according to the contract between the payer and provider, the healthcare provider is responsible for payment.
Since denial code 96 is due to an uncovered service, it is often accompanied by at least one remark code. The remark code provides additional information about why the service was not covered. These can be either:
- NCPDP: National Council for Prescription Drug Programs Reject Reason Code – typically for pharmacy-related denials
- RARC: Remittance Advice Remark Code – for general healthcare services
If the exact reason for rejection is not clear, you can also check the 835 Healthcare Policy Identification Segment (loop 2110 Service Payment Information REF) if it is available in the documentation.
What Causes the CO 96 Denial Code?
Before we can discuss how to prevent and resolve the CO 96 denial code, it is first essential to understand the root causes behind it. The following are the primary reasons why claims receive this denial code:
Non-covered Services or Procedures
The most direct cause of CO 96 denials is that the service or procedure provided is not included in the patient’s insurance benefits. This could be due to:
- Policy exclusions that are explicitly listed in the insurance contract
- Experimental or investigational procedures not recognized as standard care
- Wellness or preventive services outside standard coverage
- Cosmetic procedures or services deemed not medically necessary
Lack of Medical Necessity
Another major reason for the denial code CO 96 is the lack of medical necessity. If the insurance companies believe that a provided procedure or service is not medically necessary for the patient’s condition, they might reject the claim. Services may be denied if:
- The payer determined that the treatment was not essential for the patient’s condition
- The documentation fails to establish medical necessity
- Alternative and less expensive treatments were available
Prior Authorization Requirements
Many services, especially high-cost procedures, specialized treatments, or certain medications, require pre-approval from the insurance company. Failing to obtain this authorization often results in CO 96 denials.
Eligibility Issues
Problems with a patient’s eligibility can also result in CO 96 denials. Eligibility issues can be:
- Lapsed or inactive coverage on the date of service
- Services provided during a waiting period
- Patients not meeting residency or other eligibility requirements
Incorrect Documentation
Incomplete documentation can also lead to denial code CO 96. However, it is not a direct reason, as there are other denial codes as well that are triggered due to documentation issues. Documentation issues can be:
- Incorrect CPT/HCPCS codes that do not match the actual service provided
- Missing or wrong modifiers (e.g., KX, GA, GZ, or GY)
- Insufficient documentation to support the billed service
- Diagnosis codes that do not support medical necessity for the procedure
- Erroneous or missing patient information
How to Prevent CO 96 Denial Code?
Preventing CO 96 denials requires a proactive approach to insurance verification and billing practices. Our billing experts at NeuraBill suggest implementing the following strategies to prevent the denial code CO 96:
Verify Insurance Coverage
The most crucial step in preventing CO 96 denials is comprehensive insurance verification before providing services. Train your billing staff to always:
- Confirm active coverage status for the date of service
- Verify specific benefits for the planned procedures or services
- Identify any coverage limitations, exclusions, or benefit maximums
- Determine if the service requires certain conditions or diagnoses for coverage
- Check if the patient has multiple insurance plans and determine the correct primary payer
Review Coverage Policies and Guidelines
Staying updated with the recent coverage policies and guidelines of the major insurance payers is essential to prevent denial code 96. Before filing a claim, your billing staff must always:
- Regularly review Local Coverage Determinations (LCDs) for Medicare patients
- Stay updated on commercial payers’ medical policies
- Understand which services are considered experimental or investigational by specific payers
- Know which procedures typically require additional documentation to establish medical necessity
Improve Documentation Practices
As a healthcare provider, the most important thing you can do to prevent denials is to prepare and attach comprehensive documentation with your claims.
- Document clear clinical rationales for all services provided
- Include relevant patient history, symptoms, and previous treatment attempts
- Link each service directly to the diagnosis being treated
- Ensure documentation meets specific payer requirements for certain services
Get Prior Authorization
As we discussed above, pre-authorization of some services is essential for reimbursement. So, build and implement a strong authorization process. To do this, you can:
- Maintain a current list of services requiring prior authorization by each payer
- Submit authorization requests well in advance of scheduled services
- Document authorization numbers in the patient record and include them on claims
- Verify the scope of the authorization (specific procedures, number of visits, date ranges)
- Follow up on pending authorizations before providing services
Utilize Advance Beneficiary Notices (ABNs)
If, for some reason, the patient or service coverage is unclear, you should use advanced beneficiary notes in your claims.
- Issue ABNs for Medicare patients when services might not be covered
- Create similar notices for commercial insurance patients
- Clearly explain the potential financial responsibility to patients
- Obtain signatures before providing potentially non-covered services
Implement Pre-Claim Scrubbing
Train your employees to recheck the claims before submitting them. If manually checking the claims is too much work, you can use claim scrubbing tools to identify potential issues. You must check for:
- Coding inconsistencies or missing information
- Verify that all required documentation is attached
- Ensure proper authorization information is included when required
How to Resolve Denial Code 96?
If you are faced with a CO 96 denial code, you can take the following steps to potentially resolve it:
- Find the Denial Reason: First and foremost, check the reason for rejection. Review Remittance Advice (RA) or Explanation of Benefits (EOB), check Remark Codes (RARCs), and examine the 835 Healthcare Policy Identification Segment to understand denial reasons.
- Identify Patterns and Verify Coverage: Determine if the denial is an isolated case or part of a recurring issue. Also, check the patient’s eligibility, benefits package, primary insurance, and benefit limits on the service date.
- Look for Billing Mistakes: Billing errors might result in the CO 96 denial code. So, double-check all the CPT, HCPCS, and ICD-10 codes.
- Make Corrections: Based on your analysis, choose the best resolution path. Make the corrections and resubmit the claim, or file an appeal if you believe the original claim was fine and there is an error from the insurer’s side.
Final Word
The CO 96 denial code is one of the most frequently occurring, yet easily preventable denials. By implementing comprehensive insurance verification processes, staying current with payer policies, and maintaining clear patient communication, healthcare providers can significantly reduce the occurrence of this denial code 96.
If you get frequent claim denials, consider employing our denial management services. Billing experts at NeuraBill have decades of experience handling billing and coding challenges.
