Life of medical practitioners dwells between providing excellent care to their patients and managing finances. Meanwhile, complicated insurance claims raise the head. Understanding denial codes can help in managing the billing process and preventing denials.
The denial code CO-45 is the most common denial reason insurance companies use. This code means the physician charged more fees than the coverage agreed under the insurance plan’s fee structure.
Denials with CO-45 can have a substantial influence on a healthcare provider’s revenue cycle, potentially resulting in an average revenue loss of 2-5% for each claim.
What Is CO-45 Denial Code?
In simple words, denial code CO-45 is a claim adjustment reason number to highlight the fact that the billed amount exceeds the amount allowed under the insurance plan fee structure. The most common reasons for these denials are:
- The healthcare provider did not update its current fee schedule according to the latest contract terms.
- The healthcare provider did not perform insurance coverage verification of the patient before providing treatment.
- This reason arises when a physician uses an incorrect code or modifier.
- If the doctor did not properly document or justify the urgency of care and requirement for relevant service, this is another cause of denial
- Identical claim submission of a claim for an alike service is a recurrent oversight, leading to a straight denial or reduced compensation.
How Does ‘CO’ Relate to Denial Code 45?
The ‘CO’ with denial code 45 is a Claim Adjustment Reason Code (CARC) among many others. Here the ‘CO’ stands for “Contractual Obligations”. These contractual obligations reflect a contract between the healthcare provider and the insurance company.
This means the physician will provide necessary medical treatment to the insured patient and will charge according to the contract terms with insurance company. This contract contains all details including the rate, maximum number of hours, days, or units for a specific procedure.
The CO- CARC code implies all financial responsibility to the provider, and the provider cannot transfer it to it patient. Hence, the provider must carefully review these contracts as they can directly affect their reimbursement rates.
Moreover, keeping an eye on these terms prevents CO-45 denials and ensures fair compensation for provider services. The CO-45 serves as a reminder for providers to proactively update fee schedules, network agreements, and coding practices.
Frequent Contractual Obligations
Here are some common contractual obligations that may lead to the use of CO:
CO-29: Indicates time-barred claims.
CO-96: Refers to non-covered charges, with more details provided in an extra code.
CO-97: This occurs when the provider combines one procedure or service with another performed on the same day.
CO-18: Indicates submission of duplicate claim or service.
CO-50: Referswhen the procedure code is not compatible with the billable diagnosis code according to coverage determination guidelines.
CO-11: Addresses contradictions between the diagnosis and procedure.
CO-16: Indicates a claim that lacks information or has submission/billing errors.
Factors Leading to CO-45 Denial
Understanding the common factors of CO-45 denials code is important for medical practitioners. For better handling such denials, healthcare providers must consider hiring services of a virtual medical scribe, because they are well-versed with the coding guidelines.
Improper Documentation
Incomplete documentation is the major cause of CO-45 denials. Medicare demands precise documentation to ensure that the treatment is necessary and appropriate. Healthcare providers have to provide comprehensive documentation to address all payer’s concerns.
Insurance Coverage Verification
Improper coverage verification may result in financial loss for providers. If a practitioner wants full compensation, ensure prior authorization for treatment. The importance of confirming that all authorizations remain current and valid cannot be overstated.
Non-Network Participation
Non-participation in network agreements may cause the charges of providers to exceed the maximum permissible amount specified by insurance carriers, leading to CO-45 denials.
Incorrect Billing/ Coding
Incorrect medical billing, wrong CPT / ICD codes, and modifiers can eventually cause for claim denial or reduced payments. To prevent such denials, verify all bills and double-check claims before submission.
Keeping CO-45 Denials at Bay
Healthcare providers should take the following precautionary measures to avoid CO-45 denials:
- Analyze the Explanation of Benefits(EOB) statement to get an understanding of the reason for denial and the write-off amount.
- Review the contracts with the insurance company to make sure that you are billing according to the agreed terms.
- In case, the billed amount exceeds the allowed limit, Review the pricing schedule for the specific procedure in the geographic area to determine that the amount is reasonable and normal.
- When the billed amount is in customary range, discuss the denial with the payer and appeal for reconsideration of the claim.
- Justify the fee charged with comprehensive documentation, such as fee schedules, invoices, or medical records.
- If denial is still persistent, the healthcare provider can dispute the resolution request.
- All this process is very complicated and time consuming, which is why outsourcing these tasks to Virtual Medical Assistant is advisable.
A Quick Recap
All in all, managing denials such as CO-45 is crucial for maintaining your practice’s revenues. These denials, usually a result of factors such as missing documents, improper coding, or incorrect fee schedules, can reduce your income if not controlled.
Overall, it is possible to reduce the effect of these denials if one is informed of why the denials occur and the obligations as per the contracts. For instance, knowing the proper usage of medical codes such as the 97750 CPT code can have a significant impact.
Therefore, it is crucial to admit that managing all of that can indeed be quite a tough thing to accomplish. This is why having a Medical Virtual Assistant can change the game in the management of your health. They are aware of the coding and hence avoid mistakes and coding and billing and make sure you are paid accordingly.
However, it is also crucial to reduce the number of CO-45 denials and, thus, it could be wiser to invite a specialist who will remove these tasks from your list and will make your practice work effectively.