For many revenue cycle leaders, denial code CO-97 shows up so often that it starts to look routine. It appears on remits, gets written off as contractual, and everyone moves on to the next claim. Over time, that habit quietly drains margin. What looks like a small adjustment per encounter can add up to hundreds of thousands of dollars per year for a busy group practice, hospital outpatient department, or multi specialty billing company.
CO-97 tells you that a service is not separately payable under the payer’s rules. On paper it is a contractual obligation. In practice it is often a symptom of deeper issues, such as weak charge capture logic, poor modifier strategy, and incomplete understanding of payer specific bundling rules. The good news is that a large portion of CO-97 volume is both predictable and controllable.
This article breaks down how denial code CO-97 really works, the operational patterns that trigger it, and specific steps you can take to reduce avoidable write offs, tighten documentation and improve first pass yield. The focus is on practical guidance for RCM leaders who own cash flow, denial performance, and compliance risk.
What Denial Code CO-97 Really Means in Practice
On an ERA, CO-97 usually appears with a remark code that says something like “benefit included in payment for another service” or “payment included in allowance for another procedure.” At a technical level, CO identifies a contractual adjustment and 97 identifies non covered service because it is bundled or not separately reimbursable under the payer’s policy.
That does not automatically mean the service was incorrectly billed. It means that, after the payer’s editing logic ran, the line item did not qualify for separate payment. That can happen for several reasons:
- The procedure is inherently packaged into a primary service under payer policy, such as certain surgical supplies that are always considered incidental.
- The encounter falls inside a global surgical period and the additional service is not clearly distinct.
- NCCI (National Correct Coding Initiative) edits indicate that two codes cannot be reported together without a valid modifier and medical justification.
- The payer regards the line as duplicative of another claim or another line on the same claim.
From a revenue perspective, CO-97 matters for two reasons. First, some denials are valid, but others are inappropriate because the services were distinct and should have been paid. Second, even when the payer is technically correct, high CO-97 volume is a sign that your charge description master, coding rules, or front end decision trees are not aligned with current payer policies. That usually means unnecessary rework, higher denial rates and extra touches per claim.
For leaders who track key performance indicators, CO-97 should be monitored as a subset of your overall denial rate, segmented by payer, location, service line and coding pattern. A “good” range varies by specialty, but once CO-97 plus related bundling codes exceed roughly 3 to 5 percent of total charges for a given segment, it is time for a structured review of the underlying edits.
Common Coding and Billing Patterns That Trigger CO-97
Although payer logic is complex, most recurring CO-97 patterns fall into a small set of scenarios. Understanding these patterns lets you design edits and workflows that stop bad claims before they go out, and challenge inappropriate denials when they come back.
Global period encounters and follow up evaluation and management
Physician practices and hospital based groups frequently see CO-97 when a post operative evaluation and management (E/M) visit is billed during a 10 or 90 day global period. If the visit is truly related to the original procedure, the payer expects it to be covered by the global payment, so separate professional fees for standard follow up are bundled.
When a patient presents with a different complaint, a distinct diagnosis, or care unrelated to the original surgery, the E/M can often be paid separately when a valid modifier (such as 24 for unrelated E/M during a postoperative period) is applied and the documentation is clear. CO-97 in these situations is often a sign that visit type selection, diagnosis coding, or modifier logic is not aligned with actual clinical intent.
Services caught by NCCI bundling edits
NCCI tables include extensive procedure to procedure (PTP) edits that indicate when one CPT or HCPCS code is a component of another. Payers incorporate these tables into their claim editing engines. When two codes are billed together in a disallowed combination without a justified modifier such as 59 or one of the X modifiers, the component line is frequently denied as CO-97.
Examples include certain musculoskeletal injections reported with imaging guidance, therapy procedures that are mutually exclusive on the same anatomic site, or diagnostic tests that are bundled into a higher level service on the same day. In many organizations, the NCCI logic embedded in the practice management system lags behind current CMS tables, creating preventable CO-97 denials for combinations that could have been flagged before submission.
After hours, ancillary and “incident to” codes
Many practices attempt to capture additional reimbursement through after hours codes, specimen handling fees, prolonged services, or ancillary charges. Payers differ widely on what they consider separately payable. If your chargemaster includes line items that the payer regards as “always included” in the E/M or primary procedure, those lines will often be denied with CO-97.
For example, some plans only pay after hours codes when the practice has clearly defined normal hours and the service occurred outside those hours. A 24/7 urgent care center that routinely appends after hours codes will likely see high CO-97 frequency, which is a signal to strip those charges at the front end for plans that never pay them.
Duplicative and overlapping encounters
In multi specialty groups or health systems, it is not unusual for multiple departments to bill for similar services on the same date of service. When the payer considers one unit sufficient, the additional line items may be bundled into the first and denied with CO-97. This often happens with diagnostic imaging, injections, and certain minor procedures that different departments might perceive differently.
In this context, CO-97 is less about coding error and more about lack of coordinated charge governance. The financial impact comes from redundant work and friction with patients who see multiple line items on statements that do not align with the payer’s view of the visit.
A Structured Framework to Analyze CO-97 Root Causes
Once CO-97 appears frequently in reports, treating each denial as a one off problem is ineffective. RCM leaders benefit from a systematic approach that connects coding logic, contract rules, and payer behavior. A practical framework includes four steps.
Step 1: Segment CO-97 by payer, service line and code pair
Start by pulling a 3 to 6 month dataset of all CO-97 denials. Group by payer, billing location, specialty and the specific CPT or HCPCS codes involved. Then, where possible, look at code pairs: the denied line and the primary line it was bundled into. This quickly shows which combinations drive the bulk of your adjustments. In most organizations, a short list of 20 to 30 code relationships accounts for the majority of CO-97 dollars.
Step 2: Map each pattern to its policy source
Next, map those high volume patterns to their governing rules. For Medicare and Medicaid plans this often means NCCI and CMS global surgery policies. For commercial payers, it means reviewing contract attachments, published policies and payer bulletins. The objective is to label each pattern as:
- Always bundled (never separately payable for this payer).
- Conditionally payable (separately reimbursable when appropriate modifier and documentation support distinct services).
- Inappropriately denied (payer behavior not aligned with contract or published policy).
This classification decides whether the right fix is build time logic, coding education, or appeal strategy.
Step 3: Align front end rules and coding workflows
For patterns that fall into the “always bundled” category, the most efficient solution is prevention. Suppress those charges for that payer at the claim edit level, change encounter templates, or remove nonpayable items from the chargemaster altogether. This reduces unnecessary touches and keeps CO-97 from cluttering denials queues.
For conditionally payable patterns, focus on two things: coder decision support and provider documentation. Build prompts that remind coders when modifiers such as 24, 25, 59 or X modifiers may be appropriate, and provide quick reference guides with payer specific examples. At the same time, work with clinicians on note structure, so that distinct problems, separate anatomical sites, or unrelated complaints are clearly documented. Without that clarity, even correctly appended modifiers will be vulnerable if a claim is pulled for audit.
Step 4: Define appeal standards and thresholds
For the “inappropriately denied” bucket, establish clear appeal criteria. For example, you might decide to appeal high dollar CO-97 denials whenever documentation shows a distinct diagnosis and a compliant modifier could have been used, or whenever the denial conflicts with a specific contract section. Create payer specific appeal templates that reference policy language, attach supporting documentation, and track overturn rates so you can refine your strategy over time.
RCM leaders should also define thresholds: not every small dollar CO-97 line warrants an appeal. Common practice is to set minimum appeal amounts by payer and by client or service line, balancing recovery opportunity against staff workload.
Operational Tactics to Prevent CO-97 Before Claims Go Out
Eliminating preventable CO-97 denials is mostly an upstream exercise. While every environment is different, several operational tactics consistently deliver results across specialties and settings.
Keep NCCI and payer editing logic current
Many billing platforms include built in NCCI tables and commercial edit libraries, but they are only effective if they are updated regularly and configured correctly. Work with IT or your vendor to ensure NCCI edits are current to at least the most recent quarter. For your top commercial payers, consider building payer specific edit sets that mirror their behavior as closely as possible, especially for high volume, high dollar code pairs.
Measure the difference in denial rates before and after any major edit refresh. If CO-97 volume does not decline, review which edits are set to warning only versus hard stop, and whether coders override warnings too easily.
Standardize modifier use by specialty and payer
Uncontrolled modifier use is a major risk factor for both CO-97 denials and post payment audits. Develop modifier playbooks for each major specialty that answer three questions clearly: when to use, when not to use, and how to document. Customize these playbooks for payers that deviate from Medicare norms.
For example, a cardiology group might have specific rules for modifier 59 on vascular procedures with imaging, while a primary care group needs clarity around modifier 25 on same day preventive and problem oriented visits. For each scenario, define documentation examples that reviewers can use as a benchmark. Periodically audit a sample of paid and denied claims to confirm that modifier logic aligns with policy and that note content is adequate.
Align global surgery workflows with scheduling and documentation
CO-97 tied to global periods often reflects disconnects between schedulers, surgeons and coders. A practical approach is to flag accounts that are within a global window at the scheduling stage, so staff can clearly identify whether the visit is routine post operative care or a new problem. Build simple prompts in the schedule reason or intake workflow that ask whether the complaint is related to the prior surgery, and route scheduling notes to coding.
On the documentation side, coach providers to explicitly differentiate unrelated problems on the day of service. For example, phrases like “seen today for new complaint of…” with distinct diagnoses help support modifier 24 when appropriate. Without this, you risk two bad outcomes: either E/M services go unpaid and appear as CO-97, or modifiers are applied without sufficient support, which increases exposure in payer audits.
Metrics and Reporting to Manage CO-97 Over Time
RCM leaders should treat CO-97 as a managed indicator rather than a static fact of life. That means embedding it into regular reporting and accountability structures and tracking both financial and process metrics.
Consider building a small dashboard that includes:
- CO-97 denial rate as a percentage of total charges and of total denials, trended monthly.
- Top 10 code pairs or scenarios driving CO-97 by dollar amount, with payer attribution.
- Appeal overturn rate for CO-97 related appeals, by payer and scenario.
- Average days to resolution for appealed CO-97 denials, compared with baseline AR days.
- Write off percentage of CO-97 amounts, segmented into preventable (should not have been billed) and contestable (could be paid under certain conditions).
Use these metrics in monthly or quarterly reviews with coding leadership and payer relations. When you see a spike in CO-97 for a specific specialty or payer, treat it as a trigger for focused root cause analysis. Over time, the goal is not to eliminate CO-97 entirely, since some bundling is appropriate, but to reduce it to the level that reflects clean alignment between your coding practices and payer policy.
Turning CO-97 Management Into a Strategic Advantage
Although CO-97 is classified as a contractual obligation, it is also a powerful signal about the maturity of your revenue cycle operations. Organizations that understand and manage this denial code well tend to share several characteristics: they maintain an up to date editing environment, they invest in coder and provider education, and they document payer specific rules in a way that front line staff can actually use.
The benefits go beyond recouping a handful of bundled charges. Lower CO-97 volume means fewer touches per claim, less back and forth with payers, tighter cash flow, and a more predictable revenue stream. It also reduces frustration among providers who otherwise see their professional work discounted for reasons no one can clearly explain.
If your CO-97 rate is higher than you would like, or if your team spends significant time reworking bundled denials without clear improvement, it may be time for a more comprehensive review of denial patterns, payer rules and editing logic. An experienced RCM partner can help analyze your data, redesign workflows and build the right front end safeguards so that only truly payable, well supported services reach the payer in the first place.
To explore how you can reduce CO-97 denials, improve first pass yield and protect your organization’s cash flow, you can contact us for a deeper discussion of your current denial patterns and operational challenges.
References
Centers for Medicare & Medicaid Services. (n.d.). National Correct Coding Initiative (NCCI) and Medically Unlikely Edits (MUE). Retrieved from https://www.cms.gov/medicare/coding-billing/national-correct-coding-initiative-ncci-edits/medicare-ncci-medically-unlikely-edit-mue-archive
Centers for Medicare & Medicaid Services. (2023). Medicare Claims Processing Manual, Chapter 12: Physicians/Nonphysician Practitioners. Retrieved from https://www.cms.gov/medicare/regulations-guidance/manuals/internet-only-manuals-ioms
Centers for Medicare & Medicaid Services. (2024). Global Surgery Booklet. Retrieved from https://www.cms.gov/files/document/mln907166-global-surgery-booklet.pdf
