Did you know that up to 49% of claims got denied in 2021? Most of them were easily avoidable.
To pile on, the truth is that there’s not a way to remove them entirely. This is why it’s vital that you know where you can improve your billing practices to help reduce the amount of denial codes.
The easiest way to reduce denial codes is through a third-party clearinghouse to scrub the claims for any errors. But, you can also increase the training your staff receives. Increasing training efforts helps further decrease the amount of errors your staff will make while submitting claims. Especially when it comes to filing the claims and sending them to the insurance company without any minor errors.
We’re a clearinghouse provider with over 25 years of experience. From helping our clients submit claims to insurance providers and receive payment from them for that long, we’ve started to notice some serious patterns. Thus, we not only understand how to streamline the claim submission process…we also know the most common claim denial codes, how to fix them and how to avoid them.
In this blog, we’re going to cover the very easily avoidable denial code. In particular, we’ll discuss what it is, what causes it, and how you can mitigate it. So without further ado lets jump into it!
Table of Contents
What is a denial code?
Before we dive into the details of denial code CO 27, it’s important to establish a baseline. So, let’s briefly walk through and define what a denial code is.
Your billing department will receive a denial code when the claim submitted to the insurance company contains an error.
The error can be for a large number of reasons.
Each denial code signifies the reason why a claim wasn’t accepted. The claims also have a supplementary reason code that provides further details on why the denial occurred.
Beyond the obvious delay in revenue, this is why billing departments hate receiving denial codes…one denial code can have multiple different reason codes attached to them. Attempting to find the reason for a denial through a standardized code from an insurance company can be intimidating for your staff.
There are different types of denial code categories, the first kind is a CO denial code, which stands for “contractually obligated”. This means that the insurance company has to pay for the patient's care because of the contract.
Another category of denial code is PR denial code, which stands for “patient responsibility”. This means that the bill is the responsibility of the patients and the insurance company will not cover any of it.
Understanding the difference between CO and PR denial codes, is the first step to streamlining the revenue cycle.
However, the most important aspect associated with a denial code is the claim adjustment reason code (CARC) attached at the end of it. The CARC attached to a denial code is the number at the end. The number is what signifies the specific reason why the claim came back.
What is denial code CO 27?
Now that you know a little bit more about what a denial code is, let's jump into what denial code CO 27 is.
Luckily for you, denial code CO 27 is the code you will receive when the patient's insurance coverage has expired, which makes it an easy denial code to resolve.
In other words the denial code means the insurance company is not paying for the claim and it’s now the responsibility of the patients or the physician's office.
Once the denial code CO 27 comes back to the physician's billing office, the denial code sometimes changes to PR 27. This is because the insurance company is not contractually obligated to pay for the service provided…since the coverage is in an expired status.
In some cases the physician's office will be responsible for paying a portion of a bill, but this responsibility typically falls on the patient.
Hence why the denial code can change to PR 27, since if the physician's office does not pay…the claim turns over to the patient's responsibility to pay for the services out of pocket.
What causes denial code CO 27
Now that you understand what denial code CO 27 means, let’s dive into the common reasons why it happens. Denial code CO 27 occurs when the patient’s insurance coverage has terminated, making the claim ineligible for payment. Avoiding this denial starts with understanding the root causes, which fall into these key areas:
1. Skipping Insurance Verification
The most common cause of CO 27 denials is not verifying the patient’s insurance before providing services. If your office doesn’t confirm active coverage at the time of the appointment, you may bill an insurance plan that has already expired.
2. Miscommunication During Patient Intake
Errors in collecting insurance information during the patient intake process can also lead to this denial. If a patient provides outdated or incorrect insurance details, claims sent to the wrong plan will likely turn into a denial.
3. Failure to Update Insurance Information
When a patient’s insurance coverage ends, healthcare providers must update their records right away. Continuing to bill an inactive policy results in denials every time.
4. Delays in Claim Submission
Submitting claims late can cause major issues. If your team sends a claim after the patient’s insurance coverage ends, you’ll receive a CO 27 denial. Staying within timely filing limits and confirming active coverage are both critical.
5. Errors in Termination Dates
Entering incorrect termination dates for insurance coverage can wreak havoc. If your records show coverage when it has already ended, you’ll submit claims outside the coverage period, resulting in denials.
6. Lack of Patient Communication
When patients fail to notify the office about changes to their insurance, it puts your billing team at a disadvantage. If you don’t know about the termination, you can’t stop billing the expired plan.
7. Inadequate Coverage Verification
Not verifying coverage regularly can leave you billing the wrong insurance. Always confirm coverage for every appointment to avoid submitting claims outside the eligibility window.
8. Switching Insurance Plans
Patients often change insurance plans without telling their provider. If your office continues to bill the old plan, you’ll receive denials until you update your records with the new insurance details.
9. Billing Errors
Mistakes in billing, such as using incorrect dates of service or codes, can lead to CO 27 denials. Double-checking every claim ensures you send accurate information to the insurance company.
By addressing these issues, you can reduce your risk of receiving CO 27 denials. Establishing a robust verification process, improving communication with patients, and maintaining up-to-date insurance records can all help protect your revenue cycle.
How to mitigate CO 27
Now that you understand what denial code CO 27 means and what causes it, let’s focus on actionable ways to mitigate it. These strategies will help your office reduce the risk of receiving this denial, improve your billing processes, and speed up reimbursements.
1. Enforce Clear Office Protocols
Start by creating and enforcing standardized protocols for your office staff. Every team member should follow the same procedures for patient intake, insurance verification, and claim submission. Regularly reviewing these protocols ensures consistency and minimizes errors.
2. Verify Insurance Coverage for Every Patient
Insurance verification must happen before every patient’s appointment. Checking coverage details ensures services are only provided to patients with active insurance. Train your staff to confirm eligibility and cross-check termination dates during this process.
3. Foster Open Communication with Patients
Encourage patients to keep your office informed about any changes to their insurance coverage. Building trust and maintaining regular communication will help prevent surprises, such as a terminated policy. Send appointment reminders that include a request to verify or update insurance information.
4. Streamline Your Claims Submission Process
Develop a streamlined process for submitting claims. Include thorough checks to confirm the accuracy of insurance details, such as active coverage and correct termination dates. This proactive approach can catch issues before claims reach insurers.
5. Perform Regular Billing Audits
Conduct audits of your claims and billing processes on a regular basis. Reviewing claims for errors, such as incorrect dates or missing information, allows you to catch issues early. This helps you identify patterns that might lead to CO 27 denials.
6. Leverage Technology and Automation
Use technology to simplify and improve your billing process. Revenue cycle management software and automated verification tools can reduce human error, speed up claims processing, and flag potential issues, such as inactive insurance coverage.
7. Hire a Clearinghouse
Partner with a clearinghouse to scrub claims before submission. Clearinghouses verify insurance coverage and catch potential issues that might delay or deny payment. This service ensures claims are clean before they reach insurance payers, reducing denial risks and improving payment timelines.
8. Educate Your Staff
Train your staff regularly on insurance verification best practices and payer requirements. A knowledgeable team can better identify potential issues and take corrective action before claim submission. Include training on the importance of accuracy and the consequences of errors.
9. Stay Updated on Payer Policies
Keep up with the latest payer policies and guidelines. Insurance companies update their rules often, and staying informed ensures compliance. Regularly reviewing payer communication helps your team adapt to changes that might affect claim approval.
By implementing these strategies, your office can significantly reduce the occurrence of CO 27 denials. Prioritizing accuracy, communication, and the use of technology will improve your billing process and protect your revenue cycle.
Addressing denial code CO 27
Even if you take every preventative measure, you might still receive denial code CO 27. It’s frustrating, but resolving it requires a structured and proactive approach. Here are the steps you can follow to address this denial and work toward a resolution:
1. Verify the Termination Date of Insurance Coverage
Start by reviewing the patient’s insurance policy or contacting the insurance company directly to confirm the exact date their coverage ended. Ensure you have accurate and up-to-date information about the termination date to avoid unnecessary delays.
2. Check for Billing Errors
Review the claim for errors. Confirm that the services you billed for occurred before the termination date and double-check all details, such as dates of service and the patient’s eligibility at the time. Mistakes in these areas could trigger the denial.
3. Contact the Patient to Confirm Insurance Details
Reach out to the patient to confirm the status of their insurance policy. If their policy is still active, gather any supporting documentation they can provide. If their insurance has expired, ask if they have secondary coverage or a new insurance plan.
4. Resubmit or Appeal the Claim
If the insurance is active: File an appeal with the insurance company. Include all necessary documentation, such as proof of coverage, timely submission records, and supporting medical records. This ensures the insurance company has everything needed to reevaluate the claim.
If the insurance is inactive but secondary coverage exists: Collect the secondary insurance details and resubmit the claim with the updated information.
5. Discuss Payment Options with the Patient
If the patient doesn’t have secondary insurance or a new plan, explain that they are responsible for the bill. Offer a clear explanation of the situation and provide options, such as:
Payment plans: Set up an affordable payment schedule to ease the financial burden.
Financial assistance programs: Help patients explore resources or programs that might cover some of their expenses.
6. Document Every Action Taken
Keep detailed records of every step you take. Include the dates and times of phone calls, the names of individuals you spoke to, and notes from each conversation. Proper documentation protects you if the same issue arises later.
7. Follow Up Regularly
Don’t let the process stall. Follow up with the insurance company, the patient, or any third-party entities involved to ensure progress is being made. Staying proactive reduces delays and speeds up resolution.
Conclusion
denial code CO27 is easily avoidable, as long as you are aware of what it is and what causes it. The easiest way to avoid denial code CO 27, is to ensure that your office staff is verifying the patient's insurance policy before their visit. This will make sure that their insurance is active and the doctor is in network. It is also important to look into working with a Clearinghouse to help scrub the claims reducing errors.
By addressing these issues before they occur can help streamline the revenue cycle, and ensure you get your money faster. The faster you address these issues the sooner you can see a decrease in the denial code CO 27.
