Understanding Denial Code CO 167: Reasons & Solutions for Medical Bills

Did you know that on average between 5% and 10% of medical claims get denied? I hate to tell you but a lot of these denials are avoidable.  

To make it worse, there is no way to remove all denial codes entirely but you can try to avoid them. That’s why it’s vital for your organization to monitor the billing practices to help identify what areas need improvement. This can help reduce the amount of denial codes your office receives overall. 

But don’t panic, there is a very easy way to reduce denial codes and that is through the use of a third-party clearinghouse that scrubs the claims for any errors. If they find an error, they will send the claim back to your billing department identifying the error they found and what the next steps are. 

We’re a clearinghouse provider with over 25 years of experience. Over the years of helping our clients submit claims to their insurance provider, we have noticed some startling patterns. Thanks to this experience, we’ve developed an understanding of the most common denial codes, how to fix them and how you can avoid them. 

In this blog, we’re going to cover the denial code CO 167, what it means, what causes it, and how you can mitigate it. So without further ado let’s jump into it!

Table of Contents

What is a CO 167 Denial Code?

Before we dive into what causes the denial code CO 167 let’s go into the details of what it is first. 

This denial code occurs when the insurance company believes the diagnosis doesn’t justify the service billed. To further simplify it the diagnosis code submitted does not justify why the procedure or service was necessary. 

This denial code is a contractually obligated (CO) denial. This means the insurance company is saying they are not responsible for payment. Unless additional information gets provided that shows the service was actually needed. 

Fortunately, CO 167 is typically easy to resolve.

Common Reasons for a CO 167 Denial Code

Now that you have an understanding of what the denial code CO 167 is, let's talk about some of the most common reasons for them to appear. 

Missing or Incomplete Prior Authorization 

Some services require that the doctor’s office get prior authorization from the insurance company before the service. 

Prior authorization actually is exactly what it sounds like, insurer approval obtained before providing a service. The insurance company requires approval for the service to ensure it is medically necessary. 

By not obtaining prior authorization before the service, you run the risk of the coverage getting denied.

Services Rendered Outside the Authorized Time Frame

Once your billing department has received prior authorization there is a specific time frame in which the service needs to occur. If your physician performs the service before or after the approved window of authorization you will receive denial code CO 167.  Many organizations overlook this as they are not aware the authorization can expire.

Incorrect Procedure Code 

When the billing department is filling out a claim they need to input procedure codes. These tell the insurance provider exactly what service the patient got. There are many reasons why incorrect codes happen from the use of outdated codes or just a simple typo. With the incorrect procedure code, the insurance company does not know what was done leaving them no other choice but to deny the claim backing up the revenue process. 

Patient Ineligible for Coverage 

This may sound complicated but it’s actually straightforward, if a patient is ineligible for coverage, it means their insurance wasn't active when the service happened. 

That seems pretty straightforward… right? 

Well, a patient can be ineligible for coverage, for many different reasons. In most cases, the patient's insurance policy is just inactive or terminated when the service is complete.  In more difficult cases, the patient’s age, diagnosis or condition does not meet the coverage criteria.

Lack of Medical Necessity Documentation 

When an insurance provider is reviewing a claim, they will need to examine the medical documentation to ensure that all necessary tests support the service as medically necessary. If they do not have that documentation they will deny the claim. 

It is imperative to the success of your organization that your billing department understands what can cause denial code CO 167. These errors cause a lot of denials that are unnecessary, delaying the revenue cycle. 

How To Mitigate Denial CO 167

Having a good understanding of what the reasons are for these denial codes, let’s talk about how to prevent them.

Step 1: Verify Diagnosis Codes

This solution is one of the easiest things to have your employees implement to reduce the error code. Employees should confirm that the code is up-to-date and valid for the service date. By doing this it ensures that the correct code is being used and does not further delay the revenue cycle.

Step 2: Update Coding Resources Regularly

Current Procedural Terminology or CPT codes are constantly updating.  It is important to adopt a consistent schedule to check your resources and update them to represent the new or changed codes. Your organization could also invest in a coding tool that constantly updates with the changes, so you don't have to. 

Step 3: Pre-Authorization & Eligibility Verification

Before the service, it is important to contact the insurance company, this will confirm both pre-authorization and their eligibility. Your staff should also confirm the patient's details like name, ID number and coverage dates, to further ensure they are eligible for coverage.

Step 4: Staff Training & Coding Accuracy

Before you roll your eyes and skip this section, this is a very overlooked reason for helping to prevent denial codes. Providing ongoing training on updated coding standards is just one way to help ensure your staff stays educated. Your organization can also encourage continuous education to keep your staff as up-to-date as possible. 

Implementing these solutions helps keep your revenue cycle moving and ensures timely payment for all parties. 

Addressing Denial Code CO 167

Unfortunately, even if you and your billing team do everything you can to mitigate it will still appear. This can be frustrating for your billing department, let’s explore how to address it effectively. 

Review the Claims for Errors

Review the entire claim, and keep an eye out for any errors. Things like incorrect or outdated diagnosis/CPT codes, patient information, or missing documentation could have triggered this denial code. 

Review Patient Policies

Reviewing the patient's policy should be the first thing you do if you get the denial code CO 167. When reviewing you should be looking to see if there are any changes in the patient's policy. 

Resubmitting or Appealing the Denial 

If the claim has any errors, it is important that your billing department corrects them and resubmit the claim promptly. Insurance companies have strict timeframes for accepting resubmitted claims, so your billing team should be aware of these deadlines to avoid further denials. 

If the claim does not contain any errors and you believe the denial occurred in error, your team may appeal this claim. For the insurance company to review the claim, you must fill out the appeals form and submit it within the insurer's specified timeframe. 

Conclusion

It’s crucial that your billing department understands what causes denial code CO 167, and how they can mitigate it. Whether that's by verifying diagnosis codes, pre-authorization or just keeping up on staff training. 

Your billing staff should be well-trained in how they address this denial code if they ever run into it. Checking the claims for errors, the patient's policy or just filing an appeal can help resolve the denial quickly. 

By continuously improving the procedures, it can help your organization streamline the revenue cycle management process.