🚀 What’s This Blog About?
This blog explains how denial code CO 50 affects healthcare billing teams and what steps they can take to reduce or respond to it. It walks through causes, payer policies, and best practices your team can use to protect cash flow.
Key Takeaways
- ✅ Thorough documentation is essential to avoid CO 50 denials
- ✅ CO 50 means the payer deemed the service not medically necessary
- ✅ Review, resubmit, or appeal denials within insurer timelines to protect revenue
Who Should Read This?
This guide is ideal for billing teams, revenue cycle managers, and healthcare administrators trying to improve claims processing and reduce denials. It’s especially useful if you’re struggling with coverage issues tied to medical necessity.
Did you know that almost 10% of medical claims get denied? The bad news? Most of these denials could have been completely avoided.
To make it even worse, there is no way to remove all denial codes. Now before you panic, with the right processes in place, your organization can significantly reduce them.
The easiest way to reduce these denial codes is the use of a third party clearinghouse, that scrubs claims for any errors. If the clearinghouse identifies errors, they will return the claim back to your billing team providing the error they found and the steps to fix it.
In today's blog, we are going to cover denial code CO 50, what it means,why it happens, and how you can mitigate it.
Table of Contents
What is a Denial Code?
Before we dive into the details of denial code CO 50, it is 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 occur because of a large number of reasons.
Each denial code signifies the exact reason why the claim was denied. The claim will also have a supplementary reason code that helps provide further information on why the denial occurred.
Beyond the obvious delay in revenue, this is one of the biggest reasons billing departments hate to receive denial codes. One denial code can have multiple different reason codes attached to them. The billing department attempting to find the reason for the denial through a standardized code from an insurance company can be a hefty task.
To make it more complicated, there are two different types of denial code categories, the first kind is a CO denial code, which means “contractually obligated”. This type means that the insurance company has to pay for the patient's care due to the contract in place.
The other category is a PR denial de, which stands for “patient responsibility”. This means that the bill is the responsibility of the patients and the insurance company is not obligated to cover any of it.
Having a thorough understanding of the difference between CO and PR denial codes, will help your organization streamline the revenue cycle.
What is CO 50 Denial Code in the Revenue Cycle?
Now that you have a better understanding of what a denial code is, let's take a closer look at denial code CO 50 and why it matters in the revenue cycle.
Denial code CO 50 is the code your team will receive when the services are not covered because the insurance team deemed it as not medically necessary. In simpler terms, the payer determined that the service provided does not meet their criteria for medical necessity, and that's why it was denied for reimbursement.
Since this type of denial often falls under a CO code, providers are often not allowed to bill the patient, which means they may not be paid for the service at all. This denial can slow down overall cash flow, increase administrative work, and impact the entire efficiency of your revenue cycle.
What are the common causes for Denial Code CO 50 and reasons for it?
Now that you understand what denial code CO 50 means, let's dive into the common reasons why it happens. Denial code CO 50 occurs when the insurance company determines the services provided were not medically necessary. Avoiding this specific denial code starts with understanding the root causes to avoid.
Missing or insufficient clinical documentation:
Not to point out the obvious, but the insurance provider is not in the examination room with the patient to see what is going on throughout their appointments. That is why thorough and accurate clinical documentation is essential. It serves as the evidence payers rely on to determine whether a service was medically necessary. Without proper documentation, even appropriate and necessary care can be denied, simply because the justification is not clearly on paper.
Lack of medical necessity per payer guidelines:
Every insurance provider has its own set of payer-specific guidelines, and they can vary widely. This is why it is so essential for your billing team to thoroughly understand what each payer considers medically necessary. If a service does not align with a payers criteria, even if it was necessary from a clinical standpoint, it may be denied.
Missing or incorrect prior authorization:
This is one of the most common causes of denial code CO 50 because of how easy it is for this cause to happen. Prior authorization is the process of getting approval from the health insurance provider before the service, procedure, or prescription is provided to ensure coverage. If prior authorization is not obtained, or if it is submitted with errors, this may cause issues down the line when the claim is submitted. If the billing team did not submit prior authorization all together and the service was not covered by the insurer all together, it will result in a denial.
How Healthcare Providers can Mitigate CO 50 Denials
To avoid any delays in payment, learning how to mitigate this denial code is essential.
Improve documentation:
As we talked about earlier in the blog, proper documentation is key to a smooth claims process. Ensuring your organization has proper documentation protocols can help ensure a smooth process moving forward.
Perform routine payer policy checks:
Payers policies are subject to frequent changes, and staying ahead of these changes can prevent costly mistakes. While most organizations will update their policies annually, emergency or mid-year changes can occur. Regularly reviewing payer guidelines ensures compliance and a reduced risk in denials.
Automate eligibility verification:
With technology becoming more and more intelligent, it is able to assist healthcare providers more effectively. Automated tools can compare payers policies against a patient's scheduled services. This will confirm eligibility and obtain approvals more efficiently.
Implementing these solutions can help reduce errors allowing your organization to operate more efficiently without disruption.
What Steps Should Be Taken After Receiving a CO 50 Denial?
I hate to tell you this but, no matter how much you try to avoid a denial code, some may slip through the cracks. This can be extremely frustrating for your staff, so understanding what to do after receiving the denial code can help reduce frustration.
Review the denial notice
When your organization receives a denial they will also receive a denial notice. Which give key details like why it was denied, the denial code, patient/provider’s information, and instructions on how to appeal if necessary. Reviewing this document should be the first step when receiving a denial to allow the organization to fully understand the situation.
Check Documentation
After reviewing the denial notice, your organization should review the documentation that they submitted to the payer. This is vital to get an understanding of what the payer exactly saw to determine that the service was medically unnecessary.
Resubmitting or Appealing the denial
If the organization finds that not all of the clinical documentation was submitted, the department can resubmit the claim with the proper documentation. It is important to know that insurance providers have strict timeframes for accepting resubmitted claims, so your billing team should be aware of these deadlines to avoid further denials.
If your organization believes that the healthcare provider has all of the documentation that proves medical necessity, your team can appeal this claim. For the insurance company to review the claim, the billing team must fill out an appeals form and submit it within the specified timeframe.
Key Takeaways About CO 50 Denial Code for RCM Teams
It is vital that your organization understands what causes denial code CO 50 and how to mitigate it. Whether that's by performing routine payer policy checks, improving overall documentation and using automation to get eligibility verification.
If your team does encounter it is vital the organization has proper procedures on how to deal with the denial code. They should be reviewing the denial notice, checking the documentation to ensure everything was submitted correctly and then submitting or appealing the claim.
Your organizations should be consistently improving protocols to help streamline the revenue cycle management process.
