CO 45 Denial Code can be a daunting experience in Medical billing, with multiple codes and policies that providers have to understand to ensure prompt and accurate reimbursements. One of the most frequent and effective denial codes that healthcare providers encounter is the CO 45 denial code.
If you’ve been issued a CO 45 denial, you might be curious about what it signifies and what it does to your revenue cycle. Knowing this denial code and how to correct or prevent it is essential in keeping a sound cash flow in your practice.
In this article, we will discuss the CO 45 denial code, shed light on typical reasons for its triggering, and offer tips on how to prevent it. This will make the processing of claims easier and more financially rewarding.
What is the CO 45 Denial Code?
The CO 45 denial code is used when the charge for a medical service billed surpasses the maximum allowed or contracted rate that has been agreed upon between the provider and the payer.
The “CO” in the code means “Contractual Obligation,” indicating that the issue lies within the contractual arrangement between the payee and the provider.
In simpler terms, the insurance company is denying or modifying the claim because the price charged by the provider exceeds the contract between the provider and the insurance company.
For example, if the provider charges $200 for a specific service, but the payer’s contract only allows $150 for that service, the CO 45 denial code will be triggered. The insurance company will then only pay the contracted $150, writing off the remaining $50 as part of the contractual agreement.
Why CO 45 Denial Code Occurs: Common Reasons
Knowledge of the most typical causes of the CO 45 denial code is necessary in order to avoid it from happening in the first place. Some of the most common triggers for CO 45 denials are listed below:
1. Incorrect or Outdated Fee Schedules
If your office is employing old fee schedules and the insurance carrier has changed their reimbursement fees, it may result in a variance between the allowable amount and the billed amount. For instance, if your practice still uses an outdated rate, you might bill higher than the new allowable fee, and it will cause the CO 45 denial code.
2. Incorrect Coding and Missing Modifiers
One of the most common mistakes in medical billing is improper coding. If the CPT/HCPCS code or modifier applied on the claim doesn’t conform to the contract of the payer, it may lead to a CO 45 denial. Make sure that all medical codes are up-to-date and correct so that there isn’t any disparity in payment.
3. Duplicate Claims
Re-submission of a claim for the same procedure or service more than once will create complexity in the payer’s system, usually leading to a CO 45 denial code. This typically occurs when the initial claim is still under processing, yet a re-submission is done without verifying the claim status.
4. Overbilling or Non-Covered Services
At times, medical providers inadvertently charge for services not covered under the patient’s plan. As an instance, in case the patient’s insurance plan does not include a certain procedure or service, or in case the service has been overcharged, the payer will send a CO 45 denial.
5. Patient’s Plan Has Lower Allowed Amounts
Various plans have varying rates of reimbursement, even under the same insurer. If the patient has a high-deductible plan or lower reimbursement rate compared to normal plans, it can result in the application of CO 45 code when charges surpass the amount allowed for a particular plan.
How to Prevent CO 45 Denial Code
To prevent CO 45 denials is critical to making sure your practice is reimbursed properly and on time. Below are proactive measures to reduce or prevent the incidence of CO 45 denials:
1. Update Fee Schedules Regularly
Keep your fee schedule current with the current contractual arrangements and terms of payment from the payer. Review regularly the reimbursement rates and fee schedules offered by your carriers and update your billing system accordingly. Any failure to do so will lead to overbilling and CO 45 denials.
2. Validate Patient Benefits and Eligibility
Always check the patient’s eligibility and benefits prior to providing any services. By ensuring the patient’s plan coverage, you will be able to prevent submitting claims for services that are not covered or have reduced reimbursement levels. Utilize electronic eligibility verification tools to have accurate information prior to submitting claims.
3. Correct Coding Practices
Make sure that the CPT, HCPCS, and ICD-10 codes you employ for medical services are correct and meet the requirements of the payer. Educate your billing personnel on current coding guidelines and modifiers to prevent coding mistakes that can lead to a CO 45 denial. Properly using modifiers, i.e., -50 for bilateral procedures, will prevent billing discrepancies.
4. Prevent Duplicate Claims
To prevent duplicate claims, always verify the status of the original claim before resubmitting it. When a claim is pending or under adjudication, do not simply send a second claim. Utilize claim scrubbers or internal processes to identify duplicate claims prior to submission.
5. Verify Correct Contractual Billing
Be familiar with the terms and conditions of your agreement with the payer. Ensure that charges billed do not exceed the maximum allowable value indicated in the contract. If a provider repeatedly bills more than the contract limit, it can lead to CO 45 denials. Adhere to the fee schedule and ensure that charges fall within the allowable values.
6. Train Your Billing Staff
Invest in ongoing training for your billing and coding personnel. Have them aware of the CO 45 denial code and why it is triggered. Ongoing training will keep your staff capable of dealing with sophisticated billing procedures, reduce the number of errors, and prevent denied claims.
How to Appeal a CO 45 Denial Code
With or without preventative measures, there can be a CO 45 denial. This does not mean the claim is lost. Providers can appeal the denial if they find that the charge made was accurate and consistent with the payer agreement.
Following are the steps for appealing a CO 45 denial code:
Step 1: Check the Explanation of Benefits (EOB)
The first step is to carefully review the EOB to ensure that the CO 45 denial is accurate. Check whether the payer has applied the correct fee schedule and contract terms to the claim.
Step 2: Compare the Billed Amount to the Contractual Rate
Cross-check the billed amount with the one indicated in your payer contract. In case the claim was denied because of an amount more than the allowable fee, verify the disparity between the billed charge and the payer’s allowable rate.
Step 3: Prepare Supporting Documentation
In appealing the CO 45 denial, include the following supporting documents:
- Original claim copy
- Contract or fee schedule that defines the allowable amount
- Medical records (if necessary) to support the service
- Any prior authorization or referral forms
Step 4: Submit the Payer’s Appeal
Each payer has a designated process for appealing. Adhere to the payer’s instructions for appealing, including the method of submission (online, mail, or fax) and due date. Make certain to attach the required documentation and a thorough explanation of why the denial must be overturned.
Step 5: Monitor the Appeal Status
Once the appeal has been submitted, follow up with the payer to track the status of your appeal. Keep a record of all communications and any updates on the claim.
Conclusion
The CO 45 denial code is a common challenge for healthcare providers, but understanding its cause and how to address it can help improve your revenue cycle management. Following best practices like updating fee schedules regularly, checking for patient eligibility, using the proper codes, and conducting regular training for your medical billing personnel will help lower the prevalence of CO 45 denials. In the event a denial occurs, be proactive in addressing it by appealing the denial and reclaiming your lost revenue.
By taking these proactive steps, healthcare providers can streamline their billing processes, reduce denials, and ensure they are reimbursed accurately and on time. This allows providers to focus on delivering quality care to patients while maintaining a healthy revenue cycle.
