CO 197 Denial Code | Everything You Need To Know

Are you regularly facing CO 197 claim denials? Insurers send these denials whenever your claims do not follow their pre-authorization requirement. This blog will explore the reasons why this happens.

We will also look at the ways you can avoid them. Still tired of managing denials? Let Health Quest Billing handle it with our management services for claim denials.

CO 197 Denial Dode Descriptions

The CO 197 code is attached with a denied claim whenever insurers conclude that it does not fulfil their specific requirement. This requirement is about the precertification and pre-treatment authorization of medical services.

Insurance companies deny CO 197 claims if these authorizations are absent for them. This indicates that the necessary approval or notification was not obtained from the payers. It was not obtained before the healthcare procedure was conducted.

There are regulations set for insurers to require those prior authorizations and precertification. The full form of CO is Contractual Obligation. It is a category of claim denials that stems from the contract signed between insurers and hospitals.

Common Reasons for the CO-197 Denial Code

There can be many reasons why insurance companies issue the CO 197 code with denied claims. Let’s explore each of the common reasons for this denial code in detail:

• Failure to Obtain Pre-certification

Pre-certification, also known as prior authorization, is a requirement by many insurance companies. Their approval must be obtained before a specific treatment or procedure is performed. This ensures that the proposed service is covered under the patient’s insurance policy. It also confirms that the specific service is medically necessary.

The absence of pre-certification is a major trigger for the CO 197 denial. It signifies that the insurer was not allowed to review the treatment’s necessity. They were also unable to assess its appropriateness in advance. This could be due to an oversight, misunderstanding, or unfamiliarity with the set protocols.

• Lack of Notification

Notification involves informing the insurance company about a planned treatment or procedure. Such notifications have to be sent out ahead of time. This process is critical because insurers often evaluate such notifications. This is done to confirm that the treatment is necessary and appropriate.

These conclusions are made according to the patient’s current health status and the terms of their insurance policy. Failure to notify from the hospital’s end can lead to a denial under code 197. The reason is that the insurer was not afforded the chance to make an informed decision.

• Missing Pre-treatment Documentation

When seeking pre-certification or authorization, healthcare providers must typically submit relevant medical documentation. They include medical records and test results to substantiate the need for the proposed treatment. This documentation helps the insurer assess the medical necessity.

They are also able to determine the appropriateness of the service. Healthcare providers may fail to submit such documents. They may also be unable to adequately support the need for treatment. In such cases, the insurer may issue a denial under code 197.

• Inadequate Supporting Documentation

Even when documentation is provided, it must meet specific standards of detail and relevance. These standards have to be met in order to substantiate the claim. Inadequate documentation could mean that the records are incomplete or unclear.

They may not specifically justify the necessity of the treatment as well. Insurers rely heavily on detailed and accurate documentation to make informed decisions. Lacking this can lead to the application of the CO 197 denial code.

• Failure to Follow Specific Guidelines

Insurers often have established guidelines or criteria. Such guidelines and criteria dictate when and how services are approved. These could include protocols like requiring a second medical opinion. Hospitals also have to follow the set treatment protocols based on the patient’s condition.

There can be other insurer-specific stipulations as well that have to be followed. Non-compliance with these guidelines can trigger a denial. The reason being that it represents a deviation from the agreed terms. These terms are carefully set under which the insurer provides coverage.

• Delay in Obtaining Pre-certification

Timing is critical in pre-certification processes. Many insurers set specific deadlines that have to be followed. They must obtain the relevant pre-certification or prior authorization before these deadlines. Failing to meet these deadlines can lead to denial of payment under code 197.

Such failure implies procedural non-compliance. It may potentially lead to unnecessary or unapproved treatments being performed as well. And all this may be done without the insurer’s prior evaluation.

How to Avoid CO-197 Denial Code?

You can effectively prevent CO 197 denial codes by implementing several strategies. With them, you can easily obtain the pre-certification notifications and pre-authorizations required. Each strategy is designed to ensure compliance with payer requirements. Here’s a detailed explanation of each approach:

• Implement a Robust Pre-authorization Process

Establishing a clear and efficient pre-authorization process is crucial. This involves setting up standardized protocols. These protocols are for obtaining necessary pre-certifications, authorizations, and notifications. All these records have to be obtained before any service is provided.

This should include checklists or software prompts. They can ensure that all required steps are taken before proceeding with treatment. A systematic approach helps in maintaining consistency and compliance. It can significantly reduce the chances of overlooking necessary authorizations.

• Enhance Communication with Payers

Developing strong communication channels with insurance payers is essential to stay informed. You must stay informed about their evolving policies and requirements. Regular interactions such as meetings or updates via newsletters from payers are important.

They can help healthcare providers stay updated about any changes in pre-authorization procedures. This proactive communication allows for adjustments in your practice workflows. These adjustments are primarily in accordance with payer requirements. They can ensure compliance and less denial risks.

• Educate Staff on Pre-authorization Requirements

Training all your billing staff is critical. This staff can be your front desk workers, billing specialists, and clinicians. They have to be trained about the importance of pre-authorization and specific payer requirements. Educational programs should cover how to handle pre-authorizations.

It is also important to know about the role of accurate documentation. In addition, your billers must keep the implications of non-compliance in mind as well. Well-informed staff are less likely to make procedural errors that could lead to denials.

• Utilize Technology Solutions

Utilize advanced technology solutions like electronic health records (EHRs) and automated verification systems. These solutions can greatly enhance the pre-authorization process. The systems can automatically check for pre-authorization requirements. Those requirements are checked against the services scheduled.

As a result, they are able to alert the staff in case of any missing approvals or documentation. All this is done before the relevant medical service is provided. This automation reduces human error and improves the approval process.

• Conduct Regular Audits

Periodic auditing of the pre-authorization process helps identify and correct inefficiencies. You are also able to detect any recurring errors. Healthcare providers can regularly review their procedures and denials.

By doing this, they can pinpoint specific areas where compliance is lacking. In addition, they can implement corrective measures to improve their processes. This way, they are also able to decrease the likelihood of future denials.

• Improve Documentation Practices

Ensuring that all documentation is thorough and accurate is crucial. You should also be able to confirm that it aligns with the set payer requirements. This includes detailed medical records and test results.

There can be other documents as well that support the medical necessity of a treatment. Effective documentation practices help substantiate the need for services. This can be done during the pre-authorization process. It can also easily serve as a defense against claim denials.

• Monitor and Track Denials

Tracking denial trends and analyzing patterns related to pre-authorization is another important practice. It can provide valuable insights into common compliance issues. This monitoring allows providers to proactively adjust their procedures.

They can do this to address the root causes of denials. As a result, they can enhance their overall compliance. In addition, they can reduce the frequency of denials associated with pre-authorization failures.

• Establish a Denial Management Process

Having a structured process for managing denials is crucial. This should include mechanisms for quickly addressing and appealing unjustified denials. You should also be able to track the outcomes of these efforts. Effective denial management ensures that issues are resolved promptly. Moreover, any similar denials should be prevented in the future.

What Are Pre-Authorizations?

Healthcare organizations have to undergo the procedure of preauthorization. In this process, they have to obtain approval from an insurance company to provide a medical service. Preauthorizations are also called pre-certifications.

This has to be done before that medical service is provided. The approval declares that the service is medically necessary for the relevant patient. It is considered appropriate given the patient’s condition which is why the payer covers it in its insurance plan.

Pre-authorization requirements are based on the insurance plans of patients and can vary accordingly. They also depend on the medical service being provided. Some insurance coverages require hospitals to pre-authorize all their services.

Other plans only target specific procedures and treatments. You must completely understand the pre-authorization requirements for each coverage. This way, you can timely obtain the approvals before providing your healthcare services.

How to Obtain Pre-Authorizations?

Obtaining pre-authorizations is a step-by-step process in which you have to systematically implement every step. You first have to identify the medical procedure or treatment that has to be preauthorized.

The next step is to review the patient’s insurance plan. This will help you determine the pre-authorization requirements for your medical procedure. You can find these details either in the documents or the website of that insurance plan.

Finally, you must send the pre-authorization request to the relevant payer. You should include all the details about your patients. They can include their condition, the proposed procedure, and any supporting documentation. Then, you can only await their decision.

The decision will only be made after a careful review of your documents. It will also be communicated in writing after they review pre-authorization requests. You can also follow up with insurance companies if they deny those requests. Follow up requests usually ask for additional information to appeal the decision.

How Health Quest Billing Helps Prevent Claim Denials?

Health Quest Billing continuously monitors the performance of submitted claims. We also track the denial rates of healthcare providers. Our analysis enables us to identify trends and adjust billing strategies. We also implement the best practices to further reduce claim denials.

Before submitting any claims, Health Quest Billing also conducts a thorough review of all necessary information. This includes patient demographics, provider details, and service specifics. This strict review process helps identify and rectify any errors or omissions. This way, they are unable to cause claim denials.

We also emphasize the importance of clear and updated patient documentation to hospitals. We work closely with them to ensure that the medical records accurately reflect their diagnoses and procedures. This facilitates a smoother claim processing for them.

The Bottom Line

The CO 197 denial code states that a claim does not fulfill the preauthorization requirement of the insurance company. This can happen due to a lot of reasons like inadequate supporting documents, failure to follow guidelines, and others.

You can avoid these claim denials by conducting regular audits, using technology solutions, and other ways. Contact Health Quest Billing to ensure your revenue stream is free from these denials.