CO-97 Denial Code: Why It Happens and How to Prevent It?

Why did a claim that looked clean come back with a CO-97 denial code and zero payment?

You have the note, the codes, and the claim details in place. Yet the remittance says the service was already included in another payment. Now you have to figure out what the payer included, which rule it used, and whether the adjustment is actually correct.

We ran into this problem while building Bill Matters. Studying CO-97 and the workflows around it showed us something easy to miss: the denial code is only the starting point. The real work begins when you trace that denied line back to the related service and the rule behind the adjustment.

That is where CO-97 gets complicated. The same code can stem from bundling, NCCI edits, global surgical periods, reporting issues, or payer-specific rules.

In this guide, we'll walk through how to identify the actual cause, decide what action the claim needs, and spot patterns that lead to recurring CO-97 denials. We'll also look at where AI can help with that work and where human judgment still matters.

What Does a CO-97 Denial Mean?

A CO-97 denial code means the payer considers the service included in the payment for another service or procedure it already processed. In medical billing terms, the payer is saying that this service is not separately payable.

Here’s the breakdown of CO-97 denial code for you:

• CO means Contractual Obligation. The adjustment generally stays with the provider rather than becoming patient responsibility.
• 97, also called CARC 97, identifies a service that the payer considers included in another adjudicated service.
• Patient billing: A CO adjustment generally should not be transferred to the patient as a balance.

For example: a provider bills an office visit and a minor procedure on the same day. The payer pays the procedure but reduces the office visit to $0 with CO-97 because it considers the visit part of the procedure.

That tells you what the payer decided, not whether the decision was correct. The claim still needs to be reviewed to determine why the payer bundled the service and whether separate payment is supported.

Why Does a Medical Claim Get Denied with CO-97?

A CO-97 denial can come from several payment and coding rules. The payer may consider the service part of another procedure, apply an NCCI edit, include it in a global surgical package, read the claim as insufficiently distinct, or follow its own bundling policy.

1. The Service Is Bundled into Another Procedure

The most basic cause is simple: the payer considers the denied service part of a procedure it has already paid.

For example, a surgeon reports an incision closure separately after an open procedure. If that closure is already included in the surgical payment, the payer treats it as part of the primary procedure and applies CO-97.

You may see this type of bundling when:

• A smaller service is included in a more comprehensive procedure
• Routine work is part of the primary procedure
• An incidental service is already covered by the main payment

Here, the payer is grouping related work into one payment rather than paying each reported line separately.

2. An NCCI Edit Applies to the Code Pair

A CO-97 NCCI edit can occur when two CPT or HCPCS codes are reported together even though an NCCI Procedure-to-Procedure edit does not allow separate payment in that situation. CMS uses these edits to prevent payment for services that should not be reported together.

The relationship usually involves:

• A Column One code that is eligible for payment
• A Column Two code that may be denied under the edit
• A Correct Coding Modifier Indicator that determines whether an associated modifier can bypass the edit in appropriate circumstances

CMS updates its published NCCI PTP files quarterly, so the edit set can change over time.

Also Read: How to Write a Bundling (NCCI) Appeal Letter with Modifier Justification

3. The Service Falls Within a Global Surgical Period

A CO-97 global period denial occurs when the service is treated as part of the surgical package rather than a separate payment.

For Medicare, surgical packages can include related care for three types of global periods:

• 0-day: the procedure day only
• 10-day: the procedure day plus 10 postoperative days
• 90-day: one day before surgery, the procedure day, and 90 postoperative days

CMS includes certain preoperative and postoperative services within these packages, depending on the procedure.

A related postoperative visit is a common example. When that care falls within the applicable package, the payer may consider the visit already covered by the surgical payment.

4. The Claim Does Not Clearly Show a Distinct Service

Another CO-97 cause is reporting. The services may be performed separately, but the claim may not clearly represent them as distinct under the applicable coding rules.

This is where CO-97 modifier 59 questions often come up. Modifier 59 and the XE, XS, XP, and XU modifiers can identify certain distinct services when the clinical circumstances support their use. CMS lists these among the modifiers associated with NCCI PTP edits.

The reported services may involve:

• Separate encounters
• Different anatomical sites or structures
• Separate practitioners
• Non-overlapping services
• A separately identifiable E/M service reported with another procedure

The issue here is the way the services appear on the claim, not whether the payer is questioning whether care was actually provided.

5. The Payer Uses Its Own Bundling Rules

Not every CO-97 denial reason comes from NCCI. Commercial payers, Medicaid programs, and Medicare Advantage plans can apply their own payment edits or contract-based bundling rules.

Those rules may include:

• Payer-specific code-pair edits
• Contractual payment terms
• Proprietary bundling policies
• Rules that package certain services into another payment

This can produce different outcomes for the same services across different payers. A code pair that bundles under one payer's policy may not be treated the same way by another.

Quick Summary Table for What Causes CO-97 Denials:

How Do You Identify the Exact Cause of a CO-97 Denial?

To identify the exact cause for CO-97 denial code, follow the claim trail from the denied line to the related service, then use the remittance and claim records to confirm the rule behind it. Here's the step-by-step breakdown of the process for you:

1. Start With the ERA or EOB

Begin with the payment record for the claim. This gives you the actual adjustment details instead of just the CO-97 label in your denial queue.

Pull these details first:

• CPT or HCPCS code
• Date of service
• Adjusted amount
• Claim number
• Any accompanying remark code

A CO-97 ERA/EOB review should include any RARC, or payer message attached to the adjustment. These remarks can provide details that the CARC alone does not.

2. Find the Service the Payer Linked to It

Next, find the service the payer says already includes the denied line.

Start on the same claim. If you do not find the related service there, review other relevant claim records for the same patient and date. For surgical services, include the procedure that may have created the applicable postoperative period.

You should be able to state the relationship plainly:

Denied service → related paid service

That gives you the two claim lines you need for the rest of the review.

3. Compare the Claim Details

Now use the claim data to confirm that the relationship makes sense.

Look at:

• The reported code pair
• Dates of service
• Units and procedure history
• Surgical dates, when relevant
• The payer involved
• Any NCCI or payer policy reference

This is the core of CO-97 denial analysis. You are moving from “this line was adjusted” to “these two services are connected in the payer's processing.”

For electronic claims, the ERA/835 may also contain references that help connect the adjustment to the related claim information.

4. Read the Documentation for What Actually Happened

Once the two services are clear, look at the underlying documentation.

You are not deciding whether the claim should be paid yet. You are establishing whether the record matches the relationship shown by the payer.

Focus on details such as:

• Encounter timing
• Anatomical site or structure
• Practitioner involved
• Clinical circumstances
• How each service was documented

This step helps separate the claim record from the actual care provided.

5. Confirm the Rule Behind the Adjustment

Now take the denied line and the related service you identified and verify the rule that connects them.

Start with the rule linked to the claim:

• NCCI
• Global surgery
• Payer policy

The rule should clearly explain why the payer treated the denied service as included in the other payment. Once that connection is established, you have identified the basis of the CO-97 adjustment.

Snapshot at CO-97 Denial Identification Workflow

Once those pieces line up, you have more than a CO-97 denial code. You have a clear explanation of what the payer connected, what the record shows, and which rule produced the adjustment.

How Do You Fix a CO-97 Denial?

To fix a CO-97 denial, either correct the claim and resubmit it, appeal the payment decision with supporting evidence, or accept the adjustment when the payer's rule is correct. The right path depends on what the claim review established.

1. Correct and Resubmit the Claim

A CO-97 corrected claim is appropriate when the original submission contains an error that caused the denial. That could be an incorrect CPT or HCPCS code, date, modifier, or reporting detail.

Correct the actual error rather than changing other parts of the claim unnecessarily. The correction also needs to match the medical record.

Before resubmitting, confirm:

• The corrected code, date, or modifier is supported by the documentation.
• The claim is marked or submitted as a correction according to the payer's process.
• The original claim information is linked when the payer requires it.

Do not use a corrected claim to argue that the payer's bundling decision was wrong. That is an appeal.

2. Appeal the CO-97 With Evidence

When the claim was reported correctly but the payer's bundling decision does not hold up, appeal the CO-97 denial.

A strong CO-97 appeal letter should:

• connect the denied service to the service the payer considered inclusive
• explain the rule supporting separate payment, and
• point to the documentation that supports your position

Depending on the case, that may include the CPT/HCPCS relationship, NCCI edit, modifier usage, global-surgery rule, operative note, or other supporting records.

You can also use AI tools like Bill Matters to assemble and draft this work. Its AI denial agent assesses the denial against the claim, evidence, and governing policy. When an appeal is appropriate, the AI appeal generation feature builds an evidence-backed appeal from those inputs, with cited facts tied to their sources, while keeping final submission tied to human reviewers.

Also check the payer's filing deadline before submitting. For Original Medicare, the first-level redetermination generally must be requested within 120 days after receipt of the initial determination. CMS also requires the request to explain why the appellant disagrees and allows supporting documentation to be submitted with it.

3. Accept the Adjustment

Sometimes the review confirms that the payer applied the correct bundling or payment rule. When the documentation does not support separate payment, the CO-97 should be accepted rather than forced into an unsupported correction or appeal.

Record the basis for the adjustment and close the claim.

The goal of CO-97 denial resolution is not to overturn every denial. It is to take the action that the claim evidence and applicable payment rule support.

How Can You Prevent Recurring CO-97 Denials?

To prevent CO-97 denials, move the control upstream. Use prior denial data to find repeat problem areas, put a targeted check in front of those claims, and track whether the same patterns continue.

1. Find Where CO-97 Keeps Recurring

A recurring CO-97 is not automatically a coding problem. The pattern can sit with a payer, a code combination, a provider, or a specialty.

Track recurring CO-97 denial activity by:

• Payer
• CPT/HCPCS code pair
• Provider or specialty
• Modifier
• Denied dollars

The useful question is not just “How many CO-97s did we get?” Ask where are they concentrated?

For example, repeated denials from one payer on the same code pair point to a payer-specific pattern. Repeated denials from one provider may point to a reporting or documentation habit.

At higher denial volumes, that analysis becomes difficult to maintain manually. Bill Matters' payer insights separates denial patterns by payer and surfaces recurring issues such as bundling edits and payer-specific documentation requirements.

2. Put the Control Before Submission

Once a repeat pattern is clear, build the check where the claim can still be changed.

For CO-97 denial prevention, that can include:

• Pre-bill checks for high-risk code pairs
• Alerts for modifier use that needs supporting documentation
• Payer-specific bundling rules for frequently affected services
• Focused review of providers or specialties with repeated CO-97 activity

The control should match the pattern. A recurring code-pair issue needs a different check from a provider documentation problem.

3. Measure Whether the Pattern Is Actually Improving

A drop in denial count does not automatically mean better prevention. One high-dollar payer pattern can matter more than dozens of low-dollar denials.

For teams trying to reduce recurring CO-97 denials, track:

• Denial volume
• Denied dollars
• Write-offs
• Repeat rate by payer and code pair

Compare those numbers over time. If a targeted control is working, the same payer, code pair, or provider should stop producing CO-97 at the previous rate.

CO-97 Denial Prevention at a Glance

Effective CO-97 denial prevention comes from controlling the patterns that repeatedly create the denial, not adding the same review to every claim.

What CO-97 Denial Management Comes Down To?

A CO-97 adjustment becomes far easier to manage when the payment decision behind it is understood clearly. Bill Matters helps teams bring denial, claim, payment, and evidence details together when that work becomes difficult to manage consistently.

The larger point remains that CO-97 denial management is not about reacting to the code alone. It is about understanding what sits behind the adjustment and making a decision based on the claim and supporting evidence. That clarity helps teams handle denials consistently without treating every CO-97 as the same problem.

Book an appointment with Bill Matters to see how it can support your CO-97 denial management workflow.