Did you know the place of service (POS) also impacts your reimbursement amount? To standardize healthcare transactions, insurance companies require POS codes with electronic healthcare claims. In fact, it is a law under HIPAA. So, what happens if you use the wrong POS code?
You receive a CO 5 denial code! Although this is a straightforward claim denial, many healthcare providers and practices still struggle to avoid and resolve it. That’s why we are including it in our series to help you understand common denial codes. Let’s discuss the CO 5 denial code, including its description, common reasons, and best prevention and resolution strategies.
CO 5 Denial Code – Description
How many times have you been a victim of CO 5 denials? This is quite a common problem. This denial code indicates that the procedure code you billed is inconsistent with the place of service code. In simple words, insurance companies use it to notify providers that their bill does not match the location where they performed the service.
Let’s look at an appropriate denial code 5 scenario. A healthcare provider receives a CO 5 denial code for billing an appendectomy (CPT code 44970). The main reason? The place of service (urgent care outpatient clinic) does not match the procedure. Since the surgery is quite complicated, it is only suitable in a hospital setting. Hence, the payer rejects the provider’s request for reimbursement.
Common Causes of CO 5 Denial Code
There might not be many reasons for CO 5 denials. But you should understand them to avoid this denial code.
Incorrect POS Code
The primary reason for receiving the CO 5 denial code is using the wrong place of service (POS) code in your claim. Introduced by the Centers for Medicare & Medicaid Services (CMS), these two-digit codes have become a standard in medical billing. Insurance companies require them to evaluate whether the location is consistent with procedural codes.
For example, if you incorrectly used an outpatient POS code (19 or 22) for an appendectomy performed in a hospital (POS 21), you will receive a CO 5 denial.
Inaccurate Procedural Code
This is another common cause for receiving the denial code 5. A lack of coding expertise or rushed billing due to tight deadlines can lead to coding mistakes. If your procedural code or type of bill is inconsistent with the location where you performed the service or provided an item, then you might be in trouble.
For example, insurance companies will deny your claim with the CO 5 denial code if you incorrectly use emergency room service codes (CPT codes 99281 to 99285) with an office POS 11 instead of using routine E/M codes.
Mismatched DMEPOS Location
You can also receive CO 5 denials for Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) claims. If you bill a DME item with a POS code where the medical equipment is not typically used, you might face this denial code.
For example, filing a claim for a home blood glucose monitor (HCPCS code E0607) with a hospital POS code 21 instead of POS 12.
Incomplete Documentation
Your documentation should justify why you performed a procedure at a specific location. If your documents fail to support the place of service, you can receive the CO 5 denial code.
Lack of Verification
Most practices and healthcare providers often make the mistake of submitting claims without verification. As a result, they fail to check whether the place of service aligns with the coding requirements and face CO 5 denials.
Denial Code 5 – Prevention
Don’t let basic coding mistakes get in the way of your revenue. Follow our tips to avoid the CO 5 denial code:
Use Accurate POS Codes
Always verify the place of service before filing any claim. Your POS code should match the requirements of billed procedural or service codes. You can review the complete POS coding list on CMS’ website. Simply read their descriptions to use them accurately.
Verify CPT & HCPCS Codes
Double-check your procedural and other service codes. Keep up with the annual and quarterly updates of CPT and HCPCS codes, respectively. Use accurate codes for the performed services.
Confirm DMEPOS Claim Details
DMEPOS claims are quite tricky. You have to verify two things:
- The correct HCPCS code for the billed DME
- The place where the beneficiary will use the item
The intended location of use should align with the medical equipment. Verify these details and use the accurate HCPCS code with the appropriate POS code.
Submit Supporting Documentation
Gather all important details and notes in one place. Don’t give insurance companies a single reason to deny your claim with the CO 5 denial code. Attach complete and accurate documentation with your claim.
These documents should support the procedural/service codes and the place of service listed on the claim. This will help insurance companies understand where and how the service was performed.
Train & Educate Your Staff
Investing in proper training and education may initially seem quite expensive, but you will get a greater return through steady cash flow. Conduct regular training sessions and educate every person in your practice, including billing and non-billing teams, on both procedural and POS codes to avoid future mistakes.
Review Claims Before Submission
Our most important tip is to review your claims regularly, especially before claim submissions. This will help you catch potential billing errors and coding/POS inconsistencies. So, implement an efficient review process to avoid the CO 5 denial code.
Denial Code 5 – Resolution
Struggling to understand the next possible step after receiving this denial code? Let us help you with that! You can resolve the CO 5 denial code through the following steps:
Identify the Reason for Denial
As always, to resolve any denial, the first step is to understand the reason behind it. Review the 835 Healthcare Policy Identification Segment to see why an insurance company has denied your claim.
In case of CO 5 denials, insurance companies may use the M77 Remark Code to indicate that the place of service is invalid on the claim.
Verify the Place of Service
Next, examine the POS code on your claim and confirm whether it aligns with the billed procedure or service. Check the medical records to verify the place of service and then CMS’ coding list to see if you have used the correct POS code.
Identify Coding Mistakes or Discrepancies
If the POS code is accurate, review the procedural and service codes for accuracy. If the procedural and POS codes are inconsistent, identify the mistakes during billing that lead to the CO 5 denial code. They may involve inaccurate patient data, coding errors, or outdated information.
Correct Coding Errors & Resubmit the Claim
After identifying the mistakes, make necessary corrections and resubmit the claim to the appropriate payer. This process may include updating the POS or CPT/HCPCS codes and submitting additional documentation to support your claim.
File An Appeal (If Necessary)
You can challenge the CO 5 denial code on one condition: if you believe the decision was incorrect based on the medical necessity of the provided service.
If you have the supporting documentation to back the POS code you have used on the claim, then file an appeal with a letter explaining why the payer should reconsider their decision. Attach all the relevant documents, and don’t forget to follow the payer-specific guidelines for submitting an appeal.
How MediBillMD Can Help Resolve Denial Code 5?
If you are struggling to resolve CO 5 denials for any of these reasons—time limitations, hectic schedules, staff shortage, or inexperienced coders—you can partner with our denial management team. At MediBillMD, we give you the option to outsource denial management at extremely affordable rates. The best part is that you don’t have to compromise on anything.
Our experienced billers and coders can work on any problem and resolve even the most persistent denial codes. So, if you are looking for a professional to handle the CO 5 denial code, talk to our representatives to book an appointment.
