Contractual obligations, service coverage, and coding! Medical billing is a complicated process for an average healthcare professional. Insurance policies vary from provider to provider, covering different services at varying contractual rates. A single mistake can lead to your insurance company denying or rejecting your medical claim.
But how can you identify the reason for your claim denial?
Payers generally use denial codes to specify the issues in your claim. Each code has a specific meaning. Let’s shed some light on the CO 197 denial code that usually results from miscommunication.
What is the CO 197 Denial Code?
The infamous denial code 197 often occurs due to coverage limitations. You might already know the basics of health plans. But if you don’t, medical insurance policies usually cover hospitalization, regular checkups, and more. However, they have some restrictions. Most payers cover some services only under certain circumstances.
Unfortunately, most patients and healthcare providers only learn about these coverage limitations after the treatment or procedure. Healthcare providers don’t obtain permission for these services. As a result, insurance companies deny their medical claims with a CO 197 code.
According to an independent health policy research and news source, Kaiser Family Foundation (KFF), 14% of in-network medical claims are denied for non-covered services. In technical terms, denial code 197 highlights the absence of pre-authorization for a specific medical service or procedure. But what exactly is this pre-authorization in medical billing? Let’s find out!
What is Pre-authorization in Medical Billing?
Some services require special permission! Pre-authorization in medical billing refers to obtaining that authorization from a patient’s insurance company. This process has its benefits and drawbacks. It highlights:
- The need for the proposed treatment.
- It also ensures quick reimbursements to healthcare providers.
- It helps insurance companies control unnecessary costs and procedures.
- It helps healthcare providers comply with the regulations.
- It ensures that the patients receive the necessary care without interruptions.
However, pre-authorization also burdens healthcare providers with more administrative tasks.
A few reminders! Pre-authorization is not valid for explicitly excluded treatments. It is only available for specific services covered under the patient’s healthcare plan. Moreover, these services are only approved when there is a medical necessity. While some insurance providers need pre-authorization for certain procedures, others may demand it for all services.
How to Obtain Pre-authorization?
This pre-approval process usually involves several steps. It includes submitting a patient’s detailed medical report with diagnosis and appropriate treatment to the insurer. You can obtain pre-authorization or prior approval for specific services through these 5 steps.
1. Determine the Service or Treatment
After diagnosing the patient, the first step is to determine whether the appropriate treatment requires authorization from the insurance provider.
2. Check the Patient’s Insurance Coverage
If the service requires special permission, the next step for healthcare providers is to check the patient’s insurance coverage. Carefully review your patient’s insurance plan to identify all the pre-authorization requirements for the specific service or treatment.
3. Submit the Pre-Authorization Request
After verifying all the details, submit a comprehensive pre-authorization request. Make sure to attach all the relevant documents, including the patient’s detailed medical report highlighting the need for that specific service or procedure.
4. Wait for the Decision
The next step is to wait for the insurance provider’s decision. Once approved, you can proceed with the treatment. However, you may have to explore other options or file an appeal in the case of denial.
5. Follow Up if Appropriate
If the insurance company denies your request, contact them to understand the reason for their decision. Follow up with the appropriate documents to get them to change their mind or explore other alternatives.
What Causes the CO 197 Denial Code?
CO 197 is one of the most common notifications sent by insurance providers. However, it is also easily avoidable if you understand its leading reasons.
Absence of Pre-Authorization
This is the main reason for receiving the CO 197 denial code. Many healthcare providers and patients don’t often review the insurance coverage. Hence, healthcare providers don’t obtain approval from the payers before giving special treatments to the patients. For example, a surgeon removes an appendix before getting pre-authorization from the patient’s insurance provider. As a result, the payer denies the claim with a CO 197 notification.
Incorrect or Missing Pre-authorization Number
Healthcare providers often receive a CO 197 denial code for submitting a medical claim with an incorrect pre-authorization number. Insurance providers also deny the claims if they don’t include the pre-authorization number. For example, due to the wrong pre-authorization number, the payer declines the medical claim for an MRI with a CO 197 code.
Expired Pre-Authorization Number
Insurance companies also deny medical claims with an expired pre-authorization for a specific service. For example, the approval for a CT scan was valid from June 1 to July 2, but the doctor performed the test on July 5.
Failure to Keep Up With the Changing Policies
Both healthcare providers and patients should keep up with the changing policies. Failure to adapt to these changes can result in a claim denial CO 197. For example, the insurance company refuses to reimburse for a PET scan because the healthcare provider didn’t obtain prior approval for this test. The reason? The physician was unaware of the revised pre-authorization requirements and did not know that the test required prior approval.
How to Prevent the CO 197 Denial Code?
CO 197 is one of the easiest denial codes to avoid. You can take the following steps to prevent denial code 197.
Understand the Pre-Authorization Requirements
Every healthcare provider should understand the pre-authorization requirements of every patient. This includes reviewing their insurance coverage policies and covered services. You can find all the relevant details on their plan’s documents or the payer’s website.
Provide All the Relevant Details to the Payer
You can also avoid denial code 197 by providing all the necessary patient information to the payer with the pre-authorization request. The insurance companies usually require a patient’s detailed medical records, including history, current diagnosis, and proposed treatment or procedure.
Stay Updated With the Changing Policies
Many insurance providers often revise their policies. To avoid a claim denial with CO 197, you should frequently review every patient’s insurance coverage as a healthcare provider. We know that this strategy is quite burdensome, especially during long shifts and emergencies, which takes us to the next step.
Train Your Staff
You can assign the entire pre-authorization process to some of your staff members. Just make sure that they have the knowledge and skills to understand different insurance policies and can efficiently request prior approval from payers. You can conduct regular training sessions to cover all the details, including frequent pre-authorization updates.
Denial Code 197 Management & Resolution
Prevention is the key, but if you have already received a CO 197 denial code, you can follow our systematic approach to manage and resolve it.
Determine the Reason for Denial
You should first identify the reason for your claim’s denial. Read the CO 197 denial code attached to your claim to understand why the insurance company refused reimbursement. Determine whether the payer rejected your claim due to a lack of pre-authorization, missing information, or an expired authorization number.
Gather Necessary Information
The next course of action is to collect all the relevant documents of your patient. It includes the patient’s insurance coverage and medical history, as well as the original request for prior approval and information about the service provided.
Correct & Resubmit the Claim
After identifying the issue, make the necessary changes to your claim for resubmission. Include all the relevant documents and resubmit the claim to the patient’s insurance company.
Request Retroactive Authorization
But what if a healthcare provider didn’t have the time to request pre-authorization?
If you have operated in an emergency, you can always request retroactive authorization for reimbursement. However, you will have to justify your request. So, provide a detailed explanation about the necessity of the performed treatment or service to the insurance provider and attach all the supporting documents.
Appeal
You can also appeal to the insurance provider to reverse the CO 197 claim denial. Write a formal request to the insurance company addressing the reasons for your claim denial. Include all the supportive documents, such as pre-authorization request, approval (if there is any), medical records of your patient, and others if required. Make sure to read and follow the guidelines of the insurance company before submitting your appeal.
Seek Professional Help
Since the process is quite complicated, we advise you to seek professional help. If you don’t have time or the trained staff to manage or resolve the CO 197 denial code, opt for any of the reliable denial management services available online.
For example, if you are a physiotherapist, you can always depend on physical therapy billing services for quick reimbursements. Let experienced professionals deal with this problem and focus more on providing quality care to your patients.
Bottom Line
Insurance companies use the CO 197 denial code to highlight the absence of a pre-authorization number for a specific service.
However, CO 197 is one of the easiest denial codes to prevent compared to others. The key solution for healthcare providers is to review their patients’ insurance coverage policies frequently.
We have provided some of the common preventive and management strategies for denial code 197 so you can get timely reimbursements for your services.
