What you should know about Denial Code CO 50?

Denial Code CO 50 means that the payer refused to pay the claim because they did not deem the service or procedure as medically necessary. It is a very popular denial code and the sixth most frequent reason for Medicare claim denials.

According to a CMS, It is observed that 30% of claims are either denied, lost, or ignored. Claim denials hurt the revenue cycle badly and pose a serious issue for hospitals amid an already complicated reimbursement landscape.

You should understand that the medical necessity policy of each payer varies greatly as well as it is continuously changing. Moreover, different payers have different “medical necessity” criteria.

It is necessary to note here though Medicare and the American Medical Association (AMA) are the foundation of the guidelines, each state separately has guidelines for medical necessity. Hence it is pivotal to understand the medical necessity.

What is the Medical Necessity of denial code CO 50?

According to the American Medical Association (AMA), medical necessity mandates the provision of healthcare services that a physician or other healthcare provider, exercising prudent clinical judgment, would provide to a patient for the purpose of preventing, evaluating, diagnosing, or treating an illness, injury, disease, or its symptoms.

Apart from the above, Medicaid and private insurance payers have specific guidelines for medically necessary items, procedures, and/or services which are found in the payment policies of payer or clinical guidelines. However, there may be some common reasons for which a claim is denied from the payer under CO 50.

Common Reasons for denial code CO 50

  • Item billed may require a specific diagnosis or modifier code based on related LCD.
  • A development letter requesting additional documentation to support service billed was not received within the provided timeline.
  • The billed item does not meet medical necessity.
  • Hospital service has exceeded the stay length approved by the payer.

Based on insurance contracts held by a practice, “medical necessity” denial may require a practice to perform various series of tasks.

Now, let’s understand each task in more detail:

Strategies to avoid medical necessity denial prevention

  • Look for preauthorization and insurance coverage

Your front office staff should be checking insurance coverage for patients and authorization for office visits and procedures. This initial check will reduce half of your claim denials as well as help you to save time and money.

  • Make your advocate to your patient

The simple meaning for the above sentence is, you should educate your patient regarding the treatments. Let patients understand your purpose behind the product or services they will be receiving. These educated patients will help physicians if the claim is denied in the future.

  • Skilled coding Team

CO 50 claim denials are results of invalid use of diagnosis code for the procedure. These denials can be overturned but the practice needs ample time as well as resources. Insurance companies are using codes to determine if services were “medically necessary”.

Having a knowledgeable and skilled coding team on payer policies, contracts, local coverage determination (LCD), and national coverage determination (NCD) codes, with detailed documentation from the clinical team who communicate effectively will enhance the prevention of denials.

Range of duties must performed by practice to avoid a claim denial based on “medical necessity”. There should be clear communication between billing staff and clinical staff to understand procedures and insurance contract policies that the practice provides for their patients.

Now, you know about denial code CO 50 and what to do if it occurs. Still, have any doubts? We can help you, we are a team of expert billing and coding professionals in improving practice efficiency and increasing revenue.