When I See a CO-96, Here's What I Check First

When I see a CO-96, the first thing I do is read the group code and the remark code next to it. I do not start with an appeal. I do not send a bill to the patient. Those steps come later, and only if the remit actually supports them.

Providers hire me as an RCM investigator. My job is to increase revenue, find delays, and fix mistakes in an outsourced billing team's method. A "not covered" denial is one of the first piles I sort, because CO-96 is a broad code. It can mean a true benefit exclusion, a medical-necessity decision that was labeled the wrong way, or a paper claim sent when the payer required an electronic file.

What I check first

CO-96 is Claim Adjustment Reason Code 96 with the CO group code. X12's official wording is "Non-covered charge(s)," and it requires at least one remark code that is not an Alert (X12 Claim Adjustment Reason Codes, last modified 1 July 2017). That remark code is the real instruction.

The group code tells me who is supposed to carry the amount. Under CMS rules, a CO amount is generally the provider's to write off, and it should not be billed to the patient (Medicare Claims Processing Manual, Ch. 22, §60.1). PR means patient responsibility. If an outsourced team treats every 96 as a patient balance, they will bill people who do not owe the money.

My first pass on a remit is simple:

  • Is the group code CO or PR?

  • What remark code sits next to 96?

  • Does the remark match the service, the diagnosis, and the way the claim was filed?

How CO-96 differs from CO-50 and CARC 204

I see teams use "not covered" and "not medically necessary" as if they were the same denial. They are not the same.

CO-50 is a medical-necessity decision. X12's text says the services are non-covered because the payer did not deem them a medical necessity. The plan may cover that benefit in general, but it did not accept that this patient needed this service on this date. The next step is the record, the coverage policy, and, for Original Medicare, whether a valid Advance Beneficiary Notice of Noncoverage was issued.

CARC 204 is narrower than 96. X12 describes it as "This service/equipment/drug is not covered under the patient's current benefit plan." It points to the plan the patient has now, not to a medical-necessity review. You will often see it as PR-204, when the plan expects the member to own the charge.

CO-96 is the broader "non-covered charges" code. The remark tells you which kind you are holding. That is why I will not work a 96 until I have read the remark.

An $8,400 batch I reviewed

I once reviewed an $8,400 batch of "not covered" remits for a provider who had outsourced the billing. The first thing I did was split the batch by group code and remark code.

A large share of the lines were CO-96. The team had already dropped those balances onto patient statements. That method was wrong. Under CO, the provider generally carries the amount. I had them pull the statements back. Two patterns showed up once I read the remarks.

Some Medicare lines came back CO-96 with M117. X12's wording for M117 is "Not covered unless submitted via electronic claim." The visits were fine. The team had sent paper CMS-1500 claims for a practice that must file electronically. The fix was to resubmit those lines electronically, not to appeal, and not to bill the patient.

Other lines were Medicare services the law does not cover, with remark code N425, "Statutorily excluded service(s)." Those should usually appear as PR-96, not CO-96, and the claim should have been set up before the visit. That is where the ABN and the modifiers matter.

I do not treat the $8,400 as a recovery study. It is only the size of the batch I was asked to review. Some lines could still be corrected. Some were true exclusions.

Let's say a $2,150 Medicare line

Let's say a claim for $2,150 is denied as not covered. If the remark is N425, I am looking at a statutory exclusion, a service Medicare never pays. I review the billed code first. If the service is truly excluded, the GY modifier signals that the item does not meet the definition of a Medicare benefit.

An Advance Beneficiary Notice of Noncoverage, Form CMS-R-131, is not required for care that is never covered. CMS still strongly encourages a voluntary notice before the service (Medicare Claims Processing Manual, Ch. 30, §50.2.1). That is not the same as modifier GA.

GA is for a required ABN, used when you expect Medicare may deny a service as not reasonable and necessary. If the ABN is valid, CMS says the contractor will hold the beneficiary, not the provider, liable for the denied charges. If the notice is invalid, the contractor will override GA, and the provider is liable (Medicare Claims Processing Manual, Ch. 30, §30.2.3).

That is why I watch these modifiers closely. I have seen GA used on a statutory exclusion, where GY and a voluntary notice were the right tools. I have also seen no notice at all, followed by a patient bill after a CO-96. Both create the same leak: the wrong person is asked to pay.

On a commercial plan, the remark I often see with a benefit restriction is N130: "Consult plan benefit documents/guidelines for information about restrictions for this service." I open the plan document and the provider contract. I bill the member only when the remit or the contract allows it, and only when the patient was told in writing before the service.

How I decide what to do next

I keep the decision path short.

  • If the remark points to a filing or coding problem, such as M117, I correct the claim and resubmit. I do not appeal a format error.

  • If the claim was billed correctly and the plan should have paid the service, I appeal with the policy language and the record. For the letter, I start from a structured draft in the Appeal Letter Generator, then I add the policy text and the documentation.

  • If the service is truly non-covered and the remit shows PR, or a valid ABN supports beneficiary liability, I bill the patient under the notice I already have.

  • If the remit shows CO and there is no valid patient agreement, I write the amount off. I do not send it to collections.

For more free billing tools, I use the Medical Billing 101 tools.

What I ask the outsourced team to change

  • Work 96 by group code and remark code, not as a single "not covered" bucket.

  • Do not bill the patient on a CO balance.

  • Use GY and a voluntary ABN for Medicare statutory exclusions, and reserve GA for a required ABN on a medical-necessity risk.

  • Confirm electronic filing rules before a paper claim goes out.

  • Get the patient's written agreement before a known non-covered service, not after the denial arrives.

When I see a CO-96 now, I still start in the same place. I read the group code. I read the remark code. Then I decide.

Manikandan J, CPC, CRCR — founder of Medical Billing 101