CO 97 Denial Code: Meaning and Checks for Lab Claims

What Does the CO 97 Denial Code Mean?

The CO 97 denial code means payment for a billed service is included in the allowance for another service already processed. The payer considers the affected service part of another payment rather than separately payable.

The code has two parts:

• CO: Contractual Obligation, which assigns the adjustment amount to the provider.
• 97: Claim Adjustment Reason Code, or CARC, which explains why separate payment was not allowed.

CO-97 and CO 97 refer to the same code. Neither necessarily means the entire claim was denied.

Why Does CO 97 Appear on Laboratory Claims?

A common reason is bundling, where payment for a panel or comprehensive procedure includes a separately billed test.

For example, a laboratory bills a lipid panel and separately bills the cholesterol test performed within that panel. Medicare’s laboratory coding rules include edits that restrict separate payment for panel components.

This is an example of an overlap that could lead to CO 97. The exact adjustment code depends on the payer.

A medically necessary repeat test may qualify for separate reporting with an appropriate modifier. A rerun solely to confirm results or address specimen or equipment problems does not qualify under Medicare’s repeat-test rules.

Unlike a CO-16 denial, which concerns missing information or submission errors, CO 97 concerns a service the payer considers included in another allowance.

How Do You Resolve a CO 97 Denial Code?

To resolve CO 97, identify the related service, review the applicable policy, and compare the claim with the documented work. The findings determine whether to correct the claim, challenge the adjustment, or accept it.

Start with these checks:

1. Read the remittance. Identify the affected procedure, adjustment amount, remark codes, and any policy reference.
2. Find the related service. Determine which panel or procedure includes the adjusted charge. Ask the payer if this is unclear.
3. Review the records. Confirm what was ordered, performed, and reported, including any separate repeat test. Address unclear orders through the process for requisition errors.
4. Check the rules. Review the payer’s policy and relevant coding edits effective on the service date.

Then choose the appropriate response:

• Correct the claim if an included component was incorrectly billed separately.
• Request reconsideration or appeal if the documentation and payer policy support separate payment.
• Accept the contractual adjustment if the payer correctly included the service in another allowance.

Follow the payer’s deadlines and submission requirements. Do not add a modifier simply to obtain payment; it must match the documented service and applicable rules.

Do not automatically bill the patient for the CO 97 balance. For Medicare, CO assigns responsibility to the provider, while PR identifies patient responsibility. For other payers, check the contract and applicable requirements before any patient charge.