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Decoding Denial Code CO 50 – Medical Necessity Denial

December 15, 2020

medical-practice-workflowAccording to Modern Healthcare, claim denials cost hospitals around $262 billion each year, and that doesn’t take into account the dollars lost by medical practices across the country due to denied claims. We’ve been looking at some of the most common denial codes, and denial CO 50 is another very popular one that many practices encounter. CO 50 means that the payer refused to pay the claim because they did not deem the service or procedure as medically necessary. 

It’s essential to not only understand how to solve this problem when this type of denial occurs, but also how to prevent it in the first place. Here’s a closer look at medical necessity, tips for preventing and solving medical necessity denials, and steps you can follow to appeal these types of denied claims. 

Defining Medical Necessity 

First, it’s essential to understand how medical necessity is defined by payers. Medically necessary refers to services, procedures, and supplies that are needed and proper for the treatment or diagnosis of a medical condition. They meet the local standards of good medical practice, are not for the convenient of the doctor or patient, and are provided for diagnosis, direct care, and treatment of the medical condition. 

For example, if a patient visited a practice with an earache and was diagnosed with an ear infection but the provider billed the payer for chest x-rays, the payer would deny the claim because chest x-rays aren’t medically necessary for patients who don’t have any chest-related or breathing problems or symptoms. 

Common Reasons Services May be Deemed Not Medically Necessary 

While there are many different reasons payers may deny a claim as CO 50 (services or procedures are not deemed a medical necessity), some of them may include: 

  • Denial because physical therapy treatment has exceeded the insurance usage limit for the year
  • Hospital service has exceeded the stay length approved by the payer 
  • Prescribing medications that are used for cosmetic services
  • Administering treatments that may have been delivered in a setting that was much cheaper

Tips for Preventing Medical Necessity Denials 

The best thing you can do is to work to prevent these types of claim denials in the first place. If you’ve noticed CO 50 denials have become too common in your practice, try implementing the following tips. 

1 – Check Insurance Coverage and Authorization 

One of the first things you can do to ultimately help prevent these types of denials is make sure your front office staff is checking for patients’ insurance coverage and authorization for office visits and procedures. It’s often surprising what insurance companies will and will not cover. Taking the time to ensure the patient has coverage and the visit or procedure is covered before they even see a provider can save the practice a significant amount of money in denied claims in the future. Claims denial prevent begins in the front office.

2 – Educate Patients on Treatments 

It’s also important to sit down with patients and educate them on the treatments or procedures they will be receiving. Most importantly, explain to patients why you’ll be using this product, service, or treatment method so they understand how it will help them with their medical issue. By doing this, you’ll be creating an advocate who can help you fight if the claim is denied later. If you do have a denial in the future, this patient will be well-informed and can call the insurance company to ask them why they will not pay the claim. Asking patients to get involved can be helpful in some cases, so patient education is beneficial for many reasons. 

3 – Stress Provider Documentation 

To prevent medical necessity denials, it’s essential to stress provider documentation. Providers need to document the diagnosis for every procedure performed and service provided. Diagnosis much also be documented for all diagnostic tests that are ordered. It’s a common error for providers to document a single diagnosis and indicate a number of tests ordered while leaving it unclear if the tests are for the diagnosis that’s been documented or other diagnoses. For example, if a patient presents with left knee pain and the provider does an arthrocentesis but also orders a chest x-ray, if the only documented diagnosis is knee pain, payment for the chest x-ray will be denied. There’s no support noted for the chest x-ray. 

Medical coders can catch this problem by question providers on why tests were ordered to ensure the proper diagnosis is reported within the claim. Perhaps the provider made a mistake and meant to order a knee x-ray or perhaps the provider also diagnosed with patient with difficulty breathing or chest pain and it was not noted. 

4 – Ensure Diagnosis Codes are Supported by Medical Records 

One word of caution here – don’t think you can simply alter diagnosis codes for patients to match covered codes to eliminate the problem with a medical necessity denial. Remember, any diagnosis codes that are submitted have to be supported by the patient’s medical record. Making this mistake can result in far more than a denial – it could result in fines for fraud or even criminal prosecution. 

Essential Steps for Appealing Medical Necessity Denials 

While prevention is the best way to avoid these CO 50 medical necessity denials, there are things you can do to appeal a claim that’s been denied for this reason. Steps include: 

  • Step #1 – Discover the Specific Reason – Why sometimes denials have generic denial codes and it can be tough to figure out the real reason it was denied. Even if you get a CO 50, it’s a good idea to dig deeper, talk to the payer, and get an accurate explanation for non-payment. 
  • Step #2 – Have the Claim Number – Remember to not simply use the original claim number, but append to note it’s a corrected claim to avoid it coming back to you again as a duplicate claim. 
  • Step #3 – Record Information – When dealing with payers, be sure to record information like the date, reference number of the call, and the person you talk to. This way you can reference your encounter if the fight to appeal the claim requires multiple phone calls. 
  • Step #4 – Follow Up – Even once you resubmit a claim that’s been kicked back for a CO 50 denial, be sure to follow up at least once a month. You don’t want to let the claim fall through the cracks. 
  • Step #5 – Send Clear Appeal Letters – When you do appeal claims, ensure appeal letters include the claim number, patient, service date, provider number and member ID. Make the letter to the point and ensure you attach supporting documentation.  By having everything correct the first time, you’ll prevent having the appeal denied.

While CO 50 is a common denial code, you’re now better equipped to prevent and handle this denial if it does occur. At M-Scribe Medical Billing, we specialize in improving practice efficiency and increasing revenue. To find out more about how we can work with you to prevent denials and boost your practice’s bottom line, visit M-Scribe.com today.

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