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October 27, 2014

Why Is My Claim Denied? – Deciphering "Contractual Obligation (CO)"

After CGS processes a claim, we communicate the decision on that claim via remittance advice (RA) - either an electronic remittance advice (ERA) or a standard paper remittance (SPR). Your RA provides final claim adjudication and payment information. Most RAs include adjudication decisions about multiple claims. Itemized information is reported for each claim and/or line to enable providers to associate the adjudication decisions with those claims/lines as submitted by the provider. The ERA or SPR reports the reason for each adjustment, and the value of each adjustment. Adjustments can apply at the line, claim or provider level. Adjustment reasons are reported with standard codes. For any line or claim level adjustment, three sets of codes may be used:

  • Claim Adjustment Group Code (Group Code) assigns financial responsibility for the unpaid portion of the claim balance. The Group code will be either:
    • CO (Contractual Obligation) assigns financial responsibility to the provider. When CO is used to describe an adjustment, a provider is not permitted to bill the beneficiary for the amount of that adjustment; or
    • PR (Patient Responsibility) assigns financial responsibility to the patient. Medicare beneficiaries may be billed only when Group Code PR is used with an adjustment.
  • Claim Adjustment Reason Codes (CARCs) provide an overall explanation for the financial adjustment and may be supplemented with the addition of more specific explanation using Remittance Advice Remark Codes (RARCs). CARCs give specific reasons for adjustments, or why a claim (or service line) was paid differently than it was submitted. If there is no adjustment to a claim/service line, then there is no need to use a CARC. These codes are found in the ADJ REASON CODES field on the ERA and the RC field on the SPR.
    • If you need help finding this field, check out CGS's Interactive SPR.
    • Expert tip: look for the specific code to find out why the line or claim was denied. The WPC website has a complete list: http://www.wpc-edi.com/reference/codelists/healthcare/claim-adjustment-reason-codes/External Website.
    • Common reasons for denials that result in CO messages being generated include:
      CARC and Narrative Tips
      55503 - NO PAYMENT CAN BE MADE FOR THIS CLAIM AS IT DID NOT MEET THE MEDICAL NECESSITY GUIDELINES AS OUTLINED IN CGS'S LOCAL COVERAGE DETERMINATION (LCD). IF YOU DISAGREE WITH THIS DETERMINATION, YOU MAY REQUEST A REDETERMINATION. Review applicable LCD to determine if documentation was omitted from the claim.
  • Remittance Advice Remark Codes (RARCs) are used in conjunction with CARCs to further explain an adjustment. There are also some informational RARCs, starting with the word "Alert," that are used to provide general adjudication information (e.g., whether appeal rights are associated with the adjustment). RARCs can be used alone or when there is no adjustment. RARCs are maintained by the Centers for Medicare & Medicaid Services (CMS). Any RARC may be reported at the service-line level or the claim level, as applicable, on any ERA or SPR.

Other tips:

  • You can access and print duplicate remittance advices for the previous 12 months, at no cost, through the myCGS web portal (you must be a registered user to access the web portal). Learn more here.
  • If you disagree with your claim denial, you may be able to appeal – look for RARC M25. First-level appeals ("redeterminations") must be filed within 120 days of the initial claim determination (usually the date on your RA). You may file redetermination requests electronically through the myCGS web portal (including attachments) or by completing the Redetermination Request form.
    • If you're using the Redetermination Request form, we strongly recommend completing the required fields electronically, then print and sign the form. Attach documentation to support your appeal.
    • Remember, RTP'd claims do not have appeal rights; correct and resubmit the claim (for claims submitted through DDE, F9 the claim after correcting).

Reference:

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