CO57: Payment denied/reduced

The No. 3 denial reason code from Medicare among HME providers as reported by RemitData is CO57: Payment denied/reduced because the payer deems the information submitted does not support this level of service, this many services, this length of service, this dosage, or this day’s supply. This denial is received for: 1) over-utilization, 2) same/similar equipment, and 3) downcoding.

Here’s an example of over-utilization: Medicare allows only one insertion tray with a drainage bag with an indwelling Foley catheter per month, but your company dispenses four to the patient. If you receive this denial code for over-utilization, you will need to gain information from the patient’s medical record stating the medical reason why the patient requires more than the maximum level set by Medicare, then send the claim to redetermination.

It is advisable to have the information on hand prior to sending the original claim for processing rather than reacting to the denial. In such cases, you should require that the patient sign an Advanced Beneficiary Notice (ABN) at the time of delivery stating that they are receiving items over Medicare’s usual and customary limit. Another helpful hint is to enter the additional medical necessity information into the NTE record (HAO) on the claim prior to the initial send to help reduce the number of CO57s you might receive.

The ever-present and frustrating same/similar equipment denial is also part of the CO57 family. This will be indicated by an “M3” remark code. If Medicare purchases a piece of equipment for a patient, the program will not pay for another for five years.

There are many instances in which a patient will receive an item from one provider and then go to another provider a couple of years later and get another. The first step is research to find out if there was a reason that the patient required another piece of equipment; the first piece of equipment could be broken or stolen, etc. If this is the case, the claim can be sent to redetermination with documentation of what happened to the first piece of equipment.

Or, if there has been a change in the patient’s medical condition and he or she requires a higher-level piece of equipment than what was prescribed initially, send that information with your redetermination.

Downcoding under the CO57 reason code occurs when a patient qualifies for a piece of equipment that is a higher level than what is medically necessary. If this happens, Medicare will pay for the item that is the least costly alternative. For example, if you deliver a semi-electric hospital bed and the patient only qualifies for a fixed-height bed, Medicare will pay the claim at the fixed-height rate rather than the semi-electric rate.

Based on analysis of 3,680,443 claims adjudicated by the Medicare contractors between July 1, 2006, and Sept. 30, 2006, and processed for RemitDATA customers. Source: RemitDATA, 866/885-2974, www.remitdata.com.

Sarah Hanna is a reimbursement consultant and vice president of ECS Billing & Consulting, Tiffin, Ohio, and specializes in proper billing protocols, Medicare coverage guidelines and billing office procedures. She can be contacted at 419/448-5332 or [email protected].