CO-97 Denial Code 2026: Meaning, Description & Fix

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To resolve a CO-97 denial, work it in four steps. Find the paid code it was bundled into on the 835. Look up the pair in the CMS NCCI procedure-to-procedure (PTP) edits and check the modifier indicator: 0 means no modifier can unbundle it, 1 means one may. If the record shows a separate site, session or encounter, add modifier 59 or the matching X modifier and send a corrected claim. If not, post the adjustment; CO-97 is a contractual obligation, so the patient can’t be billed. On Original Medicare claims, a failed PTP edit shows as CO-236 instead.

Identify the paired, paid code on the remittance.
Check the NCCI PTP edit and its modifier indicator.
Confirm the documentation supports a distinct service.
Send a corrected claim with the right modifier, or write it off.

Three terms come up in every CO-97 case. NCCI is the National Correct Coding Initiative, the CMS program of edits that stop improper code pairs from being paid. A PTP edit is a procedure-to-procedure pair in which one code is bundled into the other. The modifier indicator is the 0, 1 or 9 value on each edit that tells you whether a modifier can bypass it.

For example, when an E/M visit is bundled into a minor procedure on the same day, check the note for a separate, significant problem before you add modifier 25. If the note only covers the procedure, the bundling is correct.

Claim denials don’t just slow down your revenue. They erase it. In 2025, Experian Health’s 3rd Annual State of Claims Survey found that 41% of healthcare providers had at least 1 in 10 claims denied (Experian Health, 2025), up in every edition since 2022. Among the most common culprits is the CO 97 denial code, and it’s also one of the most consistently misworked denials in any billing department.

This guide breaks down what CO 97 actually means, why it fires, and exactly how to work through it, from pulling the remittance to filing an appeal.

Table of Contents

Modifier 59 vs XE, XS, XP and XU

CMS created the four X modifiers as more specific subsets of modifier 59. Use the most specific one that fits. If the payer rejects the modifier itself, the denial is usually CO-4 (modifier inconsistent with the procedure code), not CO-97.

Modifier	Meaning	Example
59	Distinct procedural service	Use when no X modifier describes the situation
XE	Separate encounter	A second visit later the same day
XS	Separate structure or organ	A procedure on a different lesion or site
XP	Separate practitioner	A different provider performed the service
XU	Unusual non-overlapping service	A service that does not overlap the main procedure

Source: CMS NCCI PTP edits. Never add a modifier only to bypass an edit; the record must support it.

Key Takeaways

CO 97 means the payer bundled a billed service into another one it already processed. The patient can’t be billed for it.
CMS updates the NCCI procedure-to-procedure (PTP) edit tables every quarter, with separate files for practitioners and hospitals (CMS.gov). A claim that hits one of these pairs with no valid modifier is denied.
Modifier 59 or an X modifier (XE, XS, XP, XU) can get past the edit only when its modifier indicator is “1” and the record shows a truly separate service.
A CO 97 that is never worked becomes a permanent write-off, even when a modifier would have fixed it.

CO-97 Denial Code Description (Official CARC 97 Text)

Here is the official wording from the X12 Claim Adjustment Reason Code list, checked October 6, 2026:

Group code CO	Contractual Obligation
Reason code 97	“The benefit for this service is included in the payment/allowance for another service/procedure that has already been adjudicated.”
X12 usage note	“Refer to the 835 Healthcare Policy Identification Segment (loop 2110 Service Payment Information REF), if present.”
Code status	Active since 01/01/1995; wording last modified 07/01/2017

In plain terms, a CO-97 denial means the payer bundled this line into another service it already processed, so it pays nothing extra for it. Because the group code is CO, you can’t bill the patient for the difference. Check the 835 for that loop 2110 REF segment too. When the payer sends it, it identifies the payer policy behind the adjustment, which tells you what you’re up against before you appeal.

The fix starts with the NCCI edit pair. If its modifier indicator is “1” and the record shows a distinct service, add XE, XS, XP, XU or 59 and send a corrected claim. If the indicator is “0”, the bundling stands. The full steps are below.

What Is the CO 97 Denial Code?

CO 97 is a CARC, a Claim Adjustment Reason Code, with a specific meaning: “The benefit for this service is included in the payment/allowance for another service/procedure that has already been adjudicated.” CO stands for contractual obligation. So the provider can’t bill the patient for the denied amount. It is a write-off under the payer contract.

Most code-pair bundling comes from CMS’s National Correct Coding Initiative (NCCI). CMS updates its PTP edit tables every quarter (CMS.gov, Medicare NCCI PTP Edits). One common belief is wrong. On Medicare claims, a line that fails a PTP edit is not denied with CO 97. CMS tells its contractors to use CARC 236 with group code CO instead (CMS Transmittal 13701, Claims Processing Manual Ch. 23, §20.9.3.1), so that denial shows up as CO-236. Medicare uses CO 97 for other bundling. For example, it applies to a code with a “B” status on the fee schedule (remark code M15) and to care inside a global surgery period (M144 or N20). Some contractors also pair it with M80 for same-day services (First Coast, WPS, Noridian). X12 defines CARC 236 for NCCI and workers’ compensation edits. A commercial payer that uses its own bundling rules may still report a code-pair denial as CO 97.

The denial doesn’t mean the work wasn’t done. It means the payer sees it as part of something it already paid for.

CMS updates the NCCI Procedure-to-Procedure (PTP) edit tables quarterly. A billed CPT code that falls under one of those pairs with no valid override modifier is denied: Medicare reports it as CO-236, and other payers may use CO 97. (CMS.gov, Medicare NCCI PTP Edits; CMS Transmittal 13701)

Here is your step-by-step guide to searching NCCI PTP tables on CMS.gov

Why Does a CO 97 Denial Happen?

In 2023, the average administrative cost for hospitals and health systems to fight a single denied claim rose to $57.23, a 30.5% jump from $43.84 the year before, according to a Premier Inc. survey. Knowing the exact reason CO 97 fired is the difference between a fast recovery and wasted rework on an unwinnable denial.

Three root causes drive nearly all CO 97 denials:

1. NCCI Bundling Edits (Most Common)

One CPT code is classified as a Column 2 component of a Column 1 code. Payers pay only the Column 1 code and deny the Column 2 code. Medicare reports that denial as CO-236; other payers may use CO 97. A classic example: billing 99213 (office visit) alongside 93000 (EKG routine) on the same claim without appending Modifier 25 to the E/M. The EKG gets denied as bundled.

2. Global Surgical Package Inclusions

Pre-op visits, routine follow-ups and some care during surgery are part of the global surgical package (10-day or 90-day). Bill them on their own without a modifier that shows they are separate, and CO 97 fires.

3. Mutually Exclusive Code Pairs

Some CPT codes describe procedures that would not normally be done on the same patient, on the same day and at the same site. CMS flags these as mutually exclusive pairs. Bill both without a documented reason and the claim is denied: CO-236 on Medicare claims, and possibly CO 97 with other payers.

Practical note: CO 97 doesn’t always mean the claim was coded incorrectly. A large share of these denials fire because a modifier was simply left off a legitimately distinct service. That’s a billing workflow issue, not a coder error, and it’s the fastest category of CO 97 to recover revenue from.

Global surgical package guide 10-day and 90-day global period billing rules

How to Work on CO 97 Denial Code: Step-by-Step

A denied claim that is never fixed and resent is money lost for good. CO 97 is often fixable when you work it step by step.

Step 1: Pull the EOB or ERA

Identify exactly which CPT code received the CO 97 denial and which code was paid. You need both to identify the NCCI pair. Note the date of service and the payer.

Step 2: Look Up the NCCI Edit Pair

Go to CMS.gov → NCCI Edits → PTP tables. Search for the Column 1 (paid) and Column 2 (denied) code combination. Check the modifier indicator:

Indicator “0”: No modifier can override this edit. The denial is final. Write it off.
Indicator “1”: Modifier 59 or an X modifier is allowed if the service was genuinely distinct. Proceed to Step 3.

Step 3: Review Clinical Documentation

Pull the operative note, visit note or procedure record. Ask one question: does it show the two services were separate? Look for a different site, a different session or a different provider. If yes, you can appeal. If no, accept the denial and share the finding with the provider.

Step 4: Apply the Correct Modifier

When documentation supports a distinct service, append the appropriate modifier (see CMS MLN1783722, Proper Use of Modifiers 59, XE, XP, XS and XU):

XS: a different site, organ or body area
XE: a separate session on the same day
XP: a different provider did the service
XU: a service that doesn’t overlap the main one
Mod 59: a distinct service; use it only when no X modifier fits

Step 5: Resubmit as a Corrected Claim

Send a corrected claim with frequency code 7 (replacement) and the original claim number. On a professional claim, that goes in Box 22 or CLM05-3. On an institutional claim, it is the last digit of the type of bill (see NUCC 1500 manual, Item 22). Medicare Part B is the exception. It doesn’t take replacement claims, so ask for a reopening instead. Attach the notes that back the claim. Log the resubmission with a follow-up date.

Step 6: File a Formal Appeal if Still Denied

Include the denied EOB, a printout of the NCCI edit showing the modifier is allowed, and the note that shows the services were separate. File before the deadline.

Video Resource: CO-97 Bundled Denial: Why Insurance Pays One CPT and Denies the Other (Published Feb 2026)

Here is the corrected claim resubmission guide → step-by-step instructions for corrected claims by payer type

Claim Denial Rates by Payer Type (2024)

Payer Type	Initial Denial Rate (2024)
Medicare	8.4%
Commercial (average)	13.9%
Managed Medicaid	15.1%
Medicare Advantage	15.7%
ACA Marketplace (in-network)	19.0% (KFF, 2024)

Sources: ACA Marketplace row from KFF, Claims Denials and Appeals in ACA Marketplace Plans in 2024. Other rows are an industry aggregate (Aptarro, US Healthcare Denial Rates & Reimbursement Statistics, 2026) not yet traced to a primary source

How to Prevent CO 97 Denials Before They Happen

CO 97 is one of the most preventable denials. Catching the bundling conflict before you send the claim costs almost nothing. Working it after a denial costs $57.23 per claim on average (Premier Inc., 2023 data).

At the clearinghouse / PM system level

Turn on NCCI edit checks in your billing system or clearinghouse so they run before claims go out. Ask your vendor where the setting is if you can’t find it.

At the coder level

Build a reference list of your 10 most frequently denied code pairs and the correct modifiers for each.
Add a mandatory NCCI lookup step to the coding workflow for any multi-procedure claim.
Train coders on the difference between global period inclusions and separately reportable services.

At the billing manager level

Set up a weekly denial trend report filtered by CO 97. If the same code pair appears more than 3-5 times in a week, that’s a systemic issue. Fix it upstream, not claim-by-claim.

From the billing floor: Pick the X modifier that fits instead of reaching for Modifier 59 by habit. To choose the right X modifier, you have to check the notes. That check catches thin records before they turn into a bigger problem.

Providers Reporting >10% Denial Rate (2022-2025)

Year	% of Providers Reporting >10% Denial Rate
2022	30%
2024	38%
2025	41% (up in every edition since 2022)

Source: Experian Health, State of Claims 2025 (survey editions 2022, 2024 and 2025; there was no 2023 edition)

Video Resource: What Are Remark Codes – CO-97 Bundled Denials: Learn and Fix It (Published Dec 2025)

Here is the complete guide below on how to setup denial trend in your PM system.

Denial trend reporting setup in your PM system

Modifier Selection Quick Reference

Scenario	Use This Modifier
Services at a different anatomical site or body region	XS
Services at a separate encounter (different session, same day)	XE
Services performed by a different practitioner	XP
Service does not overlap the typical component definition	XU
None of the above X modifiers fit exactly	Mod 59 (last resort)

Frequently Asked Questions About CO 97 Denial Code

Can a patient be billed for a CO 97 denial?

No. CO means contractual obligation, so the denied amount is a provider write-off under the payer contract. It is not the patient’s share. Billing a patient for a CO denial breaks most payer contracts. The provider takes the loss unless an appeal wins.

What is the difference between CO 97 and CO 4?

CO 4 fires when the procedure code doesn’t fit the modifier or place of service. CO 97 fires when a service is bundled into another one already paid. CO 4 is usually a coding fix. CO 97 is a bundling and modifier issue. Both are contractual denials, but you fix them in different ways.

How long do I have to appeal a CO 97 denial?

Most commercial payers allow 90-180 days from the EOB date to file an appeal. Medicare allows 120 days from the date you receive the initial determination to request a redetermination, and receipt is presumed to be 5 days after the notice date (CMS). Always verify the exact deadline in the payer provider manual. File before the deadline.

Does Modifier 59 always fix a CO 97 denial?

No. If the edit’s modifier indicator is “0,” no modifier can get past it, and the denial stands. Only pairs with an indicator of “1” can be bypassed with modifier 59 or an X modifier. Check the indicator in the CMS PTP tables before you spend time on a corrected claim or appeal.

What is the fastest way to reduce CO 97 volume?

Turn on NCCI edit checks in your clearinghouse or billing system so they run before claims go out. Catching a bundling conflict then costs almost nothing. Working it post-denial costs an average of $57.23 per claim (Premier Inc., 2023 data).

Here is your complete Clearinghouse NCCI scrubbing setup

Conclusion

CO 97 is one of the easier denials to fix, but only if you work it quickly. The code says the payer bundled your service into something it already paid. Your job is to decide if the payer is right, or if a modifier and the record prove the service was separate.

Work it in six steps: pull the remittance, check the NCCI modifier indicator, review the clinical note, append the right modifier, resubmit, and appeal if needed. To prevent repeats, turn on NCCI edit checks before claims go out. Don’t let CO 97 become a write-off by default.

Sources

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CO 97 Denial Code: What It Means and How to Work It (2026 Guide)

Modifier 59 vs XE, XS, XP and XU

Key Takeaways

CO-97 Denial Code Description (Official CARC 97 Text)

What Is the CO 97 Denial Code?