CO-107 Denial Code: Not a Covered Charge by Payer

A CO-107 denial occurs when a payer determines that a billed service is not a covered charge under the patient’s insurance plan. Unlike medical necessity denials, CO-107 focuses on coverage restrictions defined by the policy, including exclusions, benefit limits, and network requirements. These denials underscore the importance of verifying patient eligibility, confirming prior authorizations, and accurately documenting services. Understanding the reasons behind CO-107 denials allows providers to submit compliant claims, reduce rejections, and ensure timely reimbursement while keeping patients informed about potential out-of-pocket costs.

Common Reasons for CO-107

To address CO-107 denials effectively, it is important to understand the common causes that trigger this type of rejection.

Service explicitly excluded from coverage

Many insurance plans maintain a list of procedures, therapies, or supplies that are not covered under the patient’s policy. Even when these services are clinically necessary, submitting claims for non-covered items triggers CO-107 denials. Providers must be aware of plan exclusions to avoid billing services that will not be reimbursed.

Lack of prior authorization

Certain services require pre-approval from the payer to confirm coverage. Claims submitted without obtaining the necessary authorization are automatically denied, even if the service is medically appropriate. Ensuring all required pre-approvals are obtained before the service is performed is crucial to prevent CO-107.

Out-of-network provider billing

If services are rendered by a provider who is not part of the patient’s insurance network, the claim may be denied or reimbursed at a reduced rate. Payers may classify such services as non-covered, leading to CO-107 denials. Confirming network status before service is essential.

Experimental or investigational procedures

Procedures or treatments that are considered experimental, investigational, or lacking evidence-based support are often excluded from coverage. Billing for these services without payer approval results in a CO-107 denial. Documentation supporting the clinical rationale can sometimes be used to appeal.

Exceeded plan limits

Insurance plans set limits on the number of visits, procedures, or total dollar amounts that are reimbursable within a specific period. Claims exceeding these limits are denied as not covered. Providers should track plan thresholds and verify limits before submitting claims.

Incorrect or incomplete eligibility verification

Submitting claims without confirming the patient’s active coverage, plan status, or benefits can result in immediate CO-107 denials. Verifying eligibility prior to service ensures that the billed services are covered and reduces the risk of claim rejection.

CMS & AAPC-Aligned Best Practices

Preventing CO-107 denials requires a proactive approach that combines coverage verification, documentation accuracy, and adherence to payer-specific rules. Following best practices ensures claims are compliant, reduces rejections, and helps maintain a smooth and efficient revenue cycle.

Verify patient eligibility and active coverage 

Before delivering any service, confirm the patient’s insurance status, plan type, and coverage period. Ensuring the service is included in the patient’s active benefits helps prevent CO-107 denials due to non-covered services.

Confirm prior authorization requirements 

Identify services that require pre-approval and secure all necessary authorizations before performing the procedure. Obtaining prior approval ensures coverage and significantly reduces the risk of claim denial.

Understand plan-specific exclusions and coverage limits 

Each payer has unique rules regarding non-covered services, frequency limits, and maximum benefit thresholds. Familiarity with these exclusions helps providers avoid submitting claims for services that will be automatically denied.

Maintain thorough documentation of medical necessity 

Detailed clinical records are critical for supporting claims and justifying services. Clear documentation can also support appeals when exceptions are required for non-covered services.

Educate providers and billing staff 

Training your team on coverage rules, prior authorization processes, and documentation standards reduces billing errors. Staff awareness of policy nuances prevents claims from being denied as not covered.

Conduct pre-submission audits and ongoing monitoring 

Review claims for potential non-covered services before submission. Regular audits and trend monitoring help identify common errors, improve claim accuracy, and prevent repeated CO-107 denials.

Corrective Action Steps For Denial Code CO-107

Addressing CO-107 denials requires a structured approach that combines coverage verification, documentation review, and accurate claim resubmission. Following these steps ensures claims are compliant, reduces repeated denials, and improves reimbursement efficiency.

Review the denial to determine the coverage issue 

Carefully examine the CO-107 denial to identify why the payer considered the service non-covered. Understanding whether the denial is due to plan exclusions, missing authorization, or exceeded limits guides the corrective action.

Verify patient eligibility and benefits 

Confirm the patient’s active coverage, plan type, and included services for the date of service. Accurate verification helps ensure the claim is submitted for a service that the plan actually covers.

Obtain or confirm prior authorization

If the service requires pre-approval, secure the necessary authorization before resubmitting the claim. This prevents further denials for services that are otherwise covered.

Gather supporting documentation

Collect clinical notes, procedural details, and any other evidence that justifies the service. Comprehensive documentation strengthens both resubmissions and appeals.

Correct and resubmit the claim or submit an appeal 

Update the claim with accurate coding, authorization information, and supporting documentation. Submit a well-documented appeal if necessary, referencing plan rules to justify coverage.

Educate providers and billing staff

Train your team on plan-specific coverage rules, authorization requirements, and documentation standards. Awareness reduces errors and prevents future CO-107 denials.

Monitor trends and refine workflows

Track recurring CO-107 denials to identify patterns in billing or documentation. Implement workflow improvements and pre-submission checks to minimize future claim rejections and streamline revenue cycle processes.

BillingFreedom – Ensure Accurate Coverage & Prevent Denials

BillingFreedom helps healthcare organizations prevent claim denials by ensuring every service aligns with patient benefits and payer rules. Our team verifies eligibility, confirms prior authorizations, and reviews plan-specific coverage to identify potential non-covered services before submission. By verifying coding accuracy and maintaining thorough documentation, we enable providers to submit compliant claims, thereby reducing rejections and expediting reimbursement.

In addition to prevention, BillingFreedom provides full support for correcting denied claims and filing well-documented appeals. We train providers and billing staff on coverage rules, prior authorization procedures, and best practices for documentation. Partnering with BillingFreedom streamlines the revenue cycle, improves claim approval rates, and minimizes denials, giving healthcare organizations confidence that their claims are accurate, compliant, and reimbursed promptly.

For more details about our exceptional medical billing services, please don't hesitate to contact us via email at info@billingfreedom.com or call us at +1 (855) 415-3472.

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