Claim Adjustment Reason Code 96 is defined by X12 as: “Non-covered charge(s).” The code description includes a rule: at least 1 remark code must be provided to explain the adjustment, and the Electronic Remittance Advice (ERA) may include a policy reference in the 835 Healthcare Policy Identification segment.
What does CO-96 Mean?
CO-96 is not a statement about speed, pended status, or missing paperwork by default. CO-96 is a statement about coverage as adjudicated by the payer for that service line. The payer processed the line and assigned a coverage outcome that resulted in a reduction or denial.
Two operational conclusions follow from the official definition:
- CO-96 is a line-level classification. One claim can contain payable lines and CO-96 lines at the same time.
- The remark code matters. The payer is required to provide additional detail through remark messaging for this CARC.
CO-96 Changes Who Works
Medicare’s remittance guidance explains that an ERA/RA uses 3 code sets for adjustments: Group Code, CARC, and RARC. Group codes assign financial responsibility. CO assigns responsibility to the provider. PR assigns responsibility to the patient. Medicare beneficiaries are billed only when PR is used with an adjustment.
That structure turns CO-96 into a routing decision:
- CO-96 under Group CO routes to contract/coverage validation and internal correction. Patient billing is restricted by the group code logic and payer rules.
- 96 under Group PR routes to patient responsibility workflows, financial consent checks, and notice requirements under the payer’s policies.
The code alone is not the decision. The code trio is the decision: Group Code + CARC 96 + RARC.
How to interpret CO-96 on an ERA (835) without wasting time
CMS describes the ERA as an itemized report of adjudication decisions and adjustments at the line, claim, or provider level. That description points to a reliable read sequence for CO-96.
Use this 4-step read sequence on every CO-96 line
Step 1: Start at the service line, not the claim total.
CAS adjustments attach to the service line. The claim can still pay even with one CO-96 line.
Step 2: Capture the group code.
CO vs PR changes liability, downstream billing, and compliance posture.
Step 3: Read the remark code (RARC) as the payer’s explanation.
X12 defines RARCs as codes that provide additional explanation for an adjustment already described by a CARC or convey processing information.
Step 4: Look for a policy reference segment.
X12’s CARC 96 guidance points billers to the 835 Healthcare Policy Identification segment (Loop 2110 REF) “if present.”
A policy ID, medical policy number, LCD/NCD reference, or payer clinical policy link often sits there in payer-specific form.
This sequence prevents 2 common failures: appealing without evidence and writing off without validating coverage logic.
CO-96 vs PR-96: What the Group Code Changes
CMS states the rule plainly: CO indicates a contractual obligation assigned to the provider. PR indicates patient responsibility. Medicare beneficiaries are billed only when PR is used with an adjustment.
That statement creates a posting rule that reduces disputes:
- CO-96 means the payer assigned provider liability for a non-covered charge under that payer’s adjudication. Patient billing is not the default action.
- PR-96 means the payer assigned patient liability for the non-covered charge, subject to payer policy, patient notice rules, and contractual requirements.
Posting teams that ignore group code risk 2 outcomes: billing a patient for a provider-liable adjustment or suppressing a patient balance that was correctly assigned.
What Triggers CO-96 in real billing operations?
X12 defines 96 as non-covered. The root cause sits underneath that label. Root causes fall into 5 operational buckets that map to different fixes.
1) Plan exclusion or benefit design exclusion
Coverage terms can exclude categories such as routine supplies, convenience items, non-covered preventive variants, or services outside a benefit schedule. A payer can mark the line non-covered even with correct coding.
Evidence to collect
- Member plan document excerpt or payer portal benefit screen
- Contract language for provider liability rules
- Policy ID reference from ERA, when present
Best action
- Write-off or patient billing only when the group code and notice rules support the transfer.
2) Coverage exists, but a required condition was not met
A service can be covered only under defined conditions, such as diagnosis restrictions, frequency limits, site-of-service rules, provider specialty rules, or step-therapy logic (common in pharmacy and injections).
Evidence to collect
- Medical policy criteria and the claim’s diagnosis/procedure pairing
- Prior utilization history for frequency edits
- Place of service, rendering NPI taxonomy, facility type
Best action
- Correct claim elements when the criteria were met but not communicated.
- Appeal with policy criteria crosswalk when the criteria were met clinically.
3) Authorization or precertification requirement
Many payers treat missing authorization as non-covered at adjudication, producing CO-96 with a remark that identifies authorization failure. The action depends on payer rules for retro-authorization and timely filing.
Evidence to collect
- Authorization number, approval letter, dates, service units
- Proof of submission route used by the payer
Best action
- Correct and resubmit with authorization data when allowed.
- Appeal with authorization evidence when the ERA contradicts the approval.
4) Eligibility mismatch on the date of service
Eligibility changes produce denials that present as non-covered. Coverage lapses, wrong subscriber ID, wrong payer sequence, terminated coverage, or dependent status changes show up here.
Evidence to collect
- Eligibility response for date of service
- Patient demographics match (name, DOB, member ID)
- Coordination of benefits verification
Best action
- Correct payer, member ID, or coordination order, then resubmit.
5) Coding or documentation failed to communicate coverage criteria
A covered service can be adjudicated as non-covered if the submitted code set signals an excluded service, a missing modifier, or an unsupported diagnosis. Documentation failures compound the problem by blocking medical necessity review.
Evidence to collect
- CPT/HCPCS code, modifier set, diagnosis set
- Payer coding policy or claim editing rules
- Chart note sections that prove indication, duration, and findings
Best action
- Correct code/modifier/diagnosis with documentation support, then resubmit.
- Appeal only after the corrected clinical story matches payer policy.
Why is the remark code (RARC) not optional for CO-96 work?
CARC 96 includes a requirement for remark messaging. CMS Medicare guidance explains why: some CARCs are generic and do not communicate the reason clearly without remark codes, so Medicare contractors must report appropriate remark codes, and remark codes are maintained by CMS.
X12 defines RARCs as the “additional explanation” layer for a CARC. That definition creates a practical rule:
CO-96 without the RARC is incomplete. Work based on the CARC alone produces misrouted appeals and incorrect write-offs. A real example appears in Medicare contractor education: Noridian pairs Reason Code 96 with Remark Code N180 to indicate the item/service did not meet criteria for the category billed. That pair changes the fix from “coverage excluded” to “billed under wrong category/criteria mismatch.”
How to address CO-96: A 7-step Resolution Workflow
Denial teams perform better with a repeatable workflow that ends in one of 3 outcomes: correct/resubmit, appeal, or write-off.
Step 1: Pull the ERA line and store the full adjustment context
- Capture group code, CARC 96, RARC(s), allowed amount, and adjustment amount
- Capture policy ID reference segment when present.
Step 2: Classify the denial into 1 of 5 buckets
- Exclusion
- Coverage condition not me.t
- Authorization missing/invalid
- Eligibility mismatch
- Coding/documentation mismatch
Step 3: Validate eligibility and payer sequence for date of service
- Match subscriber ID, patient demographics, and plan effective dates
- Confirm primary vs secondary order. er
Step 4: Validate authorization, referrals, and policy restrictions
- Match auth dates, units, rendering provider, facility, CPT list
- Match policy criteria to chart evidence
Step 5: Validate coding and modifiers against payer rules
- Confirm CPT/HCPCS selection
- Confirm modifier necessity (bilateral, professional/technical, screening indicators)
- Confirm diagnosis supports the policy criteria.
Step 6: Choose the correct action path
- Correct and resubmit for fixable claim element errors
- Appeal for payer misapplication of policy or misread documentation
- Write-off or transfer only after exclusion confirmation and liability review
Step 7: Record a prevention tag
- Eligibility verification gap
- Authorization workflow gap
- Coding education gap
- Policy mapping gap
- Front-end disclosure gap
Prevention tags convert a denial into process control.
Correct and resubmit vs appeal vs write-off: a practical decision rule
CARC 96 means non-covered, not “unpayable forever.” A structured decision rule limits wasted rework.
Correct and resubmit fits these scenarios
- The wrong payer was billed, orthe coordination order was wrong
- Subscriber/dependent data mismatch
- Authorization obtained but not transmitted on the claim
- Modifier omission that changes coverage classification
- Diagnosis mismatch that blocks medical policy match
- Documentation exists, but the claim did not carry the right code set.
Appeal fits these scenarios
- Policy criteria met, denial contradicts chart documentation.
- Authorization approval exists; denial claims are missing authorization.
- Payer applied the wrong benefit rule for plan type
- Payer misread screening vs diagnostic classification based on billed indicators
Write-off fits these scenarios
- The member plan excludes the service category.
- Contract disallows reimbursement and assigns provider liability under C.O.
- Medical policy explicitly excludes the indication with no override p.ath
Group code review stays mandatory because CO and PR change liability.
Prevention: Reduce CO-96 volume using 6 front-end controls
CO-96 prevention is a front-end verification problem more than a back-end appeal problem.
Control 1: Service-specific eligibility verification
- Verify active coverage for the exact date of service
- Verify the benefit category for the exact service type.
Control 2: Policy mapping for high-denial CPT groups
- Map payer medical policies to a short internal checklist
- Map frequency limits, diagnosis gates, and site-of-service limits
Control 3: Authorization gating tied to scheduling
- Block scheduling release until the authorization status is recorded
- Tie the CPT units and facility data to the authorization record.
Control 4: Coding rules built into charge capture
- Require modifiers for common classification shifts
- Require screening indicators where payer policy expects them.
Control 5: Documentation prompts that match policy language
- Prompt for indications, prior conservative therapy, imaging findings, impairment measures
- Prompt for start/stop times and complexity elements where needed
Control 6: Financial disclosure workflow for non-covered services
- Flag likely non-covered services before visit completion
- Document patient notice and estimate rules required by the payer and contract
Why colonoscopy claims show CO-96: screening rules vs diagnostic rules
Federal rules under the Affordable Care Act (ACA) require many plans to cover recommended preventive services without patient cost-sharing, including colorectal cancer screening recommended by the United States Preventive Services Task Force (USPSTF). The operational issue is classification. Screening workflows and diagnostic workflows use different coding signals, payer edits, and patient cost-sharing logic.
CMS-issued ACA FAQs state that a plan must cover a follow-up colonoscopy after a positive non-invasive stool-based screening test without cost-sharing for individuals in the USPSTF recommendation, describing the follow-up colonoscopy as an integral part of preventive screening.
CO-96 shows up on colonoscopy lines under patterns such as:
- Screening billed without the payer-required screening indicators
- Diagnostic intent billed under a plan that restricts the diagnosis set
- Frequency limits exceeded under plan rules.
- Authorization or site-of-service restriction triggered by plan design
Coverage confusion is common enough that patient-facing organizations warn that “screening” definitions create billing confusion in practice.
Conclusion
CARC 96 is defined as “Non-covered charge(s)” and requires remark messaging. The operational mistake is treating that label as a single action. Payment posting improves once the team reads CO-96 as a 3-part message: group code assigns liability, CARC states the broad reason, and RARC supplies the payer’s specific explanation.
A CO-96 line becomes manageable through a repeatable method: classify the root cause, collect the right proof, choose the correct action path, and record the prevention tag. That structure protects cash flow, reduces rework, and limits patient billing errors that trigger complaints and reversals.
FAQs
Why would a colonoscopy get a denial code 96?
Denial code 96 appears when the payer adjudicates the colonoscopy line as non-covered under the plan’s coverage rules. Screening vs diagnostic classification, frequency limits, site-of-service rules, authorization rules, and missing screening indicators drive that outcome in many payer edits. ACA guidance emphasizes that preventive colorectal screening should be covered without cost-sharing in many plans, and CMS clarifies coverage for follow-up colonoscopy after a positive stool-based screening test.
What does code 96 mean?
Code 96 is defined by X12 as “Non-covered charge(s)” and requires at least 1 remark code to explain the adjustment.
Is CO-97 a denial code?
CO-97 is a CARC that indicates the benefit for the service is included in the payment/allowance for another adjudicated service (bundled/included). X12 lists this meaning directly after CARC 96 in its code list.
What is the difference between CO-96 and PR-96?
CMS explains the core difference: CO assigns provider liability (contractual obligation), and PR assigns patient liability (patient responsibility). Medicare beneficiaries are billed only when PR is used with an adjustment.
What does a CO-96 denial on the claim mean for next steps?
Next steps depend on the full adjustment context: group code, remark code, and policy reference. CMS describes those code sets as the mechanism that explains adjustments on ERA/RA. Read the RARC, classify the root cause, then choose correct/resubmit, appeal, or write-off.
Is a colonoscopy 100% covered by insurance?
Many private plans cover USPSTF-recommended colorectal cancer screening without cost-sharing under the ACA, and CMS clarifies that a follow-up colonoscopy after a positive stool-based screening test must be covered without cost-sharing for applicable individuals. Patient cost-sharing can still appear based on plan design and classification rules that treat the service as diagnostic rather than preventive, which is a documented source of confusion in practice.
