Your claim wasn't denied. It was paid less than you expected. The payer applied a payment rule that reduced reimbursement: bundling edits, multiple procedure reductions, fee schedule adjustments, or component billing rules. CO-97 is different from a denial because money did arrive. The question is whether the right amount arrived. Most practices post the payment and move on. The ones that audit it find $20,000-$60,000 per year in recoverable underpayments.
CO-97: "The benefit for this service is included in the payment/allowance for another service/procedure that has already been adjudicated."
When a claim denies (zero payment), the billing team notices. When a claim pays $85 instead of $145, most billing teams post the $85 and move to the next claim. The $60 difference doesn't trigger an alert. It doesn't show up in the denial report. It doesn't appear on the aging report. It vanishes silently into a contractual adjustment that nobody audits.
CO-97 appears on ERAs as an adjustment reason, not a denial. It tells you the payer included the benefit for this service in the payment for another service. Sometimes that's correct (legitimate bundling). Sometimes it's wrong (payer applying edits that don't apply to your claim). The only way to know is to audit each occurrence against the payer's actual rules.
The silent drain: CO-97 adjustments average $30-$150 per occurrence. A practice seeing 20 CO-97 adjustments per month at $75 average is losing $18,000/year. Because these are adjustments on paid claims (not denials on unpaid claims), they bypass every denial management workflow. They only get caught by systematic payment auditing.
The National Correct Coding Initiative (NCCI) publishes procedure-to-procedure edit pairs that define which procedures can and cannot be billed together. When two procedures are on the NCCI edit list, the lower-RVU procedure is "bundled" into the higher-RVU procedure and denied or reduced with CO-97.
Sometimes the bundling is correct: the two procedures are inherently part of the same service. Sometimes it's wrong: the procedures were genuinely distinct services performed on different anatomical sites or at different sessions. When the bundling is incorrect, Modifier 59 or an X modifier (XE, XS, XP, XU) on the secondary procedure should override the edit.
Fix: Check the NCCI edit pair table. If the procedures are listed as a column 1/column 2 pair with a modifier indicator of "1," Modifier 59 or the appropriate X modifier will override the bundle. Resubmit the reduced claim with the correct modifier and documentation that the services were distinct.
When multiple procedures are performed in the same session, most payers pay 100% for the highest-RVU procedure and 50% for each additional procedure. This is the multiple procedure reduction rule. CO-97 appears on the secondary procedure lines showing the 50% reduction.
The reduction is usually correct. But errors occur when procedures are billed in the wrong order (the higher-RVU procedure should always be listed first), when the payer applies the reduction to a procedure that's exempt from MPPR, or when bilateral procedures are reduced as multiples instead of being paid at 150% with Modifier 50.
Fix: Verify procedure sequencing (highest RVU first). Check whether each procedure is subject to MPPR using CMS's MPPR indicator in the physician fee schedule. If a procedure was incorrectly reduced, appeal with the fee schedule reference showing the procedure is MPPR-exempt.
The payer applied the wrong fee schedule rate. This happens when the payer uses a facility rate instead of a non-facility rate, applies an outdated fee schedule instead of the current year's rates, or uses the wrong geographic locality adjustment. The payment arrives but at the wrong amount.
This overlaps with CO-131 (incorrect contractual adjustment). The difference: CO-97 indicates the adjustment was based on a procedure rule, while CO-131 indicates it was based on the contract itself. Both result in underpayment.
Fix: Compare the paid amount against your contracted rate and the current Medicare fee schedule (or commercial fee schedule). If the payment doesn't match, submit a payment dispute with the correct fee schedule rate and your contract terms.
In specialties like cardiology and radiology, procedures have professional and technical components. CO-97 appears when the payer reduces payment because they've determined the technical component was included in a facility fee or the professional component was bundled into another service.
This is common when a cardiologist bills globally (no modifier) for a study that was actually performed at a hospital. The payer pays the professional component only and reduces the technical component with CO-97, because the hospital is billing the technical component separately.
Fix: Verify the place of service and the modifier. If the study was performed in-office, global billing is correct and the full payment should apply. If it was performed at a hospital, only the professional component (Modifier 26) should have been billed. Correct the claim accordingly.
Run a report in your PM system for all claims with adjustment reason code CO-97 in the last 6 months. Sort by dollar amount. The highest-value adjustments are your priority for review.
For each CO-97 adjustment, compare what the payer paid against what your contract says they should pay for that CPT code. If the payment is lower than the contracted rate after legitimate reductions (MPPR, sequestration), you have an underpayment.
If two procedures were bundled, look up the NCCI edit pair. Check whether a modifier would override the bundle. If the procedures were genuinely distinct and a modifier was either missing or should have been accepted, resubmit with the modifier and supporting documentation.
For multiple procedure reductions, verify that the highest-RVU procedure was listed first on the claim. Incorrect sequencing can cause the payer to reduce the wrong line, resulting in a lower total payment than correct sequencing would produce.
Payment disputes are different from claim appeals. You're not arguing the claim was wrongly denied. You're arguing the claim was wrongly paid. Include the ERA showing the CO-97 adjustment, your contracted rate, and the calculation showing the underpayment amount. Most payers have a separate dispute process for payment variances.
Run NCCI edit checks before submission. Your clearinghouse or scrubbing software should flag NCCI edit pairs before the claim goes out. When a bundle is detected, the biller can add the appropriate modifier if the services were distinct, or accept the bundle if they genuinely belong together.
Sequence procedures correctly every time. Highest RVU first. This is a simple rule that billing teams forget under volume pressure. Build it into your charge capture template so the sequencing is automatic.
Audit payments monthly, not just denials. Pull a monthly report of all CO-97 adjustments and review the top 10 by dollar value. This 30-minute monthly audit catches underpayments that would otherwise disappear into contractual adjustments permanently.
Know your MPPR-exempt procedures. Not all procedures are subject to the 50% multiple procedure reduction. Certain therapy services, endoscopy add-ons, and evaluation codes have different reduction rules. If a payer applies MPPR to an exempt procedure, the payment is wrong.
Revenue impact: Practices that implement monthly CO-97 auditing typically recover $15,000-$40,000 in the first year from underpayments they would never have caught. The audit takes 30 minutes per month. That's $2,500-$6,600 per hour of auditing time. No other billing activity has a higher ROI.
Our system audits every payment against your contracted rates and flags underpayments automatically. CO-97 adjustments get reviewed, not just posted.
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