How to Appeal a CO-97 Denial: The NCCI Modifier Indicator Decides

Direct answer: A CO-97 denial means the payer treated your service as bundled into the payment for another service on the same claim, and the appeal starts with one lookup, not one letter. Every National Correct Coding Initiative procedure-to-procedure edit carries a modifier indicator: 0, 1, or 9. Indicator 1 means a modifier may bypass the edit when the clinical circumstances support a distinct, separately identifiable service, and that is where recoverable revenue lives. Indicator 0 means the edit cannot be bypassed under any circumstance, no modifier and no documentation will open separate payment, and appealing it wastes staff time on a denial that is final by design. Indicator 9 means the edit pair has no modifier provision documented, usually on a deleted pair. Check the indicator in the current quarterly NCCI file before you appeal, because the same code pair can carry a different indicator on a different date of service.

What CO-97 Means

CO-97 is Claim Adjustment Reason Code 97, "The benefit for this service is included in the payment/allowance for another service/procedure that has already been adjudicated." The bundling rule behind it comes from one of three sources: the NCCI procedure-to-procedure edit table maintained by CMS and updated quarterly; payer-specific bundling rules that go beyond NCCI, since major commercial payers maintain their own proprietary reimbursement policy libraries; or the global surgical package rules, which bundle related services into the payment for a procedure. The remittance advice usually pairs CO-97 with a remark code that narrows the reason: M15, separately billed services bundled as components of the same procedure; M97, the benefit included in another adjudicated service; or N111, no appeal right except for a duplicate claim or service issue. Read the CARC and RARC pair first, because it tells you which of the three sources you are fighting.

The Modifier Indicator Decision Table

This is the whole game, and it fits in one table.

The same indicator logic governs the two NCCI denials that travel with CO-97: CO-236, a procedure or procedure-modifier combination that is not compatible, and CO-231, mutually exclusive procedures. Work all three the same way: indicator first, then modifier, then documentation.

Which Modifier, and When

For an indicator-1 pair, the modifier must match the clinical circumstance, and the record must support it. Modifier 59, distinct procedural service, is the historical workhorse, and CMS introduced the more specific X-modifiers in 2015 to add precision: XE for a separate encounter, XS for a separate structure, XP for a separate practitioner, and XU for an unusual non-overlapping service. Use the X-modifier that names the actual reason when the payer accepts them, because audit data showed modifier 59 being applied without consistent rigor. When CO-97 fires on an evaluation and management code billed alongside a minor procedure on the same date, the right modifier is usually 25 on the E/M code, not 59 on the procedure, because modifier 25 indicates a significant, separately identifiable E/M service on the same date as a procedure with a 0 or 10 day global period. Never add a modifier just to get paid: the record must support separate billing, and a modifier without documentation is an audit finding waiting to happen.

Worked Example, Two Outcomes

A gastroenterology claim bills a diagnostic colonoscopy, CPT 45378, against a therapeutic colonoscopy code on the same date. That pair carries indicator 0. No appeal will win, ever, and the correct action is to close it at the coding level and fix the scrubber rule so it never goes out again. Contrast that with a claim billing a biopsy, CPT 45380, against a polypectomy, CPT 45385, performed at two different lesions. That pair carries indicator 1. The appeal attaches the operative note documenting each lesion's location and technique separately, confirms modifier XS or 59 is on the claim, and states that the NCCI indicator for the specific pair is 1. Same denial code, opposite outcomes, decided entirely by the indicator and the documentation. A second common pattern is pediatrics: a sick E/M billed the same day as a well visit, denied as bundled into the preventive service. Before appealing, confirm modifier 25 is on the sick E/M code, in the first modifier position, not on the preventive code, and that the note documents a distinct history, exam, and assessment and plan for the problem, separate from the well-visit note. If the modifier or the documentation was missing, correct it and resubmit as a corrected claim, which is faster than a formal appeal. If both were correct and the claim still denied, that is a genuine appeal, and the letter should name the payer's own same-day preventive and E/M reimbursement policy, not just CPT guidance.

Corrected Claim, Appeal, or Write-Off

Route every CO-97 by this decision. If the modifier was missing or wrong, or the code pairing was a coding error, submit a corrected claim. If the claim was billed correctly, the indicator is 1, and the documentation proves separate services, appeal with the operative or encounter note attached. If the indicator is 0, write it off or correct the code selection, and fix the scrubber rule. If the bundling came from a payer-specific policy rather than NCCI, name that policy in the appeal and argue against the payer's own published rule, because a generic NCCI argument will not answer a proprietary edit. For Medicare, a first-level redetermination must be filed within 120 days of the remittance advice or Medicare Summary Notice date, and a second-level reconsideration goes to a Qualified Independent Contractor within 180 days of the redetermination decision. Missing the filing window forfeits the appeal regardless of how strong the documentation is, so track the deadline the day the denial arrives.

Prevention

The cheapest CO-97 is the one that never goes out. Scrub every code pair against the current quarterly NCCI file before the claim leaves the building, and confirm the modifier indicator at scrub time, not at denial time. Keep a short list of your highest-volume indicator-0 pairs and build them into the scrubber as hard stops, so coders see the bundle before the claim is created. Review the pairs monthly, because CMS updates the NCCI tables every quarter and a pair that was appealable last quarter may not be this quarter.

CO-97 Appeal Checklist

Frequently Asked Questions

A note on the rules: NCCI edits are updated quarterly by CMS, payer bundling policies change without notice, and appeal windows differ by payer. Always confirm the current edit, indicator, and deadline in the applicable NCCI file and payer manual before relying on this workflow. This article is educational information about billing workflows, not legal advice.

Related reading

• CO-18 Duplicate Claim Denial
• Modifier 25 Denial Appeal
• Corrected Claim vs Appeal
• CARC CO-45 Billing Adjustment Explained
• How to Appeal a CO-16 Denial
• Common Medical Coding Errors

Part of the complete guide: Claim Denial Codes: The Complete Guide for Medical Billing — every code in this article, explained in one place.