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  • Writer's picturePatientStudio

Understanding CO-197 Denial Code in Physical Therapy Billing

Physical therapy billing can be a complex process, with various codes and regulations to navigate. One common challenge that physical therapy billers and practice owners face is dealing with denial codes. One such denial code is CO-197, which indicates a pre-authorization or notification absence. In this comprehensive guide, we will explore what CO-197 denial code means, why it occurs, and most importantly, how to avoid it. We will provide valuable insights and practical tips to help you overcome this challenge in your physical therapy billing workflow.

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What is CO-197 Denial Code?

CO-197 is a denial code used in medical billing to indicate the absence of pre-authorization or notification for a specific service or procedure. In the context of physical therapy billing, this code signifies that the physical therapy provider failed to obtain the necessary pre-authorization or notification from the patient's insurance company before providing the service.

When a claim is denied with CO-197 denial code, it implies that the insurance company or payer requires pre-authorization for certain physical therapy services. Failure to obtain this pre-authorization can result in the claim being denied and the provider not being reimbursed for their services.

Why Does CO-197 Denial Code Occur?

CO-197 denial code occurs when the physical therapy provider fails to obtain the required pre-authorization or notification from the patient's insurance company. This can happen due to various reasons, including:

  1. Lack of awareness: The provider may not be aware of the specific pre-authorization requirements for the services they are providing. Each insurance company may have different guidelines and criteria for pre-authorization, and it is crucial for providers to stay up-to-date with these requirements.

  2. Administrative errors: Mistakes in paperwork, documentation, or communication can lead to the absence of pre-authorization. It is essential for providers to maintain accurate records and follow proper procedures to ensure pre-authorization is obtained for eligible services.

  3. Changing insurance policies: Insurance companies may revise their pre-authorization requirements or update their policies, and providers must adapt to these changes. Failure to stay informed about these updates can result in CO-197 denials.

  4. Lack of communication: In some cases, the insurance company may not effectively communicate the pre-authorization requirements to the provider, leading to unintentional non-compliance.

Understanding the reasons behind CO-197 denials can help providers proactively address and prevent them in their physical therapy billing processes.

The Importance of Pre-Authorization in Physical Therapy Billing

Pre-authorization, also known as pre-certification, is the process by which a physical therapy provider obtains approval from the patient's insurance company or payer before providing a specific service or procedure. This approval ensures that the service is medically necessary, appropriate for the patient's condition, and covered by the insurance plan.

Obtaining pre-authorization is crucial for physical therapy providers for several reasons:

  1. Reimbursement assurance: Pre-authorization helps ensure that claims for physical therapy services are reimbursed by the insurance company. Without pre-authorization, providers run the risk of denied or delayed payments, affecting their revenue and financial stability.

  2. Patient care continuity: Pre-authorization ensures that patients receive the necessary care without interruptions or delays. It allows providers to plan and provide appropriate treatment based on the approved services.

  3. Compliance with insurance policies: Insurance companies have specific pre-authorization requirements, and failing to obtain pre-authorization can lead to non-compliance with their policies. By following the pre-authorization process, providers can maintain a positive relationship with insurance companies and avoid denials.

  4. Cost control: Pre-authorization helps control healthcare costs by ensuring that services are medically necessary and appropriate for the patient's condition. It prevents unnecessary or inappropriate services from being provided and billed to insurance companies.

In summary, pre-authorization is a critical step in the physical therapy billing process, ensuring reimbursement, patient care continuity, compliance, and cost control.

How to Obtain Pre-Authorization for Physical Therapy Services

Obtaining pre-authorization for physical therapy services requires a systematic approach and adherence to insurance company guidelines. Here are the steps involved in the pre-authorization process:

  1. Identify the service: Determine the specific physical therapy service or procedure that requires pre-authorization.

  2. Review insurance plan: Familiarize yourself with the patient's insurance plan to understand the pre-authorization requirements for the specific service. This information can typically be found in the insurance plan's policy documents or on the insurer's website.

  3. Gather necessary information: Collect all the required information for the pre-authorization request. This may include patient demographics, provider information, CPT/HCPCS codes, diagnosis codes, provider NPI, clinic address, EIN, etc...

  4. Submit the request: Submit the pre-authorization request to the patient's insurance company or payer following their specific guidelines. Ensure that all the necessary information is included in the request to facilitate a smooth review process.

  5. Await the decision: The insurance company or payer will review the pre-authorization request and make a decision. They will communicate their decision in writing, indicating whether the service or procedure has been approved or denied.

  6. Follow up if needed: If the pre-authorization request is denied, follow up with the insurance company to understand the reason for the denial and explore any possible avenues for resolution. This may involve providing additional information or appealing the decision.

By following these steps and being proactive in the pre-authorization process, physical therapy providers can increase the likelihood of approval and avoid CO-197 denials.

Common Mistakes Leading to CO-197 Denial Code

CO-197 denials can occur due to several common mistakes made by physical therapy providers. Being aware of these mistakes can help providers proactively address and prevent them. Some common mistakes leading to CO-197 denial code include:

  1. Lack of medical necessity: For any prior-authorization to be approved, the treatment (or ongoing treatment) must meet the criteria of being medically necessary. This means that the answer to the question "Is this treatment medically necessary?" must be a resounding yes. The therapist's documentation should support the need for continued treatment in line with the patient's goals and medical necessity.

  2. Failure to track pre-authorization status: Providers may overlook tracking the status of pre-authorization requests, leading to missed approvals or lack of timely follow-up. Canceled/rescheduled appointments can throw a wrench in a clinic's ability to effectively track authorizations. Implementing a system to track pre-authorization status can help prevent denials.

Providers can avoid these common mistakes by staying informed, maintaining accurate documentation, implementing tracking systems, and fostering effective communication with insurance companies.

Resolving CO-197 Denial Code

When a physical therapy provider encounters a CO-197 denial code, prompt action is essential to address the issue and resubmit the claim. Here are the steps to resolve CO-197 denials:

  1. Review the denial and/or EOB: Carefully examine the adjustment and remark codes to understand the reason for the denial. There may be additional documentation or information (such as physician referral) required for resubmission.

  2. Obtain Retroactive pre-authorization: Some insurance companies allow retroactive pre-authorization, but others do not.

  3. Correct the claim: If any errors or omissions were present in the original authorization number, make the necessary corrections and resubmit the claim with accurate information.

  4. Rebill with pre-authorization details: If pre-authorization (or retro auth) was obtained, ensure that the pre-authorization details are included in the resubmitted claim. Complete Box 23 on the CMS 1500 claim form with the pre-authorization number.

By taking these steps, providers can address CO-197 denials and increase the chances of successful claim reimbursement.

Strategies to Avoid CO-197 Denial Code

Prevention is key when it comes to avoiding CO-197 denials. Here are some strategies to help physical therapy providers avoid CO-197 denial code:

  1. Educate staff and providers: Ensure that all staff members involved in the billing process are educated about payers, plans and services that require pre-authorization

  2. Verify patient eligibility and coverage: Before providing services, verify patient eligibility and coverage details, including pre-authorization requirements. This can help identify any potential issues or requirements upfront, allowing for timely pre-authorization.

  3. Track authorizations against visits: Use an EHR to track authorizations against visits/claims. Technically, an authorization is "deducted" or reduced as a result of a claim being submitted to that date of service. Your EHR must be tightly integrated with billing to properly track remaining authorizations.

By implementing these strategies, physical therapy providers can minimize the occurrence of CO-197 denials and streamline their billing processes.

Technology Used to Avoid CO-197 Denials

Technology can play a significant role in minimizing denials, including CO-197 denials, in physical therapy billing. Utilizing electronic health record (EHR) and practice management (PM) software can help automate and streamline pre-authorization tracking. Here are some ways technology can assist in managing CO-197 denials:

  1. Automated pre-authorization tracking: EHR and practice management software can automate the tracking of pre-authorization status, ensuring that providers are aware of the approvals obtained, current session count and upcoming expirations.

  2. Alerts and reminders: Software can provide alerts and reminders for pre-authorization requirements, prompting providers to initiate the process or seek a reauthorization for additional sessions.

  3. Documentation management: EHR systems can facilitate efficient documentation management, ensuring that all required information for pre-authorization and medical necessity is accurately recorded.

  4. Reporting and analytics: Software can generate reports and analytics on authorization remaining and patients that will soon require reauthorization.

By leveraging technology, physical therapy providers can streamline their pre-authorization workflows, reduce the risk of CO-197 denials, and enhance the overall efficiency of their billing processes.


CO-197 denial code can be a significant challenge in physical therapy billing, potentially causing delays and financial losses for providers. By understanding the importance of pre-authorization, avoiding common mistakes, and implementing proactive strategies, providers can navigate the complexities of pre-authorization and minimize the occurrence of CO-197 denials. Leveraging technology, such as EHR and practice management software, can further streamline the pre-authorization process and enhance overall billing efficiency. By adopting these practices and staying informed, physical therapy providers can ensure smooth and successful reimbursement for their services.

Want to rid your practice of CO-197 denials forever? Check out PatientStudio's automated authorization tracking now!

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