Short answer: CO-97 means the payer considers the service bundled, meaning it's included in the payment for another service already processed. X12 defines CARC 97 as "The benefit for this service is included in the payment/allowance for another service/procedure that has already been adjudicated." Check payer bundling edits and documentation. If the service was truly separate and distinct, a correct modifier and supporting documentation may support a corrected claim or appeal.
This guide explains denial code CO-97: the official definition, what usually causes it, how to fix it and how to prevent it. It's part of our denial management guide and the denial code guides series.
Official definition (X12 CARC 97)
Claim adjustment reason codes (CARCs) are maintained by X12 and describe "why a claim or service line was paid differently than it was billed." CARC 97 reads:
"The benefit for this service is included in the payment/allowance for another service/procedure that has already been adjudicated."
Source: X12 Claim Adjustment Reason Codes, checked October 18, 2026.
What the "CO" prefix means
The letters before the number are a claim adjustment group code. X12 says group codes "generally assign responsibility for the adjustment amounts" and defines them as CO (Contractual Obligation), PR (Patient Responsibility), OA (Other Adjustment) and PI (Payer Initiated Reductions) (X12). With CO, the adjustment is generally treated as the provider's responsibility under its payer contract rather than the patient's, so check your contract before billing the patient for a CO amount. The same reason code can appear with a different group code (for example PR or OA), which changes who is responsible.
Common causes
- The service is a component of another procedure billed on the same day
- Payer or national correct coding edits bundle the code pair
- A modifier indicating a separate, distinct service was missing or not supported
- The service was billed within a global period for a related procedure
How to fix it
- Identify which service it was bundled into (check the remittance and payer policy).
- Review documentation: was the service separate and distinct?
- If yes, correct the claim with the appropriate modifier per payer policy, or appeal with documentation.
- If no, write the line off as a contractual adjustment; don't bill the patient for a CO amount.
- Note payer-specific bundling rules for coders.
How to prevent it
- Run code-pair edits before submission
- Train coders on modifier rules and payer policies (see outsource medical coding)
- Audit modifier use regularly
Who should work these denials
Denials need an owner with payer knowledge and time to follow up before deadlines. See denial management and what an AR specialist does. If your team doesn't have the capacity, you can request help; requests may be referred to Alliance Global Solutions, which operates this site and is currently our only approved vendor. For A/R follow-up and denial rework capacity, see its remote accounting staff page.
This guide is general information, not coding or legal advice. Payer rules vary; check the payer's policy and the remark codes on your remittance.
Technology
Claim scrubbers and billing automation can catch many bundling and modifier conflicts through edit checks before a claim goes out, and denial-prediction tools flag claims that payers have rejected for CO-97 in the past. Group and reason codes come from the standard X12 code list, so remits can be routed automatically to the right work queue (X12). A person still has to fix the underlying cause and resubmit or appeal. Alliance Global Solutions helps clients set up AI assistant workflows alongside their dedicated staff.
FAQ
What does denial code CO-97 mean?
X12 defines CARC 97 as "The benefit for this service is included in the payment/allowance for another service/procedure that has already been adjudicated." The service was bundled.
How do I fix a CO-97 denial?
Find the service it was bundled into, review documentation, and if the service was separate and distinct, correct the claim with the appropriate modifier or appeal with documentation per payer policy.
Should I add a modifier to every CO-97 line?
No. Use modifiers only when documentation supports a separate, distinct service. Unsupported modifier use creates compliance risk.
Can I bill the patient for a bundled service?
Generally no. A CO adjustment indicates a contractual obligation rather than patient responsibility.
How do I prevent CO-97 denials?
Run code-pair edits before submission, train coders on payer bundling and modifier rules, and audit modifier use.