CO-167: Diagnosis Not Covered

What Does CO-167 Mean?

CO-167 is the most common pairing and represents a contractual write-off. The payer has determined that the diagnosis is not covered under the plan, and the provider must absorb the loss. You cannot bill the patient for the CO-167 amount. Your primary path is to verify the diagnosis code, correct coding errors, and resubmit. If the code is accurate, check the payer's policy to understand the exclusion and either appeal or identify an alternative covered diagnosis that the documentation supports.

When CARC 167 appears on a remittance, the payer has denied the claim because the diagnosis or diagnoses listed on the claim are not covered by the patient's insurance plan. The payer is not saying the service was coded incorrectly or that the provider is ineligible — it is specifically flagging the diagnosis itself as outside the plan's covered conditions.

However, a significant portion of CARC 167 denials are actually coding errors rather than genuine coverage exclusions. Industry data from Experian Health indicates that 42% of all claim denials are caused by coding inaccuracies. A missing 7th character on an ICD-10 code, an incorrect code that maps to a non-covered condition, or an outdated code set can all trigger CARC 167 when the underlying diagnosis is actually covered. Before accepting this denial at face value, always verify the coding accuracy against the clinical documentation.

When the denial is legitimate, it typically involves plan-specific exclusions for cosmetic conditions, experimental treatments, certain mental health conditions, fertility services, or pre-existing conditions under older plan types. The financial impact depends entirely on the group code. CO-167 is a contractual write-off that the provider absorbs. PR-167 shifts the balance to the patient, but only if proper advance notification (ABN for Medicare, or similar payer-specific waiver) was obtained before the service. The 835 Healthcare Policy Identification Segment (Loop 2110 REF) often points to the specific NCD, LCD, or payer policy behind the denial — checking this field can save significant research time.

Common Causes

How to Resolve

Verify the ICD-10 diagnosis code is accurate and specific, check plan coverage, and either correct and resubmit or appeal with clinical documentation.

1. Audit the ICD-10 code Verify the diagnosis code on the claim is accurate, current, and coded to the highest level of specificity. Compare against the clinical documentation.
2. Check the payer's coverage policy Review the payer's LCD, NCD, or coverage determination to understand why the diagnosis is excluded. Check the 835 Loop 2110 REF segment for policy references.
3. Correct and resubmit if coding was wrong If the code was incorrect, update it to the accurate diagnosis code and resubmit with supporting clinical documentation.
4. Appeal with clinical evidence if coding was correct If the diagnosis code is accurate and you believe it should be covered, file an appeal with medical records, medical necessity arguments, and references to applicable coverage policies.

Common RARC Pairings

The RARC code tells you exactly what triggered the CO-167:

How to Prevent CO-167

• Code ICD-10 diagnoses to the highest level of specificity required by the payer
• Stay current with payer coverage policy updates and LCD/NCD changes
• Implement automated claim scrubbing that checks diagnosis codes against payer coverage lists before submission
• Conduct regular coding audits to catch patterns of incorrect or insufficiently specific diagnosis coding
• Verify diagnosis coverage with the payer before rendering services for commonly excluded conditions

General Prevention

• Verify insurance coverage and specific diagnosis coverage before rendering services, especially for conditions that are commonly excluded (cosmetic, experimental, fertility)
• Use current ICD-10-CM codes at the highest level of specificity required by the payer to avoid coding-related denials
• Stay current with payer policy updates and coverage changes by regularly reviewing payer bulletins and coverage determination lists
• Conduct regular internal coding audits to identify and correct patterns of incorrect or insufficiently specific diagnosis coding
• Maintain comprehensive clinical documentation that supports the medical necessity of the diagnosis and the billed service

Also Filed As

The same CARC 167 may appear with different Group Codes:

Related Denial Codes