CO-97: Bundled Service — Not Paid Separately

What Does CO-97 Mean?

With CO (Contractual Obligation), the CARC 97 adjustment for bundled service — not paid separately is a contractual reduction. The provider absorbs this amount per the payer contract or regulatory payment methodology. The patient is not responsible for the adjusted amount. Review the remittance to confirm the adjustment is consistent with your contract terms.

CARC 97 indicates bundled service — not paid separately. The payer's adjudication logic determined that this service or procedure is included within another service that was billed on the same claim or a related claim.

Common scenarios that trigger this adjustment include: the billed procedure code is bundled with another code on the same claim per CMS National Correct Coding Initiative (NCCI) edits, and the bundled service cannot be billed separately; The billed service is part of the global surgical package for a procedure performed on the same date or within the global period, and separate payment is not allowed; A modifier (such as modifier 59, XE, XS, XP, or XU) was not appended to indicate that the service was distinct and separate from the bundled procedure. The group code paired with CARC 97 determines who bears the financial responsibility — CO places it on the provider as a contractual obligation, PR shifts it to the patient, OA indicates a coordination of benefits or other payer adjustment.

Common Causes

How to Resolve

1. Review the adjustment against contract terms Compare the CO-97 adjustment with your payer contract to confirm the reduction is consistent with agreed terms or regulatory methodology.
2. Verify the adjustment amount Confirm the dollar amount of the adjustment is calculated correctly based on the contracted rate and the service provided.
3. Appeal if the adjustment is incorrect Appeal with documentation showing the services were separate and distinct. Include operative notes demonstrating separate incisions, separate anatomical sites, or separate encounters. Specify the appropriate modifier (59, XE, XS, XP, or XU) and explain why the services should not be bundled. Reference NCCI edit tables and any applicable exceptions.
4. Process the contractual adjustment If the adjustment is correct per contract terms, process it accordingly in your billing system. This amount cannot be transferred to the patient.

Common RARC Pairings

The RARC code tells you exactly what triggered the CO-97:

How to Prevent CO-97

• Implement NCCI edit checking in the claim scrubbing process before claim submission
• Train coders on proper use of modifier 59 and the newer X-modifiers (XE, XS, XP, XU) for distinct services
• Educate providers on global surgical package rules and which services are included
• Review payer-specific bundling rules in addition to NCCI edits, as some payers have proprietary bundling policies
• Conduct regular coding audits focused on modifier usage and bundling compliance
• Use comprehensive/component code reference tools to avoid billing component codes with comprehensive codes

Also Filed As

The same CARC 97 may appear with different Group Codes:

Related Denial Codes