When you receive a CO106 denial code from your insurance company, it means your payment option or election is not in effect. This typically happens when premiums haven’t been paid, causing a lapse in coverage. Insurance companies use this code when they can’t process a claim because the patient’s chosen payment method or coverage election isn’t active at the time of service.
This denial code is common with insurance providers like Blue Cross Blue Shield, as noted by former employees. When this happens, the insurance company can’t cover the service because your account isn’t in good standing. The issue might also arise with Medicare claims, particularly with hospice care when required certifications or consent forms weren’t received on time.
Understanding denial codes helps you address payment issues quickly. For CO106 specifically, you’ll need to verify your premium payment status and confirm your coverage was active when you received medical services. Resolving this denial often requires contacting your insurance provider directly to determine what specific payment issue needs correction.
Understanding CO106 Denial Code
Medical claim denials can disrupt healthcare revenue cycles and delay patient care. The CO106 denial code specifically relates to issues with patient payment arrangements that need immediate attention.
What Is CO106 Denial Code?
CO106 is a Claim Adjustment Reason Code (CARC) that means “Patient payment option/election not in effect.” When you receive this denial code on a claim, it indicates that the patient’s chosen payment method or plan election is either not active, not on file, or not properly documented.
This denial commonly occurs when a patient has selected a specific payment plan or option that hasn’t been properly recorded or activated in the insurance system. Insurance companies use this code to inform providers that they cannot process the claim because the payment arrangement that should cover the service isn’t currently valid.
Unlike some denial codes that indicate clinical or coding errors, CO106 points to administrative issues with how the patient’s financial arrangements are set up.
Significance in Medical Billing
CO106 denials can significantly impact your practice’s revenue cycle. When these denials occur, payment for services is delayed until the patient payment issue is resolved.
These denials require prompt action because they:
- Hold up reimbursement for services already provided
- May lead to patient confusion and dissatisfaction
- Create additional administrative work for billing staff
- Could result in write-offs if not addressed quickly
The frequency of CO106 denials often increases during insurance plan transition periods or at the beginning of new benefit years. Tracking these denials helps identify patterns and prevent future occurrences.
For smaller practices, even a few CO106 denials can affect cash flow and operations if not promptly addressed.
Patient Payment Option or Election Explained
A patient payment option or election refers to how a patient has chosen to pay for healthcare services. This could include:
- Monthly payment plans arranged with providers
- Election of specific insurance benefits or coverage options
- Auto-payment arrangements
- Financial assistance programs or payment schedules
For CO106 denials, the issue typically involves verification problems between the provider’s system and the payer’s records about these arrangements.
To prevent these denials, verify patient payment elections before providing services. Ask patients to confirm their current payment arrangements at check-in and update your records accordingly.
Many healthcare organizations implement pre-service financial clearance processes to catch these issues before they become denials. Your front desk staff plays a crucial role in preventing CO106 denials by confirming payment arrangements during scheduling or check-in.
Common Causes for CO106 Denials
When your claim receives a CO106 denial code, it means the patient’s payment option or election is not properly documented or in effect. Understanding the root causes can help you prevent these denials and improve your reimbursement success rate.
Failure to Document Patient Election
Patient elections for specific payment options must be clearly documented in your records. Many CO106 denials occur when patients have chosen a particular payment method or plan option, but this choice wasn’t properly recorded in your billing system.
For Medicare patients, this often happens with hospice benefit elections or Medicare Advantage plan selections. The patient may have completed the necessary paperwork, but your office failed to obtain a copy for your records.
Insurance companies require specific documentation proving the patient’s election. Without this documentation, they cannot process claims under the patient’s chosen payment option.
Common documentation failures include:
- Missing signed election forms
- Incomplete election statement
- Failure to verify current payment elections before service
- Missing documentation of patient’s choice between payment options
Outdated or Incomplete Patient Forms
Your patient forms may be out of date or missing key information needed to support their payment elections. Insurance plans frequently update their requirements for payment options, and using old forms can trigger CO106 denials.
Patient information forms should be updated at least annually. Many practices make the mistake of using the same forms for several years without verifying they still meet current requirements.
Key areas often missing from outdated forms:
- Current insurance plan options
- Secondary insurance information
- Plan-specific election codes
- Updated authorization signatures
When patients switch between different payment options or plans, this information must be promptly updated in your system. Payers typically have specific timeframes for when election changes must be documented.
Miscommunication Between Provider and Patient
Clear communication about payment options is essential. CO106 denials frequently stem from misunderstandings between your office and patients about which payment options they’ve selected or are eligible for.
Patients may believe they’ve made a specific election when they haven’t completed the required paperwork. Or they might not understand that certain services require specific payment elections.
Tips to improve communication:
- Verify payment elections during appointment scheduling
- Clearly explain available payment options
- Document all payment discussions in patient records
- Provide written confirmation of selected payment options
When payment options change mid-treatment, ensure patients understand how this affects their coverage. Many CO106 denials occur during transitional periods when patients switch from one payment option to another.
Prevention Strategies for CO106 Denials
Preventing CO106 denials requires systematic approaches focused on documentation and verification. Healthcare providers can implement specific strategies to minimize these denials and improve reimbursement rates.
Accurate Patient Documentation
Creating a standardized documentation protocol is essential for preventing CO106 denials. Always verify and record the patient’s payment option or election status during the initial registration process.
Use electronic health record (EHR) templates that prompt staff to collect and document payment information. These templates should include fields for:
- Insurance plan details
- Premium payment status
- Election periods
- Special enrollment circumstances
Train your front office staff to recognize payment option issues before services are provided. Regular training sessions on insurance verification can significantly reduce denial rates.
Document any communication with insurance companies regarding the patient’s payment status. Keep detailed notes of verification calls, including representative names, dates, and confirmation numbers.
Verification of Payment Options
Implement a pre-service verification process to confirm patient payment options are active before providing services. This proactive approach can identify potential issues before they become denials.
Contact payers directly to verify:
- Current premium payment status
- Effective dates of coverage
- Any pending policy cancellations
- Election period validity
Consider investing in eligibility verification software that provides real-time insurance status information. These systems can automatically flag accounts with potential payment issues.
Establish a clear process for handling patients whose payment options appear inactive. Create a simple checklist for staff to follow when verifying insurance that includes steps to take when problems are identified.
Regularly audit your verification processes to identify improvement opportunities. Track CO106 denials by staff member to identify training needs and process gaps.
Resolution and Appeal Process
When your claim is denied with code CO106, you need to take specific actions to resolve the issue. A successful resolution requires understanding the payment option requirements, gathering the right documentation, and following up consistently.
Steps to Correct Denied Claims
First, review the denial reason carefully. CO106 indicates the patient’s payment option or election wasn’t in effect when services were provided. This often happens with Medicare Advantage plans or when required pre-authorizations weren’t obtained.
Contact the insurance provider’s customer service to confirm exactly which payment option is missing or invalid. Ask for specific documentation requirements to resolve the issue.
Update your billing system with the correct payment option information. This might include the patient’s current plan details, authorization numbers, or election periods.
Resubmit the claim with the corrected information. Include a clear note referencing the original denial and the changes you’ve made.
Gathering and Supporting Documentation
Collect documentation that proves the patient’s payment option was valid when services were provided. This may include:
- Copies of the patient’s insurance card (front and back)
- Eligibility verification details with dates
- Authorization numbers and approval dates
- Patient election forms with signatures and dates
Important forms to include:
- Plan enrollment confirmation
- Payment option election documentation
- Any notices of coverage decisions
Make copies of all documents for your records before submission. Always send documentation via traceable methods and retain proof of delivery.
Timely Follow-Up with Payers
Set a reminder to check claim status 10-14 days after resubmission. Most payers process corrected claims within 30 days, but follow-up helps prevent delays.
If you don’t see progress, call the payer directly. Document every conversation including:
- Date and time of call
- Representative’s name
- Reference number for the call
- Specific instructions provided
Keep detailed notes on each interaction. You may need this information if you must escalate the claim or file a formal appeal.
Remember that many payers have strict timelines for appeals and corrections. Missing these deadlines can result in permanent denial, so act promptly when you receive a CO106 denial.
Impact of CO106 Denials on Healthcare Providers
When a CO106 denial occurs, healthcare providers face both immediate financial consequences and increased workload. These denials can significantly affect revenue cycles and require specific strategies to address.
Financial Repercussions
CO106 denials directly impact your practice’s cash flow. When claims are denied because a patient’s payment option is not in effect, you don’t receive expected reimbursement on schedule. This creates revenue gaps that can accumulate quickly.
For many providers, CO106 denials lead to:
- Delayed payments averaging 45-60 days longer than clean claims
- Increased accounts receivable (A/R) days
- Potential write-offs if denials aren’t resolved
- Revenue leakage from claims that never get reprocessed
You may need to absorb costs for services already provided while waiting for resolution. This is especially challenging for smaller practices with limited financial reserves.
Administrative Burden
Addressing CO106 denials requires significant staff time and resources. Your billing team must investigate each denial, contact insurance companies, and potentially reach out to patients.
The process typically involves:
- Researching the patient’s current insurance status
- Contacting the insurance provider for clarification
- Following up with patients about premium payments or plan status
- Resubmitting claims with corrected information
Each denied claim requires approximately 25 minutes of staff time to resolve. For practices with high denial rates, this can mean dedicating full-time employees solely to denial management.
Better verification processes before service delivery can help reduce these administrative headaches. Implementing automated eligibility checks may cost money upfront but saves valuable staff time.
Best Practices to Ensure Compliance
Preventing CO106 denials requires consistent processes and regular review of your billing practices. The following strategies can help your practice reduce these denials and improve overall reimbursement rates.
Staff Training and Education
Your billing staff needs thorough training on insurance verification processes and patient election documentation. Create clear protocols for confirming patient payment options at each visit and document these elections properly in your practice management system.
Develop quick reference guides that outline the specific requirements for different payers. Some insurers have unique documentation needs for payment elections, especially for Medicare Advantage plans and supplemental coverage options.
Schedule monthly training sessions to keep staff updated on changing payer requirements. Role-playing exercises can help staff practice handling difficult conversations about payment options with patients.
Track common mistakes that lead to CO106 denials and use these as teaching moments during staff meetings. This targeted approach helps focus training on actual problem areas rather than general concepts.
Implementing Internal Audits
Regular audits of your billing processes can catch potential CO106 issues before claims are submitted. Set up a weekly review of a sample of claims to check if patient payment elections are properly documented.
Create a checklist for auditors that includes:
- Verification of current patient insurance information
- Documentation of payment option elections
- Proper coding of primary vs. secondary insurance
- Correct application of patient financial responsibility
Use technology to your advantage by setting up automated alerts in your billing system for missing payment elections. These reminders can prompt staff to collect this information before claim submission.
Compare denial rates before and after implementing your audit process to measure effectiveness. If certain providers or service types show higher CO106 denial rates, investigate these patterns to identify specific improvement areas.
Frequently Asked Questions
Understanding denial code CO106 can help you navigate healthcare billing challenges more effectively. Here are answers to the most common questions about this specific denial code and how to address payment option issues.
What does denial code CO106 indicate in medical billing?
Denial code CO106 means “Patient payment option/election not in effect.” This occurs when a healthcare service was provided but the payment option or election chosen by the patient wasn’t active at the time of service.
For Medicare patients, this often relates to hospice care where a patient’s election to receive hospice benefits wasn’t properly documented or in effect. For other insurance types, it may indicate a premium payment issue or that the patient’s chosen payment plan wasn’t activated.
How can a patient correct an issue associated with denial code CO106?
If you receive a notice about a CO106 denial, contact your insurance provider immediately. Ask them to explain exactly what payment option or election is missing or inactive.
For Medicare beneficiaries, you may need to complete or resubmit election paperwork for special benefits like hospice care. For private insurance, verify your premium payments are current, as unpaid premiums can trigger this denial.
Keep documentation of all conversations and correspondence with your insurance company. This helps track the resolution process and provides evidence if an appeal becomes necessary.
What steps should be taken by providers when they receive a CO106 denial code?
Providers should first verify the patient’s insurance status and payment elections in their records. Compare this with the information the insurance company has on file.
Contact the insurance company to determine exactly what payment option is missing or inactive. Document the conversation details including representative name, date, and specific instructions.
Work with the patient to update necessary paperwork or elections. Resubmit the claim once the payment option issue has been resolved with proper documentation attached.
Is the CO106 denial code related to specific types of healthcare coverage or plans?
This denial code appears in various healthcare plans but is common in Medicare claims, particularly for hospice services. In Medicare, it often indicates missing or late physician certification or election consent forms.
For Blue Cross Blue Shield and other private insurers, CO106 frequently relates to premium payment issues. When patients haven’t paid their premiums, the payment option may be suspended rather than outright terminated.
Some specialized healthcare services requiring specific elections, like hospice care or home health services, are more likely to encounter this denial code due to their specialized payment structures.
What documentation is required to resolve a payment option/election issue leading to a CO106 denial?
Required documentation varies based on the specific situation. For Medicare hospice care, you’ll need a properly completed and timely submitted election statement showing the patient’s choice to receive hospice benefits.
For premium-related issues, proof of payment such as receipts or bank statements may be necessary. Insurance companies may also require a formal reinstatement form.
Provider certification forms are often needed for specialized services. These must be signed by qualified healthcare providers and submitted within required timeframes to validate the election.
Can the CO106 denial code be appealed, and if so, what is the process?
Yes, CO106 denials can be appealed. Start by gathering all relevant documentation showing that the payment option or election was actually in effect during the service date.
Submit a formal appeal letter to the insurance company explaining why you believe the denial is incorrect. Include supporting documentation such as election forms, premium payment receipts, or provider certifications.
Follow up regularly on your appeal status. Insurance companies typically have specific timeframes for responding to appeals. If your initial appeal is denied, most insurers offer multiple levels of appeal that you can pursue.
