CO 167 Denial Code: Description, Reasons & Resolution Guide

If a claim comes back from the payer marked CO 167, the message is blunt: the diagnosis reported on the claim is not covered under the patient’s benefit plan. It is one of the most frequently triggered Claim Adjustment Reason Codes (CARC) in U.S. healthcare billing, and under the CO group code the balance cannot be billed to the patient.

This guide breaks down the official description of Denial Code 167, the reasons it fires, the resolution workflow, and prevention strategies your billing team should bake into the front-end process.

What Is Denial Code 167?

Denial Code 167 is a standardized CARC maintained by ASC X12 and published in the HIPAA-mandated code sets used across all U.S. electronic remittance. Its official X12 descriptor reads:

“This (these) diagnosis(es) is (are) not covered. Usage: Refer to the 835 Healthcare Policy Identification Segment (loop 2110 Service Payment Information REF), if present.”

In plain terms, the payer reviewed the ICD-10-CM diagnosis code(s) on the claim and determined that the patient’s health plan does not reimburse care tied to those conditions. The claim was not rejected at the clearinghouse—it was fully processed and denied at adjudication, so a corrected claim or formal appeal is required to overturn it.

CARC 167 appears on the Explanation of Benefits (EOB) or Electronic Remittance Advice (ERA), and the referenced 835 Healthcare Policy Identification Segment points to the specific policy, Local Coverage Determination (LCD), or National Coverage Determination (NCD) behind the non-coverage decision.

CO 167 vs PR 167 vs OA 167: Group Code Matters

Like every CARC, 167 is paired with a Claim Adjustment Group Code (CAGC) that assigns financial liability:

• CO 167 (Contractual Obligation): The most common variant. Provider liability under the payer contract. The balance cannot be passed to the patient; the practice must appeal, rebill with a covered diagnosis, or write off the amount.
• PR 167 (Patient Responsibility): The patient’s plan shifts responsibility to the member when the diagnosis falls outside covered benefits. Verify contract language before billing.
• OA 167 (Other Adjustment): Appears in coordination-of-benefits (COB) scenarios when neither CO nor PR applies cleanly.

Understanding the group code is the first triage step because it dictates whether you appeal, resubmit, or pursue the patient.

Common Reasons for a CO 167 Denial

Although the code looks self-explanatory, several distinct root causes push a claim into this bucket:

1. Non-covered diagnosis under the plan. The patient’s policy (HMO, PPO, EPO, or tiered ACA plan) excludes the billed condition. Common exclusions: cosmetic procedures, experimental or investigational treatments, pre-existing conditions, and lifestyle-related services.
2. Incorrect, incomplete, or outdated ICD-10-CM codes. ICD-10-CM is revised annually. Typos, unspecified codes where specific ones are required, or deleted codes flag the claim as uncovered.
3. LCD / NCD mismatch. For Medicare and Medicare Advantage, the diagnosis must satisfy the applicable Local or National Coverage Determination. Services outside that criteria return CO 167 (or the closely related CO 50).
4. Diagnosis–procedure pairing not on the payer’s approved list. The diagnosis may be valid, but the payer’s policy does not cover that specific ICD-10 and CPT/HCPCS combination.
5. Insufficient documentation of medical necessity. Missing physician notes, diagnostic test results, or a Letter of Medical Necessity (LOMN) can cause a technically covered diagnosis to be denied as unsupported.
6. Policy or benefit update missed. Payers routinely revise coverage; a diagnosis reimbursed last quarter may be excluded today.
7. Frequency or age-based limitations. Some plans cap visits per year or restrict coverage to specific age groups.
8. Missing prior authorization for condition-specific services that require pre-approval even when the procedure normally does not.

CO 167 vs Related Denial Codes

Because multiple CARCs sit near CO 167 in meaning, teams often misclassify them:

• CO 11 Denial code – Diagnosis inconsistent with procedure (linkage issue).
• CO 47 Denial code – Diagnosis not covered, missing, or invalid.
• CO 50 Denial code – Not deemed medical necessity (LCD/NCD failure).
• CO 96 Denial code– Non-covered charge, requires an accompanying RARC.

CO 167 specifically addresses the diagnosis-to-plan coverage relationship, not code linkage or medical necessity narrative.

Step-by-Step Resolution Workflow

Once a CO 167 denial hits the ERA, work it systematically rather than batching it into a generic rework queue.

1. Pull the EOB/ERA line details. Capture the CARC, any accompanying Remittance Advice Remark Code (RARC), and the group code. Review the 835 Healthcare Policy Identification Segment for the specific policy citation.
2. Re-verify coverage. Log into the payer portal or call provider services to confirm whether the submitted ICD-10 codes are truly excluded under the patient’s plan, LCD, or NCD.
3. Audit the coding. Pull the medical record and confirm the documented clinical picture was coded to the highest specificity. Certified Professional Coders (CPCs) often uncover a more specific—and covered—ICD-10 code buried in the chart.
4. Submit a corrected claim if the issue was a coding error, typo, or missing secondary diagnosis that supports coverage.
5. File a formal appeal if the denial was unjust. Include a clear appeal letter citing the ICD-10 and CPT/HCPCS billed, clinical documentation proving medical necessity, a Letter of Medical Necessity for high-risk services, references to the applicable LCD/NCD, and any prior authorization details.
6. Respect the filing window. Most payers require appeals within 30 to 180 days; Medicare redeterminations follow a 120-day timeline.
7. Track the appeal with weekly follow-ups, documenting every representative name and reference number.
8. Bill the patient only as a last resort and only when contract and group code allow it—typically under PR 167, not CO 167.

How to Prevent CO 167 Denials

A disciplined front-end process eliminates most CO 167 denials before they are created.

• Verify eligibility and benefits at scheduling using real-time 270/271 eligibility transactions or payer portals. Confirm the planned diagnosis category is covered.
• Build a diagnosis–procedure validation matrix inside your PM or EHR system. Cross-reference each CPT code against the payer’s covered ICD-10 list and flag mismatches before submission.
• Keep coders current. Train annually on ICD-10-CM updates, CMS transmittals, and payer bulletins. Certified Professional Coders and continuing-education credits pay for themselves in reduced denials.
• Document medical necessity in the chart. Clinical indicators, test results, duration of symptoms, and attempted alternatives should appear in the note—not be added after a denial.
• Run clean-claim scrubbing. Modern clearinghouses catch outdated ICD-10 codes and unspecified diagnoses before the claim leaves your system.
• Monitor payer policy updates. Subscribe to payer bulletins and review LCDs/NCDs quarterly.
• Obtain prior authorization for diagnoses in gray zones. A written approval is your strongest defense if the payer later questions coverage.
• Audit denial trends monthly. If CO 167 clusters around specific providers, payers, or diagnosis codes, fix the upstream workflow rather than reworking individual claims.

For practices struggling with recurring rejections, partnering with a specialized team offering denial management services can streamline the appeal process, recover lost revenue, and reduce CO 167 write-offs long-term.

Final Thoughts

CO 167 is a coverage denial, it tells you the diagnosis on the claim falls outside what the patient’s plan will reimburse. Sometimes that is a true benefit exclusion, but more often it is preventable: an outdated ICD-10 code, a missing specific diagnosis, a skipped eligibility check, or an overlooked LCD. Teams that verify coverage up front, code to the highest specificity, and maintain strong medical-necessity documentation keep their CO 167 rate low and their clean-claim rate high.