CO-50 Denial Code: Description, Causes, Solutions & Prevention Guide

The CO-50 denial code (CARC 50) means the services you billed aren't covered because the payer doesn't consider them medically necessary. Per the official ANSI X12 code set, the description reads: "These are non-covered services because this is not deemed a 'medical necessity' by the payer." Under the CO (Contractual Obligation) group code, you can't bill the patient for the denied amount. CO-50 ranks as the sixth most common reason for Medicare claim denials.

If you're seeing this code on your remittance advice, you're not alone. The denial code CO 50 shows up across Medicare, Medicaid, and commercial payers more than almost any other adjustment reason code. CMS data shows roughly 30% of all claims face some type of denial, and medical necessity sits right at the top of that list. The financial damage adds up fast: medical necessity denials contribute to billions in lost revenue across the healthcare industry every year.

This guide breaks down everything you need to know about CO-50. What triggers it, how it differs from PR-50, step-by-step resolution, appeal strategies, and how to prevent it from hitting your claims in the first place.

What Is the CO-50 Denial Code?

Official CARC 50 Description

The full CO-50 denial code description, as defined by the Washington Publishing Company on behalf of ANSI X12, reads: "These are non-covered services because this is not deemed a 'medical necessity' by the payer."

The usage note instructs you to "Refer to the 835 Healthcare Policy Identification Segment (loop 2110 Service Payment Information REF), if present." In plain terms, that means check your remittance for specific policy references that explain the denial.

Here's what the code actually tells you: the payer looked at your claim and decided the service wasn't essential for the patient's diagnosis or treatment under their coverage guidelines. It's not a billing error in the traditional sense. The payer is making a clinical coverage decision.

CARC 50, part of the standardized Claim Adjustment Reason Code set, was last modified on 07/01/2017 per the X12 current code list. But don't let that date fool you. Payer enforcement changes constantly through LCD and NCD updates. The code stays the same; how aggressively it gets applied keeps evolving.

What Does "CO" Mean in Medical Billing?

CO stands for Contractual Obligation. It's one of four group codes you'll see on remittance advice:

• CO (Contractual Obligation): Provider absorbs the cost
• PR (Patient Responsibility): Patient owes the amount
• OA (Other Adjustment): Adjustment that doesn't fit CO or PR
• PI (Payer Initiated): Payer-initiated reduction

The CO group code is the critical detail here. When you see CO 50 in medical billing, it means your practice absorbs the financial hit. You cannot balance-bill the patient for that denied amount. That's a contractual rule, not a suggestion.

The CO 50 denial code meaning comes down to this: the money is gone unless you successfully appeal. Compare that to PR-50, where the patient carries the responsibility. We'll cover that distinction in detail below.

How CARC 50 Appears on Your ERA/EOB

You'll find denial code 50 on your Electronic Remittance Advice (the ANSI 835 transaction) or on a paper Explanation of Benefits. But CO-50 by itself only tells you half the story. The real detail comes from the Remittance Advice Remark Code (RARC) paired with it.

Here are the most common RARC codes you'll see alongside CO-50:

Always check the RARC before you take any action. It tells you exactly why the payer denied the claim and points you toward the right fix. Skipping this step is one of the most common mistakes billing teams make when working CO-50 denials.

Struggling to decode denial codes on your ERA reports? MedSole RCM's denial management team reviews every remittance to identify root causes before they impact your revenue.

What Does Medical Necessity Mean for CO-50 Denials?

The AMA Definition of Medical Necessity

The American Medical Association defines medical necessity as healthcare services that a physician, exercising prudent clinical judgment, would provide to a patient for the purpose of preventing, evaluating, diagnosing, or treating an illness, injury, disease, or its symptoms.

That's the foundational definition. But here's where it gets complicated: every payer interprets "medical necessity" through its own coverage policy. What your physician considers medically necessary and what a payer's policy says is covered aren't always the same thing.

That gap is exactly where CO-50 denials happen. A claim gets denied as not medically necessary not because the doctor was wrong, but because the payer's coverage rules didn't match the clinical rationale submitted. Understanding the CO-50 medical necessity denial code meaning starts with recognizing this disconnect.

How Payers Determine Medical Necessity

Payers typically evaluate three things before making a medical necessity denial:

1. Clinical appropriateness: Is the service suitable for the patient's documented diagnosis?
2. Cost-effectiveness: Could a less expensive alternative achieve the same clinical outcome?
3. Standards of care: Does the service align with accepted evidence-based guidelines?

Different payer types apply different standards. Medicare uses Local Coverage Determinations (LCDs) and National Coverage Determinations (NCDs). Medicaid rules vary by state, so what's covered in Texas might not be covered in Ohio. Commercial payers like UnitedHealthcare, BCBS, Aetna, Cigna, and Humana follow internal medical policies, often built on InterQual criteria or Milliman Care Guidelines.

The bottom line: "medical necessity" criteria aren't universal. You can't assume one payer's rules apply to another. Providers who treat all payers the same end up with higher medical necessity denials.

Medicare LCD and NCD: The Medical Necessity Rulebook

For Medicare claims, medical necessity lives and dies by two policy types:

National Coverage Determinations (NCDs) are CMS-level national policies. They apply to every Medicare claim nationwide, regardless of your region. When an NCD exists for a service, that's the final word on coverage criteria.

Local Coverage Determinations (LCDs) are regional policies created by Medicare Administrative Contractors (MACs) when no NCD exists. Your MAC decides what's covered in your jurisdiction.

Both LCD and NCD policies define exactly which ICD-10 diagnosis codes support medical necessity for which CPT/HCPCS procedures. If your diagnosis code isn't on the list, you're going to see CO-50 on your remittance.

You can look up any LCD or NCD through the Medicare Coverage Database on cms.gov. Bookmark that page. You'll need it more than you think.

One 2026 development worth watching: CMS's WISeR Model is expanding prepayment medical review in certain states and for certain services. That means more claims face medical necessity scrutiny before payment, not after. Expect tighter enforcement and potentially more not medically necessary denial code situations.

First Coast Medicare guidance (updated March 2025) confirms what billing teams already know: CO-50 commonly happens when a procedure gets billed with an ICD-10 code that doesn't appear on the applicable LCD or NCD coverage list.

Common Causes of CO-50 Denial Code

CO-50 denials tie directly to medical necessity and coverage determinations. Before we dig into the causes, let's clarify what CO-50 is not about: duplicate claims fall under CO-18, timely filing issues trigger CO-29, and missing claim information unrelated to medical necessity uses CO-16. Mixing up your corrective action because you misidentified the denial type wastes time and delays payment.

Here are the six most common reasons the CO 50 denial code shows up on your remittance.

Insufficient Clinical Documentation

This is the number one trigger. Your clinical notes don't adequately justify why the service was medically necessary. The service might have been perfectly appropriate, but if the documentation doesn't prove it, the payer treats it like it wasn't.

Sufficient documentation means specific, measurable clinical detail:

• Chief complaint and history of present illness
• Physical examination findings tied to the diagnosis
• Diagnostic test results supporting the clinical picture
• Treatment rationale explaining why this specific service was chosen
• Previous treatments attempted and their outcomes
• Functional limitations or measurable clinical progression

Real-world example: A physical therapy clinic bills for therapeutic exercises (CPT 97110) for a patient with chronic low back pain (ICD-10 M54.5). The payer denies with CO-50 because the notes don't include functional outcome measures showing the patient is still making measurable progress. Without evidence of continued improvement, additional sessions don't meet the payer's medical necessity threshold.

Incorrect or Mismatched Diagnosis Code

The ICD-10 code you submitted has to clinically justify the procedure billed. If the diagnosis doesn't support the service under the payer's guidelines, you'll get CO-50.

Real-world example: A cardiologist orders a stress echocardiogram (CPT 93351) and submits ICD-10 R07.89 (Other chest pain). Medicare denies with CO-50 paired with RARC N115 because the LCD requires a more specific diagnosis, such as I20.0 (Unstable angina) or I25.10 (Atherosclerotic heart disease). The general "chest pain" code doesn't meet the LCD's criteria. A more specific, accurate ICD-10 code would have prevented the denial entirely.

Failure to Meet LCD/NCD Coverage Criteria

Each LCD and NCD spells out exactly what clinical conditions and documentation elements must be present for a service to be covered. Billing without checking the applicable coverage policy is one of the fastest paths to a CO-50 denial.

Common LCD-related triggers include billing without required modifiers (like the KX modifier for DME claims), missing specific documentation elements the LCD requires, or billing for indications not listed in the policy. Noridian DME MAC guidance (updated June 2025) lists missing orders, missing KX modifiers, and LCD-specific diagnosis requirements among the top CO-50 causes for durable medical equipment claims.

Non-Covered or Excluded Services

Some services are explicitly excluded from coverage, period. Medical necessity doesn't even enter the conversation:

• Cosmetic procedures performed purely for appearance
• Experimental or investigational treatments not accepted by the payer
• Routine services excluded under the specific plan
• Medicare-specific exclusions: routine dental care, hearing aids, routine eye exams for glasses

When a service falls into an exclusion category, CO-50 is the result, and an appeal won't change the outcome. Prevention here means knowing your payer's exclusion list before you render the service.

Frequency or Duration Limits Exceeded

Payers cap how often certain services can be provided. Bill a lab test that Medicare covers once every 12 months at the six-month mark, and CO-50 will appear on your remittance.

Hospital services exceeding the approved length of stay also get hit with this code. Same with DME supplies ordered more frequently than the payer's replacement schedule allows.

Missing Prior Authorization

For services that require pre-authorization, not getting approval before you render the service almost guarantees a CO-50 denial. Some payers allow retroactive authorization under limited circumstances, but don't count on it.

CMS's expanding WISeR Model in 2025 and 2026 is increasing prepayment review for certain service categories. That makes prior authorization compliance even more critical than it was two years ago.

CO-50 denials often trace back to documentation gaps that could've been caught before submission. MedSole RCM's pre-submission claim review identifies medical necessity issues before they become costly denials.

CO-50 vs PR-50 Denial Code: What's the Difference?

This is a distinction that directly affects your bottom line, and most billing resources don't explain it clearly. Both codes use CARC 50 (not medically necessary), but the group code in front changes everything about who pays.

Group Code CO vs PR Explained

If you're trying to understand the PR-50 denial code in detail, the key difference is financial direction. PR-50 points toward the patient's wallet. CO-50 points toward your write-off column.

Financial Impact: Who Pays?

With CO-50, your practice absorbs the loss. Your contract with the payer prohibits balance billing. The only path to recovery is a successful appeal, and that takes time and documentation.

With PR-50, you can and should bill the patient. But patient collections on denied services have lower recovery rates than standard patient responsibility amounts. Patients who learn their service "wasn't medically necessary" often push back on paying.

The practical takeaway: when denial code 50 appears on your remittance, the very first thing you check is the group code. CO or PR. That single letter determines your entire response strategy. Get it wrong, and you'll either write off money you could've collected or bill a patient you're contractually prohibited from billing.

How to Resolve CO-50 Denial Code: Step-by-Step

When a claim comes back with CO-50, the right response is typically a redetermination (for Medicare) or a formal appeal (for commercial payers), not a simple resubmission. Resubmitting the same claim without changes just generates another denial and wastes time.

A redetermination means a different medical claims specialist, one who wasn't involved in the original decision, reviews your claim fresh. That matters because a second set of eyes, combined with better documentation, frequently reverses the denial.

Step 1: Review the EOB/ERA and Identify the Root Cause

Read the Explanation of Benefits or Electronic Remittance Advice carefully. Identify exactly which service line or lines received the CO-50 denial. Don't assume you know the reason; let the remittance tell you.

Check for the MA130 remark message specifically. If MA130 is present, it indicates missing information that can be corrected and rebilled without going through a formal appeal. That's a faster path to payment when it's available.

No MA130? Move to Step 2.

Step 2: Check the RARC Pairing

The Remark Code paired with CO-50 reveals the exact policy basis for the denial:

• N115 tells you the denial was based on an LCD. Pull up that specific LCD.
• N386 means it was based on an NCD. Review the NCD criteria.
• N657 means the payer wants additional documentation from you.

Per X12 instructions, check the 835 Healthcare Policy Identification Segment (Loop 2110) when it's present. That segment often contains the specific policy ID that triggered the denial. Your resolution strategy starts here.

Step 3: Verify Diagnosis-to-Procedure Alignment Against LCD/NCD

Pull up the applicable LCD or NCD from the Medicare Coverage Database. Compare the ICD-10 codes you submitted against the LCD's list of covered diagnoses for the CPT/HCPCS code you billed.

If your diagnosis code isn't on the covered list, figure out why:

• Coding error? You used the wrong ICD-10 code. Fix it and resubmit.
• Documentation gap? The clinical notes support a more specific diagnosis that IS on the LCD, but you coded to a less specific code. Get a physician addendum and correct the claim.
• Genuine policy exclusion? The service truly isn't covered for this patient's condition under the LCD. Consider issuing an ABN for future services.

For commercial payers, check the payer's internal medical policy on their provider portal instead of the LCD/NCD.

Step 4: Gather Supporting Clinical Documentation

Build your case before you file anything. Compile every record that supports medical necessity:

• Progress notes with specific clinical findings
• Diagnostic test results (lab work, imaging)
• Treatment history showing what was tried before
• Physician's written clinical rationale for the specific service
• Peer-reviewed literature or clinical guidelines, if the case warrants it

For DME claims, include the signed physician order, proof of delivery, and documentation showing the item meets LCD criteria. Noridian Medicare guidance (updated June 2025) specifically lists these elements as critical for CO-50 claim denial appeals.

Step 5: Submit a Redetermination Request or Appeal

For Medicare: File a Redetermination request with your MAC within 120 days of the initial determination. Include all supporting documentation with the request.

For commercial payers: Follow the payer's specific appeal process, whether that's through their online portal, fax, or mail. Deadlines vary by payer, so verify the timeline before you start.

Your appeal letter should:

• Reference CO-50 (CARC 50) and include all claim details
• Cite the specific LCD, NCD, or payer policy
• Explain clearly why the service meets medical necessity criteria
• Attach every piece of supporting clinical documentation

We've included a free appeal letter template below that you can customize.

Step 6: Track and Follow Up

Don't file and forget. Monitor appeal status through the payer portal or by calling directly.

Medicare Redetermination decisions must come back within 60 days. If the decision is unfavorable, you can escalate through five levels:

1. Level 1: Redetermination (MAC)
2. Level 2: Reconsideration by a Qualified Independent Contractor (QIC)
3. Level 3: Administrative Law Judge (ALJ) hearing
4. Level 4: Medicare Appeals Council review
5. Level 5: Federal District Court

Commercial payers typically offer two to three levels of internal appeal, plus state external review options depending on your jurisdiction.

Keep detailed records of every submission date, every document sent, and every response received. If you escalate, you'll need that paper trail.

CO-50 vs Other Common Denial Codes: Comparison Table

CO-50 gets confused with other CO-group denial codes more often than it should. Each code requires a completely different corrective action. Applying CO-50 resolution steps to a CO-18 denial, or the other way around, wastes staff time and delays reimbursement.

Here's how the most common denial codes for medical billing compare:

Every insurance denial code on this list has its own resolution path. Always verify the exact CARC before taking action. The denial codes and reasons may look similar at a glance, but the fix is different every time.

CO-50 Denial Appeal Letter Template (Free Download)

One of the most effective ways to overturn a CO-50 denial is a well-structured appeal letter. The letter needs to directly address the payer's medical necessity determination with supporting clinical evidence. Generic letters that don't reference the specific policy or clinical rationale rarely succeed.

Here's a template our billing team uses. Customize it for your payer and clinical scenario.

[Download this template as a Word document →]

Want more denial management resources? Subscribe to our monthly billing tips for templates, checklists, and payer updates.

Writing effective appeal letters is just one part of denial recovery. MedSole RCM handles the entire denial management lifecycle, from identification to appeal to follow-up, so your team can focus on patient care.

How to Prevent CO-50 Denials: A Prevention Checklist

Prevention always costs less than rework. Per MGMA data, each reworked denial costs an estimated $25 to $118 in staff time and administrative overhead. Multiply that by dozens of CO-50 denials per month, and you're looking at real money walking out the door.

These seven strategies can cut your CO-50 denial rate significantly.

Verify Insurance Eligibility and Coverage Before Every Service

Check patient benefits, coverage limits, policy exclusions, and frequency restrictions before you render services. Use real-time eligibility verification tools integrated with your practice management system.

Confirm whether the specific CPT/HCPCS code is a covered benefit under the patient's plan. This takes minutes. Skipping it costs hundreds per denied claim.

Review LCD/NCD Requirements for Every Procedure

Before billing any service, cross-reference the procedure code against the applicable LCD or NCD. Confirm your diagnosis code appears on the covered indications list. Check for required modifiers.

Bookmark the Medicare Coverage Database and your MAC's provider portal. Make them part of your daily workflow, not something you look up only after a denial hits.

Strengthen Clinical Documentation at the Point of Care

Documentation has to happen at the time of service, not days later when details get fuzzy. Require providers to include specific clinical findings, not generic statements.

The standard to aim for: document as if the payer will read every note, because on any given claim, they might. Include the clinical rationale for why this specific treatment was chosen for this specific patient. Objective measurements, functional assessments, and validated outcome tools strengthen your position considerably.

Use Correct and Specific Diagnosis Codes

Assign the most specific ICD-10 code the clinical documentation supports. Unspecified codes when a more specific option exists are a fast track to CO-50.

Make sure the diagnosis code creates a clear clinical link to the procedure billed. Run regular coding audits to catch patterns of unspecified or mismatched coding before payers catch them for you.

Obtain Prior Authorization When Required

Build prior authorization into your scheduling workflow. Identify which services require pre-auth for each payer, and get approval before the patient arrives for the service.

Document authorization numbers and effective dates on the claim. With CMS's WISeR Model expanding prepayment review through 2026, proactive authorization is more important than it's been in years.

Issue ABN (Advance Beneficiary Notice) When Appropriate

For Medicare patients, if you suspect a service might not be covered as medically necessary, issue an Advance Beneficiary Notice (ABN) before providing the service.

The ABN tells the patient that Medicare may not pay and they may be financially responsible. Here's why this matters so much:

• Without a properly executed ABN, you can't bill the patient
• And Medicare has already denied the claim
• That means zero revenue from both sides: total loss

An ABN must be completed before the service, signed by the patient, specific to the service in question, and retained on file. It's one of the most overlooked preventive tools for CO-50 denials.

Monitor Denial Trends and Conduct Regular Audits

Track your CO-50 denial rates by payer, provider, service type, and diagnosis code. Patterns will emerge. Maybe one procedure keeps getting denied by a specific payer. Maybe one provider's documentation consistently falls short.

Conduct quarterly audits of your denial management workflow. The industry benchmark for overall denial rates is 5% to 10%; medical necessity denials specifically should sit below 3%. If you're above that, something in your process needs attention.

Building a denial-proof billing workflow takes expertise, technology, and constant monitoring. MedSole RCM provides end-to-end revenue cycle management that catches potential CO-50 issues before claims go out the door.

CO-50 Denial Code and Medicare: What Providers Need to Know

Why CO-50 Is So Common in Medicare

Medicare relies on LCD and NCD policies that define very specific clinical criteria for coverage. There's no wiggle room. If your ICD-10 code doesn't match the LCD's covered indications list, CO-50 is the result.

Medicare Administrative Contractors actively review claims for medical necessity compliance. The criteria are publicly available through the Medicare Coverage Database, but they're complex and they update regularly. Providers who don't proactively check these policies before billing are the ones seeing the highest CO 50 medicare denial code rates.

First Coast Medicare guidance (updated March 2025) confirms what most billing teams already experience: the medicare denial code CO 50 most commonly occurs when the ICD-10 diagnosis submitted doesn't appear on the LCD's approved list for the billed procedure.

Medicare-Specific Resolution: The Redetermination Process

Medicare uses the term "Redetermination" for the first level of review, not "appeal." The filing deadline is 120 days from the date of the initial determination.

A redetermination is reviewed by a different medical claims specialist who wasn't involved in the original decision. That fresh review, combined with better documentation, reverses a significant number of CO-50 denials.

If the redetermination goes against you, the five-level Medicare appeals process applies: Redetermination, then QIC Reconsideration, then ALJ Hearing, then Medicare Appeals Council Review, then Federal District Court. Each level has its own deadlines and requirements.

For simple coding errors (like an incorrect diagnosis code), check whether your MAC's Self-Service Portal allows a claim reopening or adjustment. That's faster than a formal redetermination when the fix is straightforward.

2026 Update: CMS WISeR Model and Prepayment Review

CMS announced the WISeR Model in June 2025, expanding prepayment medical review in certain states and for certain service categories. This doesn't change Medicare coverage criteria, but it increases how many claims get reviewed before or at the point of payment.

The practical impact: providers in affected regions may face more medical-necessity scrutiny upfront. That could mean a temporary increase in CO-50 denials until billing teams adapt their documentation and coding practices.

Stay informed through your MAC's provider updates and CMS.gov announcements. The providers who adjust fastest will feel the least impact.

Frequently Asked Questions About CO-50 Denial Code 

What is the CO-50 denial code?

The CO-50 denial code (CARC 50) means the payer determined the billed service isn't covered because it's not deemed medically necessary. Under the CO (Contractual Obligation) group code, the provider can't bill the patient for the denied amount. It's the sixth most common Medicare denial code.

What causes CO-50 denials?

The most common causes are insufficient clinical documentation, incorrect or mismatched ICD-10 diagnosis codes, failure to meet LCD/NCD coverage criteria, billing for non-covered or excluded services, exceeding frequency or duration limits, and missing prior authorization.

What is the difference between CO-50 and PR-50?

CO-50 (Contractual Obligation) means the provider absorbs the cost and can't bill the patient. PR-50 (Patient Responsibility) means the patient is financially responsible for the denied amount. Check the group code first before taking any action, because it determines your entire response strategy.

How do you fix a CO-50 denial?

Review the EOB/ERA for the specific denial reason. Check the RARC code paired with CO-50 (N115, N386, or MA130). Verify your diagnosis-to-procedure alignment against the LCD/NCD. Gather supporting clinical documentation. Then submit a redetermination (Medicare) or formal appeal (commercial payers).

What action should you take for a CO-50 denial?

Start by reviewing the denial notice and RARC code. If a coding error caused the denial, correct and resubmit. If the service is genuinely medically necessary, file an appeal with complete clinical documentation. For Medicare, submit a Redetermination request within 120 days of the initial determination.

How does CO-50 apply to Medicare claims?

Medicare denies claims with CO-50 when the service doesn't meet medical necessity criteria defined in LCDs or NCDs. Resolution requires a formal Redetermination request filed with your Medicare Administrative Contractor. The five-level appeal process provides additional review options if the Redetermination is unfavorable.

What does "claim denied as not medically necessary" mean?

It means the payer reviewed your claim and determined the service wasn't essential for the patient's diagnosis or treatment under their coverage guidelines. The payer may believe the service was routine, experimental, cosmetic, or not supported by sufficient clinical documentation.

How can CO-50 denials be prevented?

Verify patient insurance eligibility before service. Review LCD/NCD requirements for every procedure. Ensure thorough clinical documentation at the point of care. Use specific ICD-10 diagnosis codes. Obtain prior authorization when required. Issue an ABN for Medicare patients when coverage is uncertain.

What remark codes are commonly paired with CO-50?

The most common RARC codes paired with CO-50 are N115 (LCD-based decision), N386 (NCD-based decision), MA130 (missing information that can be corrected), MA04 (primary payer information needed), and N657 (additional documentation required). The RARC tells you the specific policy basis for the denial.

What is an ABN and how does it relate to CO-50?

An Advance Beneficiary Notice is a form given to Medicare patients before a service when you believe Medicare may not cover it as medically necessary. If the ABN is properly executed and the claim gets denied with CO-50, you can bill the patient. Without an ABN, you can't collect from Medicare or the patient, which means total revenue loss.

Stop Losing Revenue to CO-50 Denials

CO-50 denials are among the most common and costly claim adjustments in medical billing. They're also among the most preventable. The pattern is almost always the same: a documentation gap, a coding mismatch, or a missed LCD requirement that could have been caught before the claim went out.

The fix isn't one thing. It's a combination of accurate documentation, correct coding, payer policy awareness, and a systematic denial management process that catches issues early and follows through on every appeal.

Whether you handle billing in-house or need expert support, addressing CO-50 proactively protects your revenue and keeps your focus where it belongs: on patient care.

MedSole RCM helps healthcare providers eliminate CO-50 denials. Our certified billing and coding specialists manage the entire denial lifecycle, from pre-submission claim review and medical necessity verification to appeal preparation and follow-up. We reduce denial rates, accelerate reimbursements, and give you back the time you should be spending with patients.

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