Denial Code 05

Denial Code 04 Denial Code 06

Definition:

Procedure code/bill type is inconsistent with the place of service.

What is denial code 05?

Denial Code CO-05 occurs when a service is billed using a procedure code or bill type that is not valid or compatible with the place of service (POS) listed on the claim. The Place of Service code identifies the setting where the service was rendered (e.g., office, inpatient hospital, outpatient facility, home), and some CPT/HCPCS codes are only valid in certain settings. When the setting and code don’t align per payer rules or CMS guidelines, the claim is denied.

Practical Examples

Example 1#

Scenario:
A home health agency provider evaluated a low-risk new patient at home. The visit included a thorough physical exam, extensive data review, complex medical decision-making, and lasted 20 minutes. Provider submitted claim with CPT code 99221 (Initial hospital inpatient care) and Place of Service 12 (Home) to Medicare.
Upon reviewing ERA, the claim was denied with CO 05 and remark code M77, indicating a mismatch between the procedure code and place of service.
Remark Code M77 – "Missing/inconsistent/incomplete place of service."

Let's break down the issue:
Code 99221 (Initial hospital inpatient care) is strictly for inpatient hospital care (POS 21 or 22) and cannot be billed with a home POS 12.
CO 05 means there's an issue with place of service (POS).
RARC M77 specifically tells you the code is invalid with the POS provided.

Resolution:
Review the provider’s documentation. Based on the patient’s condition and services rendered, replace CPT 99221 with 99341 (Home visit for a new patient, typically 20 minutes, with straightforward medical decision-making). Resubmit the corrected claim to Medicare.

Example 2#

Scenario:
A provider conducted a follow-up evaluation of an inpatient hospital patient on their second day of admission. The provider submitted a claim using CPT 99222 (Initial hospital inpatient care) with Place of Service 11 (Office) to Aetna.
Upon review, Aetna denied the claim citing an invalid combination of procedure code and place of service.
Remark Code M77 – "Missing/inconsistent/incomplete place of service."

Let's break down the issue:
CPT 99222 is designated for initial inpatient hospital care, and must be reported with POS 21 (Inpatient Hospital).
POS 11 refers to services provided in an office setting, not a hospital.
CO 05 indicates a mismatch between the reported CPT and POS.
M77 supports that the claim was denied due to place of service inconsistency.

Resolution:
Review the documentation to confirm that the service was rendered in an inpatient hospital setting. Correct the Place of Service to 21 and resubmit the claim to Aetna for proper adjudication.

Example 3#

Scenario:
An ambulatory surgical center (ASC) billed CPT 27447 (Total knee arthroplasty) with POS 11 (Office) instead of POS 24 (ASC) to BCBS.
The payer denied the claim with denial code 05 and Remark Code M77
Remark Code M77 – "Missing/inconsistent/incomplete place of service."

Let's break down the issue:
CPT 27447 is a major surgical procedure typically performed in a hospital (POS 21) or ASC (POS 24).
POS 11 indicates an office setting, which is not an appropriate or safe environment for such a surgery.
CO 05 highlights the inconsistency between the reported CPT and the place of service.
M77 confirms that the claim was denied due to a mismatch in place of service.

Resolution:
Verify the correct surgical setting in the operative report. Update the Place of Service to 24 (ASC) and resubmit the corrected claim to BCBS for appropriate reimbursement.

Why Does Denial code 05 Occur?

1. Incorrect Coding: The procedure code or bill type used doesn't align with the place where the service was provided, often due to human error or misinterpretation of coding rules.
2. Incomplete Documentation: The claim lacks enough supporting documents to justify the billed service or location, causing mismatches.
3. Billing System Errors: Glitches in the billing software or incorrect data entry can lead to wrong codes or mismatched place of service.
4. Poor Communication: If providers don’t clearly communicate service location details to billing staff, it can result in coding errors.
5. Unaware of Coding Updates: Providers who are not up to date with the latest coding rules may submit outdated or incorrect information.

How to avoid / ways to mitigate Denial code 05?

1. Check Coding Accuracy: Ensure the procedure code and bill type match the place where the service was provided.
2. Train Staff Regularly: Keep coding and billing staff well-trained on current guidelines to avoid common mistakes.
3. Document Thoroughly: Make sure service details are clearly recorded to support accurate coding and billing.
4. Review Claims Before Submission: Implement a review step to catch and fix place-of-service errors early.
5. Use Smart Tools: Invest in billing software that flags potential coding errors for quick correction.
6. Audit Routinely: Conduct audits to spot and fix recurring issues that may lead to denials.
7. Stay Current with Code Changes: Regularly update staff on changes in coding rules, especially those affecting place of service.

Denial Code 04 Denial Code 06