Medicare Denied: Provider Can't Bill (Who Owes?)

What This Means

Medicare denied this claim with CARC CO-170, “Payment is denied when performed/billed by this type of provider” — or one of its relatives: CO-171 (the same, “in this type of facility”), CO-172 (“Payment is adjusted when performed/billed by a provider of this specialty”), or CO-8 (“The procedure code is inconsistent with the provider type/specialty (taxonomy)”). The two-letter prefix decides who pays: CO stands for “contractual obligation,” and CMS’s claims manual says CO adjustments are generally “considered a write off for the provider and are not billed to the patient” (Medicare Claims Processing Manual, Chapter 22, §60.1). Call your provider’s billing office, ask them to correct and resubmit the claim, and ask them to put in writing any reason they believe you owe.

This is not about whether the service itself is covered — it is about which kinds of providers Medicare permits to deliver and bill for it. Medicare sets those limits by provider type. A chiropractor, for example, can bill Medicare only for manual manipulation of the spine to correct a subluxation; Medicare pays nothing for X-rays or other diagnostic or therapeutic services a chiropractor furnishes or orders (42 CFR 410.21(b)). Nurse practitioners and physician assistants are paid only for services that would be covered if a physician furnished them and that they are legally authorized to perform under state law (42 CFR 410.75 and 42 CFR 410.74). Clinic staff who cannot bill in their own right, such as nurses and medical assistants, are paid only “incident to” a physician’s or practitioner’s service, which generally requires direct supervision in an office or clinic rather than a hospital or skilled nursing facility (42 CFR 410.26).

The exception that can leave you owing: if the service is one Medicare never pays that provider type for (the chiropractor X-ray is the classic example), it is non-covered rather than mis-billed. A provider does not have to give you an Advance Beneficiary Notice before furnishing something Medicare never covers and can bill you for it; CMS’s manual reserves the PR (“patient responsibility”) group code for amounts that may be billed to you. If the provider is not enrolled in Medicare at all, that is a different denial — see provider not enrolled. If the claim was simply coded wrong, see coding error.

Why This Happens

• The provider’s type can’t bill for the service. Medicare pays each provider type only for the services the law allows. The clearest case is the chiropractic limit: Part B pays a chiropractor only for manual manipulation of the spine to correct a subluxation, and Medicare doesn’t cover other services or tests a chiropractor orders, including X-rays, massage therapy, and acupuncture. Nurse practitioners, physician assistants, and other non-physician practitioners are paid only for services within their federal conditions and state scope of practice.
• The service was performed in the wrong facility type (CO-171). Some services are payable only in specific settings. “Incident to” services, for instance, must be furnished in a noninstitutional setting — the regulation defines that as any setting other than a hospital or skilled nursing facility (42 CFR 410.26(a)(6), (b)(1)).
• Billing error by the provider (often CO-8). The provider’s office may have used the wrong taxonomy code or billed under the wrong clinician’s National Provider Identifier (NPI), so the procedure code doesn’t match the provider type on file.
• Supervision requirements weren’t met. “Incident to” services must generally be furnished under the direct supervision of the physician or practitioner (42 CFR 410.26(b)(5)), and diagnostic tests must be furnished under the required level of supervision — services furnished without it “are not reasonable and necessary” (42 CFR 410.32(b)(1)). If supervision was not documented, the claim may be denied.

Should You Appeal?

What To Do Next

1. Contact your provider’s billing office. Explain that your claim was denied with a provider type restriction code. Ask if the claim can be corrected and resubmitted.
2. Check the group code before you pay anything. If the code on your MSN or EOB starts with CO, CMS’s claims manual says the adjustment is generally a write-off for the provider, not billed to the patient — ask the billing office to hold the bill while they review it. If it starts with PR, or the service is one Medicare never pays that provider type for, you may owe; ask for the reason in writing before paying.
3. Ask your provider to check their billing codes. The provider may need to verify the taxonomy code, NPI, and facility type code on the claim.
4. If the provider can’t resolve it, you can file an appeal yourself using the instructions on the last page of your MSN — within 120 days of receiving the MSN in Original Medicare, or within 65 days of the date on the notice in a Medicare Advantage plan. Include a letter from your treating provider explaining why the service was appropriate and why their provider type should be covered for this service.
5. Keep records of all communication with your provider’s billing office, including dates, names, and what was discussed. If a provider insists on billing you for a CO adjustment, call 1-800-MEDICARE (1-800-633-4227).

Sources

• X12: Claim Adjustment Reason Codes — official CARC definitions for CO-170, CO-171, CO-172, and CO-8
• CMS: Medicare Claims Processing Manual, Chapter 22 — Remittance Advice (§60.1, Group Codes)
• eCFR: 42 CFR 410.21 — Limitations on services of a chiropractor
• eCFR: 42 CFR 410.26 — Services and supplies incident to a physician’s professional services
• eCFR: 42 CFR 410.32 — Diagnostic x-ray tests, diagnostic laboratory tests, and other diagnostic tests: Conditions
• eCFR: 42 CFR 410.74 — Physician assistants’ services
• eCFR: 42 CFR 410.75 — Nurse practitioners’ services
• Medicare.gov: Chiropractic services
• CMS MLN: Medicare Advance Written Notices of Non-coverage (MLN006266)
• eCFR: 42 CFR 405.942 — Time frame for filing a request for a redetermination
• Medicare.gov: Appeals in Original Medicare
• Medicare.gov: Appeals in Medicare health plans

Frequently Asked Questions