CARC CO-97: Service Bundled Into Another — DME Appeal Guide

CO-97 means the payer already paid for this service as part of another payment — your item is considered "included" in something they've already adjudicated. You billed it separately when the payer's rules say it should be wrapped into the primary service payment.

• Oxygen content billing after 36-month cap. Under Medicare, oxygen equipment rental is capped at 36 months. After 36 payments, the beneficiary owns the equipment — but oxygen contents (A4619) are still covered. If the equipment is still showing as "in rental" in the payer's system, contents get bundled and denied CO-97.
• Rental accessories billed separately. Items like CPAP humidifiers (E0562) and tubing (A4604) are bundled into the CPAP rental payment (E0601). Billing them on separate claim lines triggers CO-97 even if they're physically separate items.
• Unbundled service components. Medicare's National Correct Coding Initiative (NCCI) bundles many procedure pairs. If you bill both codes without a valid modifier, the secondary code gets CO-97.
• Duplicate date-of-service billing. If two claims for the same item land on the same date, CO-97 (or CO-18) fires. Common when claims are resubmitted without voiding the original.

1. Check whether the denial is accurate. Look up the HCPCS in the Medicare LCD or payer's bundling policy. If it's genuinely bundled, adjust off — don't waste time on a non-appealable denial.
2. Verify the 36-month oxygen rental status. Log into the Noridian Medicare Portal (or call the IVR) and confirm the equipment rental month count. If month 36 has passed, the denial is wrong — appeal with rental history documentation.
3. Determine if Modifier-59 applies. Modifier-59 signals a "distinct procedural service" — the item was genuinely separate. It must meet the clinical criteria; don't use it defensively without documentation to back it up.
4. Submit a corrected claim with the appropriate modifier and a brief comment explaining the separate service justification.
5. If the corrected claim is denied again, file a Redetermination (Medicare) or formal appeal (commercial) with clinical notes, equipment logs, and an LCD citation showing the item is separately billable.