Quick Explanation
Denial code CO-106 indicates that Medicare has processed the claim but cannot pay the provider directly because the beneficiary's authorization to assign benefits is missing or not indicated on the claim. When assignment of benefits is not authorized, Medicare guidelines dictate that payment must be sent directly to the patient rather than the healthcare provider. To secure reimbursement, the provider must demonstrate that a valid signature on file exists and that the claim form accurately reflects this election.
Common Causes for CO-106
Denials with code CO-106 typically happen for the following specific reasons:
- The 'Accept Assignment' indicator (Box 27 on the CMS-1500 form or Loop 2300, CLM08 in electronic claims) was incorrectly submitted as 'No' or left blank.
- The patient did not sign the standard Medicare Assignment of Benefits (AOB) or Lifetime Signature on File authorization during registration.
- A mapping error occurred within the practice management software, causing the signed authorization indicator to be dropped from the electronic claim transmission.
- The billing system failed to update an expired signature on file, leading to an inconsistent authorization status on the submitted claim.
How to Prevent CO-106 Denials
To avoid receiving this denial in the future, implement these specific checks:
- Establish a mandatory intake process to secure a signed 'Lifetime Signature on File' (SOF) form for Medicare release of information and assignment of benefits.
- Configure billing software and claim scrubbers to automatically validate that the 'Accept Assignment' field is populated as 'Yes' for all Medicare claims.
- Conduct periodic billing audits to verify that electronic claims with the assignment indicator marked as 'Yes' match physically or digitally archived patient signatures.
- Train registration and front-desk staff on the critical distinction between releasing medical records and electing to assign financial benefits.
Appeal Letter Template for CO-106
If you believe this claim was denied incorrectly, you can use the following template to submit an appeal.
[Your Practice Header]
[Date]
[Payer Name]
[Appeals Department Address]
RE: Appeal for Claim [Claim Number]
Patient: [Patient Name]
ID: [Patient ID]
Date of Service: [Date]
Denial Code: CO-106 - Medicare beneficiary has not elected to assign benefits
Dear Appeals Department,
I am writing to appeal the denial of the above-referenced claim, which was denied with code CO-106: "Medicare beneficiary has not elected to assign benefits".
We are appealing the denial under code CO-106 regarding the election of assignment of benefits. Attached, please find a copy of the valid, signed 'Lifetime Signature on File' (SOF) authorization executed by the beneficiary prior to the date of service. This documentation fully satisfies the requirements outlined in the CMS Internet-Only Manual (IOM) Publication 100-04, Chapter 1, Section 50.3, which governs patient signatures and the assignment of benefits. Because we have verified and attached proof of the beneficiary's election to assign benefits directly to our practice, we respectfully request that this claim be reprocessed immediately and that payment be issued directly to the provider.
Attached please find:
1. A copy of the original claim.
2. The relevant medical records supporting the service.
3. [Any other supporting documents].
We respectfully request that you reprocess this claim for payment.
Sincerely,
[Your Name]
[Title]
[Practice Name]
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