CO-24 Denials Explained: How to Identify, Appeal, and Prevent Them

Denial codes can disrupt revenue cycle workflows, creating financial and operational hurdles for healthcare organizations. One common denial, CO-24, often puzzles billing teams due to its relationship with capitation agreements. Understanding its implications is crucial for healthcare RCM teams aiming to minimize revenue leakage and improve cash flow.

In this blog, we’ll unpack the CO-24 denial code, its causes, and how it impacts revenue cycle teams. You’ll also learn actionable strategies to appeal and prevent these denials, ensuring a more efficient claims process.

What Is a CO-24 Denial?

The CO-24 denial code indicates that charges are covered under a capitation agreement or managed care plan. In these cases, the payer has already compensated the provider through a prearranged capitation fee.

The prefix “CO” stands for “Contractual Obligation,” meaning the provider cannot bill the patient for the denied charges. The financial responsibility lies solely with the provider, as the managed care plan has determined no additional payment is warranted.

Comparison: CO-24 vs Similar Denial Codes

Denial Code	Prefix Meaning	Reason/Description	Who's Financially Responsible
CO-24	Contractual Obligation	Charges covered under a capitation agreement.	Provider
PR-96	Patient Responsibility	Non-covered services based on policy.	Patient
CO-45	Contractual Obligation	Charges exceed the payer’s allowed amount.	Provider

While CO-24 and CO-45 both fall under “Contractual Obligation,” CO-24 applies to capitation agreements, while CO-45 relates to exceeding the payer’s allowable charge. PR-96, on the other hand, shifts the responsibility to the patient for non-covered services.

Common Causes of CO-24 Denials

1. Incorrect Claim Submission: Submitting claims for services already covered under a capitation agreement can trigger a denial.
2. Failure to Verify Plan Coverage: Not checking if the patient’s plan includes capitation arrangements can lead to unnecessary claims submissions.
3. Service Misclassification: Misidentifying a service as fee-for-service instead of capitation-covered may result in denials.
4. Lack of Coordination Between Teams: Poor communication between clinical and billing teams about capitation agreements can cause claim errors.
5. Inadequate Training: Staff unfamiliar with payer-specific capitation policies may inadvertently submit claims that should not be billed.

Impact on Revenue Cycle Teams

CO-24 denials create significant financial and operational challenges for healthcare organizations:

Financial Impact:
- Loss of revenue due to denied claims that cannot be collected from payers or patients.
- Increased days in accounts receivable (AR), delaying cash flow.
- Higher write-offs for unappealable or missed-denial claims.
- Elevated operational costs as denial management efforts increase.

Operational Impact:
- Time-intensive rework for billing and denial management teams.
- Requirement for deep familiarity with payer capitation policies.
- Strain on coordination between billing, coding, and clinical staff.
- Difficulty in identifying denial trends without advanced analytics tools.

To address these challenges, organizations need data-driven denial management systems like CombineHealth.ai’s Adam (AI Denial Manager). Adam automates denial tracking, prioritizes resolutions, and reduces revenue loss by optimizing workflows.

Steps To Appeal a CO-24 Denial

If you believe a CO-24 denial was issued in error, follow these steps to appeal it effectively:

Step 1: Review the Denial Notice
Carefully examine the explanation of benefits (EOB) or remittance advice to confirm the denial reason and identify any potential errors.

Step 2: Gather Documentation
Compile all relevant documentation, including patient eligibility verification, clinical notes, and the original claim submission details.

Step 3: Verify Eligibility
Double-check the patient’s insurance plan for capitation coverage and confirm whether the denial aligns with the plan terms.

Step 4: Prepare Appeal Letter
Draft a concise appeal letter outlining why the claim should be reconsidered. Include supporting documentation and reference the payer’s specific policy.

Step 5: Submit Within Deadline
Ensure the appeal is submitted within the payer’s designated timeframe to avoid automatic rejection.

Step 6: Track and Follow Up
Monitor the appeal status regularly. Use tools like Adam (AI Denial Manager) to track progress and automate follow-ups.

How To Prevent CO-24 Denials

Preventing CO-24 denials requires a proactive approach across the revenue cycle. Here are strategies to implement:

Front-End Prevention

• Eligibility Verification: Confirm patient coverage details and identify capitation arrangements before providing services.
• Patient Registration Accuracy: Ensure all patient information is accurate to avoid claim submission errors.

Billing Best Practices

• Capitation Training: Educate billing teams on identifying capitation agreements and payer-specific rules.
• Review Before Submission: Cross-check claims for services covered under capitation to avoid unnecessary submissions.

Technology Solutions

• Automated Capitation Checks: Use technology to flag claims associated with capitation agreements before submission.
• Claim Scrubbing Tools: Leverage real-time claim scrubbing, like CombineHealth.ai’s intelligent platform, to identify potential errors upfront.

When paired with Rachel (AI Appeals Manager), CombineHealth.ai’s solutions can streamline the appeals process and reduce the likelihood of CO-24 denials, improving the overall efficiency of your RCM operations.

FAQs

Q1: What does CO-24 mean in medical billing?
CO-24 indicates that charges are covered under a capitation agreement or managed care plan, making the provider financially responsible for the denied claim.

Q2: Can CO-24 denials be appealed?
Yes, if you believe the denial was issued in error, you can appeal by providing appropriate documentation and evidence.

Q3: How long do I have to appeal?
The timeline varies by payer, so consult the payer’s specific policies to ensure timely submission.

Q4: How can I prevent these denials?
Prevent CO-24 denials by verifying eligibility upfront, training billing staff on capitation agreements, and implementing claim scrubbing tools. See our complete guide on denial prevention.