CO-24: Charges Covered Under Capitation or Managed Care
The service is covered under your capitation contract. Write off the amount as a contractual adjustment. If the service should be FFS, dispute with contract documentation.
What Does CO-24 Mean?
CO-24 is the standard pairing for this denial. The CO designation means the billed amount is a contractual write-off — your capitation contract with the payer already covers this service through the PMPM payment. You cannot bill the patient for this amount because the service is included in your contractual arrangement. The only actionable path is to verify the capitation contract scope and either accept the write-off (if correctly capitated) or dispute with contract documentation (if the service should be billed FFS).
When CARC 24 appears on a remittance, the payer is telling you that the billed service is included in a capitation or managed care arrangement that already compensates the provider. Under a capitation contract, the provider receives a fixed monthly payment per enrolled member to cover a defined scope of services. When the provider then submits a fee-for-service claim for a service that falls within that capitated scope, the payer denies the FFS claim because the service has already been paid for through the capitation payment.
This denial is fundamentally different from other claim denials because it is not a coverage issue or a billing error in the traditional sense — it is a contract-structure issue. The payer processed the claim correctly according to the terms of your capitation agreement. The most common trigger is a billing team that is unclear on which services fall under the capitation arrangement versus which can be billed fee-for-service. This confusion is especially prevalent in large practices with mixed payment models, where some patients are capitated and others are fee-for-service under the same payer.
The financial impact of recurring CARC 24 denials is primarily administrative waste — the services are already compensated, so there is no revenue loss per se, but the claim submission, denial processing, and investigation consume staff time and resources. However, if the service genuinely falls outside the capitation scope, a legitimate FFS claim is being incorrectly denied, and the provider is losing revenue. This makes it critical to maintain a clear understanding of exactly which services are included in each capitation contract.
Common Causes
| Cause | Frequency |
|---|---|
| Service falls under capitation agreement The provider has a capitation contract with the payer that covers the billed service category. The provider receives a fixed per-member-per-month (PMPM) payment and cannot bill separately for services included in the capitation arrangement. | Most Common |
| Fee-for-service claim submitted for capitated service The provider submitted a fee-for-service claim for a service that is included in their capitation contract. The payer denies the FFS claim because the service is already compensated through the capitation payment. | Most Common |
| Patient assigned to capitated provider but seen elsewhere The patient is assigned to a capitated provider panel, and the rendering provider billed fee-for-service when the service should have been coordinated through the capitated arrangement | Common |
| Misunderstanding of capitation contract scope The provider's billing team is unclear on which services are covered under the capitation agreement versus which can be billed fee-for-service, leading to incorrectly submitted claims | Common |
| Managed care referral or authorization not obtained The managed care plan requires referrals or authorizations for services outside the capitated scope, and the service was rendered without the required referral from the primary care provider | Occasional |
How to Resolve
Review your capitation contract to determine if the billed service is included — write off the amount if it is, or dispute with contract documentation if the service falls outside the capitated scope.
- Check your capitation contract scope Review the contract to determine if the billed service falls within the capitated service categories. Consult the scope-of-services exhibit.
- Verify panel enrollment and PMPM receipt Confirm the patient was on your capitated panel and that you received the PMPM payment covering the service period.
- Post write-off or dispute If correctly capitated, write off the amount. If the service is carved out of capitation, provide contract documentation and request FFS reprocessing.
Common RARC Pairings
The RARC code tells you exactly what triggered the CO-24:
| RARC | Description |
|---|---|
| N381 | Alert: Consult your contractual agreement for restrictions, billing, and payment information related to these charges. |
| N130 | Alert: Review plan documents or guidelines to determine service restrictions or coverage details. |
How to Prevent CO-24
- Maintain a clear, accessible reference of which services are capitated versus fee-for-service under each payer contract and train billing staff to check it before submitting claims
- Flag capitated patients in your practice management and scheduling systems so staff know the correct billing pathway before services are rendered
- Reconcile capitation payments monthly against patient panel rosters to ensure you receive PMPM payments for all assigned members
- Review capitation contracts regularly and update internal billing rules when contract terms, service categories, or panel assignments change
- Build claim edit rules that block FFS claims for capitated services from being submitted to avoid unnecessary denials
General Prevention
- Maintain a clear, accessible summary of which services are covered under each capitation contract and train billing staff to reference it before submitting claims
- Verify patient enrollment in capitated panels at each visit to ensure correct billing pathway — capitated versus fee-for-service
- Flag capitated patients in your scheduling and practice management systems so staff know upfront which billing rules apply
- Reconcile capitation payments monthly against patient panel rosters to ensure you are receiving compensation for all assigned patients
- Review capitation contracts regularly and update billing rules when contract terms change or new service categories are added or removed from the capitation arrangement
Also Filed As
The same CARC 24 may appear with different Group Codes:
Related Denial Codes
Sources
- https://www.shorelinemb.com/blog/common-denial-remark-codes.html
- https://docs.claim.md/docs/claim-adjustment-reason-codes
- https://www.rcmguide.com/co-26-co-27-and-co-28-denial-codes/
- Codes maintained by X12. Visit x12.org for official definitions.