CO-204 Denial Code: Not Covered Under Benefit Plan — DME Appeal Guide

What this denial means

CO-204 means the payer determined the service, equipment, or drug you billed is not covered under the patient's current benefit plan. Official description: "This service/equipment/drug is not covered under the patient's current benefit plan."

"CO" group code means the provider absorbs the write-off and cannot bill the patient.

Why DME claims hit CO-204

Equipment not on the plan's covered DME list. Many commercial and marketplace plans publish a covered DME formulary. Items not on the list generate CO-204 regardless of medical necessity.
Authorization not obtained for a required item. Some plans require prior authorization for all DME. If PA wasn't obtained, CO-204 is used by certain payers to indicate the item isn't "covered" in the absence of authorization.
Coding error placing item in non-covered category. A miscoded HCPCS that classifies equipment in an excluded category generates CO-204 even if the correctly coded item would be covered.
Benefit period exhausted. The patient's plan covers DME up to a dollar or unit limit per year. Once that limit is reached, additional items generate CO-204.
Plan change between order and delivery. Patient's plan changed after the physician ordered the equipment. The new plan doesn't cover the item.

How to fix it

Review the ERA/EOB with RARC codes. The RARC accompanying CO-204 tells you why — N130 (not covered by this type of plan), N62 (patient is not covered), N4 (missing/incomplete authorization).
Verify coverage under the current plan. Call the payer or check the provider portal. Ask for the specific benefit exclusion in writing.
Check coding accuracy. Confirm the HCPCS used accurately represents the delivered item. A wrong code in a non-covered category is a fixable error.
If PA was required: Attempt retro authorization if available under the plan, then resubmit with the PA number.
If the item is genuinely excluded: Evaluate secondary coverage, advise the patient before future orders, and document the non-coverage in the patient file.

Typical overturn likelihood

35–60% — better when the denial resulted from a coding error or missing authorization. Cases where the item is genuinely excluded from the plan: very low overturn without plan document errors or authorization exceptions.

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Frequently asked questions

What's the difference between CO-204 and CO-96?

CO-96 = non-covered charge/service (often a coding or plan coverage issue). CO-204 is more specific — the benefit plan explicitly doesn't cover this service/equipment/drug. In practice, payers use them somewhat interchangeably, but CO-204 typically implies a plan-level benefit exclusion.

Can I bill the patient for CO-204?

CO-204 uses the "CO" group code, meaning provider responsibility. You cannot bill the patient unless the item was excluded under a circumstance where a waiver (ABN or equivalent) was signed in advance.

What if the plan says CO-204 but I have a prior authorization?

A valid prior authorization is strong appeal ammunition. The PA represents the payer's pre-approval of coverage — appeal with the PA number, approval letter, and date. CO-204 with an existing PA is typically a payer processing error.

CARC CO-204: Service Not Covered Under Benefit Plan — DME Appeal Guide

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What's the difference between CO-204 and CO-96?

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What if the plan says CO-204 but I have a prior authorization?