Quick Explanation
Denial code CO 246 indicates that the payer has determined the billed ancillary services, such as radiology, laboratory tests, or physical therapy, are non-covered under the patient's benefit plan. This typically happens when the services are excluded from the plan's coverage, lack documented medical necessity, or are considered bundled into a primary service.
Common Causes for CO 246
Denials with code CO 246 typically happen for the following specific reasons:
- The ancillary service is a specific benefit exclusion under the patient's insurance plan design.
- Prior authorization or a mandatory referral was not obtained for the diagnostic or therapeutic ancillary service.
- The ancillary service is bundled into the primary procedure or global surgical package under NCCI edits.
- The ICD-10-CM diagnosis codes submitted do not support the medical necessity criteria outlined in the payer's Local Coverage Determinations (LCD).
How to Prevent CO 246 Denials
To avoid receiving this denial in the future, implement these specific checks:
- Perform robust eligibility verification to check for specific benefit exclusions and limits on ancillary services before rendering care.
- Secure all required prior authorizations specifically for diagnostic, laboratory, and therapeutic ancillary services prior to the date of service.
- Utilize automated scrubbing software to check for NCCI bundling edits and append appropriate modifiers (such as Modifier 59 or XS) when clinically justified.
- Ensure documentation and billing codes clearly align to support the clinical necessity of the secondary ancillary services.
Appeal Letter Template for CO 246
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 246 - Non-covered charges for ancillary services
Dear Appeals Department,
I am writing to appeal the denial of the above-referenced claim, which was denied with code CO 246: "Non-covered charges for ancillary services".
We are formally appealing the denial of the ancillary services billed under code CO 246. The enclosed clinical documentation clearly demonstrates that the ancillary services performed on the patient were medically necessary, distinct, and clinically indicated to guide the patient's immediate course of treatment. In accordance with AMA CPT guidelines and CMS National Correct Coding Initiative (NCCI) policy, these services are not bundled and represent independent diagnostic evaluations necessary for comprehensive patient management. We request a re-evaluation of the medical records provided and immediate reprocessing of these charges for full payment.
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]
Stop Writing Appeals Manually
Clausea can read your medical records and generate custom, evidence-based appeals for denial code CO 246 in seconds.
Generate Appeal for CO 246 Now