Charges not covered by Medicaid (Updated for 2026)

Common Causes for CO 40

Denials with code CO 40 typically happen for the following specific reasons:

• Billing for cosmetic, experimental, or investigational procedures that are explicitly excluded by the state's Medicaid benefit guidelines.
• Providing routine services such as adult dental, vision, or chiropractic care in states where these benefits are strictly limited or excluded for adult beneficiaries.
• Failing to secure a required Prior Authorization for a conditionally covered service, resulting in an automatic non-covered determination.
• Submitting claims for over-the-counter products, dietary supplements, or Durable Medical Equipment items not listed on the state's approved Medicaid formulary.

How to Prevent CO 40 Denials

To avoid receiving this denial in the future, implement these specific checks:

• Verify patient eligibility and specific Medicaid plan benefits prior to every visit to identify any non-covered service exclusions.
• Cross-reference scheduled CPT and HCPCS codes against the current state Medicaid fee schedule and provider manual to ensure coverage eligibility.
• Have the patient sign an appropriate, state-compliant Medicaid Advance Beneficiary Notice or financial responsibility waiver prior to rendering known non-covered services.
• Implement automated scrubbers within the billing system to flag codes that are historically non-covered by Medicaid for manual review before submission.

Appeal Letter Template for CO 40

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 40 - Charges not covered by Medicaid

Dear Appeals Department,

I am writing to appeal the denial of the above-referenced claim, which was denied with code CO 40: "Charges not covered by Medicaid".

We are appealing the denial under code CO 40 (Charges not covered by Medicaid) for the service rendered on [Date of Service]. While we acknowledge state-specific Medicaid coverage limitations, the clinical documentation demonstrates that this service was medically necessary and qualifies for coverage under the federal Early and Periodic Screening, Diagnostic, and Treatment (EPSDT) mandate for pediatric patients, or met the criteria for emergency medical condition coverage under CMS guidelines. According to CMS Medicaid regulations, services necessary to correct or ameliorate physical and mental illnesses and conditions must be covered for eligible youth, even if those services are not normally covered under the state plan for adults. The attached medical records substantiate the medical necessity of this procedure, and we request that this claim be reprocessed and approved for 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]