Service Not Covered Under Plan

Common Causes for 204

Denials with code 204 typically happen for the following specific reasons:

• Service explicitly excluded from plan design: The procedure, medication, or equipment is listed as a non-covered service in the patient's specific insurance policy, often because it's classified as experimental, investigational, or elective.[1][3]
• Lack of prior authorization: The provider failed to obtain required pre-authorization before rendering the service, causing the payer to deny coverage retroactively even though the service may be covered with proper authorization.[1]
• Outdated or incorrect patient insurance information: The claim was submitted with inaccurate insurance details, policy numbers, or coverage dates that don't reflect the patient's actual current plan at the time of service.[6]
• Diagnosis code mismatch with medical necessity criteria: The submitted diagnosis code doesn't adequately justify the medical necessity of the service according to the payer's coverage guidelines, triggering a non-covered determination.[3]
• Patient miscommunication or lack of eligibility verification: The provider failed to verify coverage before service delivery or didn't communicate to the patient that the specific service wasn't covered under their plan.[1][6]

How to Prevent 204 Denials

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

• Implement real-time eligibility and benefits verification at point of service: Verify not just that the patient has active coverage, but specifically confirm that the planned service/procedure/medication is a covered benefit under their current plan before rendering care.[1][6]
• Establish a mandatory prior authorization workflow: Create a pre-service checklist identifying which procedures, medications, and equipment require prior authorization for each major payer, and obtain written authorization before service delivery.[1]
• Conduct diagnosis code validation against payer medical necessity criteria: Before claim submission, cross-reference the ICD-10 diagnosis codes against the payer's published medical necessity guidelines to ensure the diagnosis supports coverage of the planned service.[3]
• Implement patient financial responsibility communication: Provide written notification to patients before service delivery when coverage verification reveals the service is non-covered, documenting the patient's acknowledgment of financial responsibility.[1]
• Maintain current insurance policy documentation: Regularly update and audit patient insurance information in your system, especially for patients with multiple plans or those nearing plan renewal dates, to prevent claims submission with outdated coverage data.[6]

Appeal Letter Template for 204

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: 204 - Service Not Covered Under Plan

Dear Appeals Department,

I am writing to appeal the denial of the above-referenced claim, which was denied with code 204: "Service Not Covered Under Plan".

We respectfully appeal the PR 204 denial and request reconsideration of coverage for this claim. Our records demonstrate that prior authorization was obtained from your organization on [DATE] for this specific service under the patient's plan, confirming coverage eligibility at the time of service delivery. The submitted diagnosis code [ICD-10 CODE] directly aligns with your published medical necessity criteria for this procedure, as documented in your coverage policy [POLICY REFERENCE]. The clinical documentation supports medical necessity, with [SPECIFIC CLINICAL FINDING] indicating this service was appropriate and necessary for the patient's condition. We request that your claims department review the prior authorization on file and reconsider this denial, as the service was rendered in full compliance with your coverage requirements and authorization protocols.

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]