Denial Code 24: Charges Are Covered Under a Capitation Agreement / Managed Care Plan (Simple Guide)
Introduction
In medical billing, Denial Code 24 is a common denial received from insurance companies. It usually means:
The patient’s charges are covered under a capitation agreement or managed care plan, so the payer will not pay this claim as Fee-for-Service.
This article explains Denial Code 24 in a simple way, why it happens, and what action steps billing teams should take.
What Does Denial Code 24 Mean?
Denial Code 24 = “Charges are covered under a capitation agreement or managed care plan.”
It happens when the insurance says:
• The provider is already paid under a capitation contract
• The claim should be sent to a managed care insurance plan, not Medicare/Medicaid directly
What Is Capitation? (Easy Definition)
Capitation is an agreement between a payer (insurance) and a provider where:
• The payer pays a fixed amount per patient
• Payment is for a specific time period
• The payment is not based on how many services were provided
So even if a patient gets many services or very few services, the provider gets the same fixed payment.
That’s why claims under capitation are often not paid separately.
What Is Fee For Service?
In Fee For Service (FFS) plans:
• Insurance pays for each service
• Each claim is paid individually based on:
CPT codes
Allowed amount
Patient responsibility (deductible, copay, coinsurance)
Why Denial Code 24 Occurs
Denial Code 24 occurs mainly because:
1) Patient is covered under a Capitation Contract
If the patient is included in the capitation agreement, then:
• The payer won’t pay additional claim amount
• Provider is already paid under the contract
2) Medicare/Medicaid says “Bill Managed Care”
If the denial comes from Medicare/Medicaid, it often means:
• The claim should be billed to the managed care payer
• Medicare/Medicaid is not directly responsible
Call Flow / On-Call Questions (Simple Format)
If Denial is from Medicare / Medicaid
Ask the payer rep:
- What is the denial date?
- Which managed care plan is active on the Date of Service (DOS)?
- Can you provide:
Managed care policy ID
Claim mailing address
- Can I get the claim number and call reference number?
Purpose: Identify the managed care plan and submit claim correctly.
If Denial is from Other Payers
Ask the rep:
- What is the processed/paid date?
- What is AA, PA, and Patient Responsibility?
Coinsurance
Deductible
Copayment
- Confirm: Is this patient under capitation?
If patient is NOT under capitation:
Ask them to reprocess the claim.
Then ask:
• What is the Turnaround Time (TAT)?
• Get claim number and call reference number
If patient IS under capitation:
Ask:
• Capitation contract start date
• Capitation contract end date
• Verify whether DOS falls within contract period
DOS within capitation period → Write off
DOS outside capitation period → Request reprocessing
Important Notes & Actions (Best Practices)
If denial is from Medicare/Medicaid and managed care info is available
• Update managed care insurance as Primary
• Submit claim to managed care plan
Check portals when available
If you have access:
• Medicare / Medicaid portals may show managed care details
Medicaid Managed Care Policy ID Rule
If denial is from Medicaid:
• Managed care plan can often be billed using the same policy ID
• Exception: BCBS (Blue Cross Blue Shield)
Medicare Managed Care Policy ID Rule
If denial is from Medicare:
• You cannot bill managed care using Medicare policy ID
• You must find the correct managed care policy number
Critical Billing Rule (Avoid Repeated Denials)
When billing managed care insurance as Primary:
Do NOT keep Medicare/Medicaid as secondary
Because:
• Medicare/Medicaid will keep denying again with Denial Code 24
• They are not responsible when managed care is active
When to Set Follow-Up
If rep agrees to reprocess, always set follow-up for:
• The TAT provided by rep
• Document call reference number
When the Claim Must Be Written Off
If:
• Patient is under capitation AND
• DOS lies within capitation contract period
Then claim must be written off, because the provider is already paid under capitation fixed payment.
Conclusion
Denial Code 24 is not a “wrong claim” denial. It is mostly a coverage/payment model issue related to:
• Capitation contracts
• Managed care plan billing
• Medicare/Medicaid managed care rules
By verifying capitation dates, identifying managed care insurance, and billing the correct payer, this denial can be resolved efficiently.
