How To Fix Denial Code 202 | Common Reasons, Next Steps & How To Avoid It

Denial Code 202 (CARC) means that a claim has been denied because the service billed is considered non-covered personal comfort or convenience services. Below you can find the description, common reasons for denial code 202, next steps, how to avoid it, and examples.

2. Description

Denial Code 202 is a Claim Adjustment Reason Code (CARC) and is described as ‘Non-covered personal comfort or convenience services’. This indicates that the insurance company will not make the payment for the billed service because it is considered a personal comfort or convenience service that is not covered under the patient’s insurance policy. In simpler terms, the claim is not payable because it does not meet the criteria for medical necessity or essential healthcare.

2. Common Reasons

The most common reasons for denial code 202 are:

1. Lack of Medical Necessity: Denial code 202 often occurs when the service billed is not deemed medically necessary by the insurance company. Insurance plans typically require services to be medically necessary in order to be covered, meaning they must be essential for the diagnosis, treatment, or prevention of a medical condition. Non-essential services that are solely for personal comfort or convenience are typically not covered.
2. Exclusion from Policy: Some insurance policies explicitly exclude certain personal comfort or convenience services from coverage. This can include services such as cosmetic procedures, elective treatments, or non-medical services that are not directly related to the patient’s health condition. Claims for these excluded services will be denied under code 202.
3. Documentation Insufficiency: In some cases, claims may be denied under code 202 due to insufficient documentation supporting the medical necessity of the service. Insurance companies require detailed documentation from healthcare providers to justify the need for the service and its relevance to the patient’s health condition. Without proper documentation, the claim will be denied.
4. Incorrect Coding: Claims may be denied under code 202 if the service is incorrectly coded, leading the insurance company to classify it as a non-covered personal comfort or convenience service. Accurate coding is essential to ensure that services are properly categorized and eligible for coverage.
5. Policy Limitations: Some insurance policies have specific limitations on coverage for certain services or treatments. If the service billed exceeds these limitations, it may be denied under code 202. Providers should be aware of any policy limitations and ensure that services are within the covered limits.

3. Next Steps

You can address denial code 202 as follows:

1. Review Medical Necessity: Evaluate the medical necessity of the service billed. Determine if it meets the criteria for essential healthcare and if it is directly related to the patient’s health condition. If the service is not medically necessary, it may be necessary to inform the patient that it is not covered by their insurance.
2. Verify Policy Coverage: Check the patient’s insurance policy to confirm if the service is excluded from coverage. If it is explicitly listed as a non-covered personal comfort or convenience service, inform the patient and discuss alternative options for obtaining the service.
3. Improve Documentation: Ensure that all necessary documentation supporting the medical necessity of the service is included in the claim. This may involve obtaining additional information from the healthcare provider or updating the documentation to clearly demonstrate the need for the service.
4. Correct Coding Errors: If the denial was due to coding errors, review the service and ensure that it is accurately coded. Consult coding guidelines and seek assistance from coding experts if needed to ensure proper coding and categorization of the service.
5. Appeal the Denial: If you believe the denial was in error or that the service should be covered, prepare an appeal. Include any additional documentation or supporting evidence that demonstrates the medical necessity of the service. Follow the insurance company’s appeal process and provide a clear and concise argument for why the denial should be overturned.
6. Communicate with the Patient: Keep the patient informed throughout the process. Explain the reasons for the denial and the steps being taken to address it. Discuss any out-of-pocket costs that may be incurred if the service is not covered by insurance.

4. How To Avoid It

You can prevent denial code 202 in the future by taking the following steps:

1. Verify Coverage: Before providing a service, verify the patient’s insurance coverage and check if the service is covered. Review the policy for any exclusions or limitations on personal comfort or convenience services.
2. Document Medical Necessity: Ensure that all necessary documentation supporting the medical necessity of the service is included in the patient’s medical record. This documentation should clearly demonstrate the need for the service and its relevance to the patient’s health condition.
3. Accurate Coding: Train your coding staff to accurately code services to ensure proper categorization and eligibility for coverage. Regularly review coding guidelines and provide ongoing education to coding staff to stay updated on coding changes and best practices.
4. Communicate with Patients: Educate patients about their insurance coverage and any limitations or exclusions that may apply. Clearly explain what services are covered and what services may be considered personal comfort or convenience services that are not covered by insurance.

5. Example Cases

Below are two examples of denial code 202:

• Example 1: A patient submits a claim for a cosmetic procedure, such as Botox injections, which are considered a personal comfort or convenience service. The claim is denied under code 202 because it is not medically necessary and is excluded from coverage under the patient’s insurance policy.
• Example 2: A provider submits a claim for a massage therapy session as part of a patient’s treatment plan for chronic pain. The claim is denied under code 202 because massage therapy is considered a personal comfort or convenience service and is not covered by the patient’s insurance policy.

Source: Claim Adjustment Reason Codes