CO-106: Patient Payment Option Not in Effect

What Does CO-106 Mean?

With CO (Contractual Obligation), the CARC 106 adjustment is the provider's responsibility. The payer denied or reduced payment because of the patient selected a specific payment option (such as an installment plan or payroll deduction) that was not in effect at the time the claim was processed. The patient is not liable for this amount. If the denial is in error, the provider can correct and resubmit the claim or file an appeal with supporting documentation.

CARC 106 appears on a remittance when the payer applies an adjustment for patient payment option not in effect. Review the group code and any accompanying RARC codes to understand the full context of this adjustment.

Common scenarios that trigger this adjustment include: the patient selected a specific payment option (such as an installment plan or payroll deduction) that was not in effect at the time the claim was processed; The patient's chosen payment arrangement does not apply to the type of service billed, and the standard payment methodology applies instead; The patient's payment option enrollment was not properly processed or recorded in the payer's system. The group code paired with CARC 106 determines who bears the financial responsibility — CO places it on the provider as a contractual obligation, PR shifts it to the patient, OA indicates a coordination of benefits or other payer adjustment.

Common Causes

How to Resolve

1. Review the remittance details Examine the CO-106 adjustment and any accompanying RARC codes to identify the specific reason for the denial.
2. Identify the root cause Determine which issue applies: patient's elected payment option expired or was not activated, payment option not available for this service type, administrative error in payment option enrollment.
3. Correct the claim Address the identified issue — update the claim data in your billing system to resolve the patient payment option not in effect problem.
4. Resubmit the corrected claim Submit the corrected claim following the payer's resubmission guidelines. Include any supporting documentation that addresses the denial reason.
5. Appeal if the original claim was correct If the patient's payment option should be active, contact the payer with enrollment documentation showing the payment option was in effect at the time of service. Request reprocessing with the correct payment option applied.

Common RARC Pairings

The RARC code tells you exactly what triggered the CO-106:

How to Prevent CO-106

• Verify patient payment option status during eligibility verification before service delivery
• Confirm with the payer that the patient's selected payment option covers the planned services
• Track payment option enrollment and expiration dates for patients with special arrangements
• Educate patients about their payment option terms and renewal requirements

Also Filed As

The same CARC 106 may appear with different Group Codes:

Related Denial Codes