CO-108: Rent/Purchase Guidelines Not Met

What Does CO-108 Mean?

With CO (Contractual Obligation), the CARC 108 adjustment is the provider's responsibility. The payer denied or reduced payment because of the durable medical equipment has been rented beyond the maximum rental period allowed by the payer, and the claim for additional rental months is denied. 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 108 indicates rent/purchase guidelines not met. The payer determined that the service or a portion of it does not meet coverage criteria under the patient's current plan benefits or the applicable coverage rules.

Common scenarios that trigger this adjustment include: the durable medical equipment has been rented beyond the maximum rental period allowed by the payer, and the claim for additional rental months is denied; The patient did not elect to purchase the rented equipment within the payer-required timeframe, and billing for additional rental periods is not allowed; The claim was submitted with the wrong modifier indicating rental when purchase was required, or vice versa, based on the payer's rent/purchase guidelines. The group code paired with CARC 108 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-108 adjustment and any accompanying RARC codes to identify the specific reason for the denial.
2. Identify the root cause Determine which issue applies: rental period exceeded for DME item, purchase option not elected within required timeframe, incorrect modifier for rent vs. purchase, among others.
3. Correct the claim Address the identified issue — update the claim data in your billing system to resolve the rent/purchase guidelines not met 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 Appeal with a complete rental history for the equipment, the current CMN/DIF, and documentation showing compliance with rent/purchase guidelines. Include the correct modifier history, rental month count, and evidence that the billing follows payer-specific DMEPOS rules.

Common RARC Pairings

The RARC code tells you exactly what triggered the CO-108:

How to Prevent CO-108

• Track DME rental periods for each patient and transition to purchase billing before the rental cap is reached
• Implement automated alerts for DME rental period milestones (e.g., month 10 of 13 for Medicare)
• Use correct modifiers (RR, NU, UE) on all DME claims based on the current rental/purchase status
• Maintain current CMNs and DIFs for all rental equipment
• Review payer-specific rent/purchase guidelines and incorporate them into the DME billing workflow

Also Filed As

The same CARC 108 may appear with different Group Codes:

Related Denial Codes