CO-144: Incentive Adjustment for Preferred Product/Service

What Does CO-144 Mean?

With CO (Contractual Obligation), the CARC 144 adjustment for incentive adjustment for preferred product/service is a contractual reduction. The provider absorbs this amount per the payer contract or regulatory payment methodology. The patient is not responsible for the adjusted amount. Review the remittance to confirm the adjustment is consistent with your contract terms.

CARC 144 means the payer adjusted the payment based on incentive adjustment for preferred product/service. The reimbursement was calculated using the payer's fee schedule, contracted rate, or regulatory payment methodology rather than the billed charge.

Common scenarios that trigger this adjustment include: the provider used a product, device, or medication that is not on the payer's preferred list, and the payer applies an incentive adjustment to encourage use of the preferred alternative; The provider is enrolled in an incentive program such as preferred drug formulary or value-based purchasing but the specific claim does not meet the program's criteria for the incentive payment; The claim was submitted with codes that do not align with the payer's incentive program requirements, preventing the incentive payment from being applied. The group code paired with CARC 144 determines who bears the financial responsibility — CO places it on the provider as a contractual obligation, OA indicates a coordination of benefits or other payer adjustment, PR shifts it to the patient.

Common Causes

How to Resolve

1. Review the adjustment against contract terms Compare the CO-144 adjustment with your payer contract to confirm the reduction is consistent with agreed terms or regulatory methodology.
2. Verify the adjustment amount Confirm the dollar amount of the adjustment is calculated correctly based on the contracted rate and the service provided.
3. Appeal if the adjustment is incorrect Appeal only if the allowed amount does not match your contracted rate. Include your signed contract showing the agreed-upon rate for the billed procedure code. If the fee schedule was applied incorrectly, provide evidence of the correct rate.
4. Process the contractual adjustment If the adjustment is correct per contract terms, process it accordingly in your billing system. This amount cannot be transferred to the patient.

Common RARC Pairings

The RARC code tells you exactly what triggered the CO-144:

How to Prevent CO-144

• Maintain a current copy of each payer's preferred product/service list and ensure clinical staff have access when making product decisions
• Train clinical and billing staff on payer incentive program criteria so preferred products are selected and coded correctly
• Include correct product identifiers (NDC codes, HCPCS codes, manufacturer information) on claims to ensure incentives are properly applied
• When a non-preferred product must be used for clinical reasons, proactively document the medical necessity
• Review payer contracts periodically to stay informed of changes to incentive program terms and preferred lists
• Monitor claims for incentive adjustments to detect patterns and adjust purchasing or prescribing practices as needed

Also Filed As

The same CARC 144 may appear with different Group Codes:

Related Denial Codes