CO-23: Prior Payer Adjudication Impact
Contractual adjustment — review against your contract terms. The patient is not liable for this amount.
What Does CO-23 Mean?
With CO (Contractual Obligation), the CARC 23 adjustment for prior payer adjudication impact 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 23 indicates prior payer adjudication impact. 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: secondary payer applies its own fee schedule or contractual adjustments after the primary payer's payment; Primary payer's payment exceeded the secondary payer's allowable, resulting in no additional payment; Adjustments from the primary payer are applied to the secondary claim processing. The group code paired with CARC 23 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
| Cause | Frequency |
|---|---|
| Secondary payer contractual adjustment Secondary payer applies its own fee schedule or contractual adjustments after the primary payer's payment | Most Common |
| Primary payer overpaid Primary payer's payment exceeded the secondary payer's allowable, resulting in no additional payment | Common |
| Prior payer adjustment carried forward Adjustments from the primary payer are applied to the secondary claim processing | Common |
How to Resolve
- Review the adjustment against contract terms Compare the CO-23 adjustment with your payer contract to confirm the reduction is consistent with agreed terms or regulatory methodology.
- Verify the adjustment amount Confirm the dollar amount of the adjustment is calculated correctly based on the contracted rate and the service provided.
- Appeal if the adjustment is incorrect If the secondary payer miscalculated the COB adjustment, appeal with both the primary and secondary EOBs showing the correct payment and adjustment amounts. Demonstrate the calculation error.
- 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.
If the secondary payer miscalculated the COB adjustment, appeal with both the primary and secondary EOBs showing the correct payment and adjustment amounts. Demonstrate the calculation error.
Common RARC Pairings
The RARC code tells you exactly what triggered the CO-23:
| RARC | Description |
|---|---|
| MA04 | Secondary payment cannot be considered without primary payer information Submit complete primary payer EOB → |
| N381 | Consult contract/fee schedule for payment information Review secondary payer's fee schedule for COB calculation → |
How to Prevent CO-23
- Submit accurate primary payer EOB data with secondary claims
- Ensure timely secondary claim submission after primary adjudication
- Verify COB order is correct before submission
- Use electronic crossover processing when available
Also Filed As
The same CARC 23 may appear with different Group Codes:
Related Denial Codes
Sources
- https://x12.org/codes/claim-adjustment-reason-codes
- https://revenuecyclemgmt.com/claim-adjustment-reason-codes/
- https://www.rivethealth.com/blog/carcs-rarcs-claim-adjustment-remittance-advice-codes
- Codes maintained by X12. Visit x12.org for official definitions.