CO-232: Institutional Transfer Amount
The transfer payment was applied. Verify the calculation and appeal if the transfer classification is incorrect.
What Does CO-232 Mean?
With CO, the transfer adjustment is contractual. Verify the calculation and classification, and appeal if the transfer pricing was applied incorrectly.
CARC 232 is specific to inpatient institutional claims where the patient was transferred from one facility to another during the inpatient stay. Under Medicare's transfer policy, when a patient is transferred before the full episode of care is complete, the transferring hospital receives a per diem payment rather than the full DRG amount. The per diem rate is calculated based on the DRG payment divided by the geometric mean length of stay.
This adjustment ensures the transferring hospital is paid proportionally for the portion of the inpatient stay they provided, rather than receiving the full DRG payment for an incomplete stay.
Common Causes
| Cause | Frequency |
|---|---|
| Patient transferred to another facility before completing DRG stay The patient was transferred from one facility to another before the full DRG payment period was completed, resulting in a reduced per diem payment to the transferring hospital | Most Common |
| Medicare transfer DRG payment policy applied Medicare's transfer policy reduces the DRG payment to the transferring hospital and pays the receiving hospital the full DRG amount | Most Common |
| Short-stay transfer adjustment The patient's length of stay at the transferring facility was shorter than the geometric mean for the DRG, triggering the transfer payment adjustment | Common |
| Post-acute care transfer policy applied The patient was discharged to a post-acute care setting (SNF, home health, IRF) that triggers Medicare's post-acute care transfer policy | Common |
How to Resolve
- Verify the classification Confirm the discharge correctly qualifies as a transfer.
- Review the calculation Verify the per diem payment amount.
- Appeal if incorrect If the transfer classification or calculation is wrong, appeal with discharge documentation.
Appeal if the patient was discharged home rather than transferred, or if the transfer policy was incorrectly applied. Include accurate discharge documentation, the correct discharge disposition code, and any DRG reassignment documentation. Reference the specific Medicare transfer policy (IPPS or post-acute care transfer) and demonstrate why it should not apply.
Common RARC Pairings
The RARC code tells you exactly what triggered the CO-232:
| RARC | Description |
|---|---|
| N381 | Alert: Consult your contractual agreement for restrictions, billing, and payment information. Review the transfer payment methodology in your payer contract or Medicare guidelines → |
How to Prevent CO-232
- Ensure discharge status codes accurately reflect the patient's actual discharge destination
- Understand which discharge dispositions trigger transfer pricing under the applicable payer policy
- Review transfer payment calculations for accuracy
General Prevention
- Understand which DRGs are subject to Medicare's transfer and post-acute care transfer policies
- Ensure accurate discharge disposition codes that correctly reflect the patient's discharge status
- Verify the DRG assignment before submission to ensure the transfer policy is applied correctly
- Coordinate with receiving facilities on patient transfer documentation
- Train billing staff on Medicare's transfer DRG payment methodology
Also Filed As
The same CARC 232 may appear with different Group Codes:
Related Denial Codes
Sources
- https://x12.org/codes/claim-adjustment-reason-codes
- https://portal.ct.gov/-/media/ohs/health-it-advisory-council/apcd-advisory-group/data-submission-guide-workgroup/meeting-materials/6-30-22/carc-codes_final.pdf
- https://www.aapc.com/resources/claim-adjustment-reason-codes
- Codes maintained by X12. Visit x12.org for official definitions.