CO-242: Services Not Provided by Network Provider

What Does CO-242 Mean?

CO-242 means the provider must absorb the denied amount as a contractual adjustment. This typically applies when the provider should have known they were out-of-network, or when the payer's contract terms require the provider to absorb the cost. The patient cannot be balance-billed for this adjustment.

CARC 242 is a network participation denial. The payer has determined that the services were rendered by a provider who is not part of the patient's insurance network or was not designated as the patient's primary care provider. This code replaced the older deactivated CARC 38 and is used across commercial insurance, managed care, and some government programs.

The denial can arise from several scenarios: the provider genuinely is not in-network for the patient's plan, the provider's network status recently changed, the patient did not obtain the required referral from their PCP, or the patient chose to see an out-of-network provider. The financial impact depends heavily on the group code — CO means the provider absorbs the cost, while PR means the patient is responsible.

In the current regulatory environment, the No Surprises Act provides important protections for patients who receive out-of-network emergency services or services from out-of-network providers at in-network facilities. Providers must understand these rules before deciding how to handle a CARC 242 denial, as balance-billing restrictions may apply.

Common Causes

How to Resolve

Verify your network status for the patient's specific plan, pursue retroactive authorization or single-case agreements if available, and handle patient billing according to balance-billing laws.

1. Verify network status Confirm whether you are truly out-of-network for the patient's plan. If you are in-network, submit documentation proving your participation and request reprocessing.
2. Request a single-case agreement If you are out-of-network, contact the payer to request a single-case agreement or retroactive authorization, especially if no in-network provider was available.
3. Write off or appeal If no resolution is available, write off the amount. If you believe the denial is incorrect, appeal with network participation documentation.

Common RARC Pairings

The RARC code tells you exactly what triggered the CO-242:

How to Prevent CO-242

• Maintain current network agreements and verify your status regularly with each payer
• Verify your network status for the patient's specific plan before rendering services
• Negotiate single-case agreements proactively for anticipated out-of-network situations
• Know No Surprises Act requirements for emergency and post-stabilization services

General Prevention

• Maintain current network participation agreements with all major payers and verify your network status regularly
• Verify network status for the patient's specific plan before providing services, as network participation can vary by plan within the same payer
• Obtain single-case agreements for out-of-network situations when possible before rendering services
• Be aware of the No Surprises Act requirements for emergency and certain post-stabilization services

Also Filed As

The same CARC 242 may appear with different Group Codes:

Related Denial Codes