CO-262: Pharmaceutical Delivery Cost Adjustment

What Does CO-262 Mean?

CO-262 designates the pharmaceutical delivery cost adjustment as a contractual write-off. Your payer agreement either does not cover delivery charges or limits them to a specific allowed amount. The difference between your billed delivery cost and the allowed amount (which may be zero) is absorbed by the provider. You cannot transfer this balance to the patient.

When CARC 262 appears on a remittance, the payer has specifically adjusted the delivery cost component of a pharmaceutical claim. This code exists exclusively for pharmaceutical billing and signals that the charges associated with physically delivering medication to the patient — courier fees, transportation costs, or specialized handling charges — were not reimbursed at the billed amount. The payer may have reduced the delivery charge to a lower allowed amount or denied it entirely.

This adjustment is distinct from CARC 263 (shipping), 264 (postage), and 265 (administrative) — all of which also apply only to pharmaceuticals. CARC 262 targets the actual delivery logistics cost. Specialty pharmacies, home infusion providers, and mail-order pharmacies encounter this code most frequently because delivery is a core part of their service model. For traditional retail pharmacies, this code is less common since patients typically pick up medications in person.

Under Group Code CO, the delivery cost adjustment is a contractual write-off that cannot be passed to the patient. This is the most common scenario — the payer's contract either excludes delivery charges or caps them at a specific rate. Before writing off the amount, verify that the correct delivery charge codes were used and that the payer applied the right fee schedule. If your contract explicitly covers delivery costs and the payer adjusted them in error, you have grounds for appeal or reprocessing.

Common Causes

How to Resolve

Verify whether delivery costs are covered under your payer contract, correct any coding errors, and resubmit or write off the adjustment.

1. Review contract terms for delivery cost coverage Check whether your payer contract includes reimbursement for pharmaceutical delivery. If delivery charges are excluded, the CO-262 adjustment is valid and should be written off.
2. Verify billing accuracy Ensure correct codes and amounts were submitted. If a coding error caused the denial, correct and resubmit.
3. Accept write-off or request reprocessing If the contract covers delivery and the denial was in error, request reprocessing with supporting documentation. Otherwise, post the contractual adjustment.

How to Prevent CO-262

• Maintain a reference table of payer contracts that specifies which payers reimburse pharmaceutical delivery costs and at what rates
• Verify delivery cost coverage before billing by checking contract terms for each payer
• Use correct billing codes for pharmaceutical delivery charges and ensure amounts are within allowed limits
• Conduct quarterly audits of pharmaceutical delivery billing to identify systematic issues

General Prevention

• Maintain accurate documentation of all pharmaceutical delivery costs including invoices, receipts, and delivery confirmations
• Verify that the patient's plan covers pharmaceutical delivery charges before billing
• Ensure delivery costs are properly separated from drug costs on the claim and use correct billing codes
• Conduct regular audits of pharmaceutical delivery billing to catch calculation and coding errors
• Stay current with payer-specific guidelines on allowable delivery charges and billing requirements

Also Filed As

The same CARC 262 may appear with different Group Codes:

Related Denial Codes