CO-278: Performance Program Proficiency Requirements Not Met
You did not meet performance program requirements under your contract. Check the 835 for the specific program, verify the data used, and appeal if the assessment is wrong.
What Does CO-278 Mean?
CO-278 means the payment reduction is a contractual obligation — the provider agreed to performance requirements as part of their payer contract and did not meet them. The patient cannot be billed for the reduced amount. The provider must either demonstrate the requirements were met (and request correction) or accept the adjustment.
CARC 278 indicates a payment adjustment because the provider failed to meet the proficiency requirements of a quality or performance program. These programs — including CMS's Merit-based Incentive Payment System (MIPS), commercial value-based payment arrangements, and other pay-for-performance contracts — set specific benchmarks that providers must achieve to receive full payment.
The adjustment can stem from genuinely failing to meet quality metrics, but it can also result from incomplete or incorrect data reporting. If the provider met the benchmarks but the data was not properly submitted or was submitted late, the payer may incorrectly apply the adjustment. The 835 Healthcare Policy Identification Segment (loop 2110 REF) typically identifies which specific program triggered the adjustment. Under CO, the adjustment is treated as a contractual obligation — the provider agreed to the performance terms and did not meet them. Under PI, the payer initiated the reduction based on their assessment of the provider's performance metrics.
Common Causes
| Cause | Frequency |
|---|---|
| Provider did not meet quality benchmarks The provider failed to achieve quality measures or performance standards outlined by the payer's performance program | Most Common |
| Missing credentials or certifications The provider lacks required certifications or credentials to participate in the performance program | Common |
| Guideline non-compliance for performance program The provider failed to follow program rules, missed submission deadlines, or did not comply with reporting requirements | Common |
| Insufficient training documentation Staff lack documented knowledge of performance program requirements, resulting in non-compliance | Occasional |
| Missed reporting deadlines The provider did not meet reporting or data submission timeframes required by the performance program | Occasional |
How to Resolve
- Identify the program Review the 835 Healthcare Policy Identification Segment to determine which performance program triggered the adjustment.
- Request performance report Contact the payer for the detailed performance scorecard showing which metrics you did not meet.
- Verify data accuracy Cross-check the payer's data against your internal quality reporting to find any discrepancies.
- Submit corrected data If reporting errors caused the adjustment, submit corrected quality data and request reprocessing.
- Appeal if warranted If you have evidence the proficiency requirements were met, file an appeal with corrected performance documentation.
If the provider meets the performance program requirements, file an appeal with documentation including performance reports, quality metrics data, certifications, and evidence of compliance with program standards. Reference the specific program requirements and demonstrate how they were met.
Common RARC Pairings
The RARC code tells you exactly what triggered the CO-278:
| RARC | Description |
|---|---|
| N831 | Alert: Refer to the 835 Healthcare Policy Identification Segment for specific details on this adjustment. Review the 835 Healthcare Policy Identification Segment (loop 2110 Service Payment Information REF) to identify the specific performance program requirement that was not met → |
How to Prevent CO-278
- Submit all required quality reporting data on time and verify receipt
- Track performance metrics throughout the measurement period to catch gaps early
- Implement quality improvement workflows aligned with program benchmarks
- Stay informed about changes to performance program criteria and deadlines
General Prevention
- Train staff comprehensively on performance program requirements and proficiency benchmarks
- Monitor provider performance regularly against program standards
- Implement performance improvement plans proactively before deadlines
- Stay updated on changes to performance program requirements
- Utilize technology solutions to track and report performance metrics automatically
- Establish clear processes for meeting reporting deadlines and documentation requirements
Also Filed As
The same CARC 278 may appear with different Group Codes:
Related Denial Codes
Sources
- https://www.mdclarity.com/denial-code/278
- https://resdac.org/sites/datadocumentation.resdac.org/files/Adjustment%20Reason%20Code%20Code%20Table%20(TAF%20Claims).txt
- https://x12.org/codes/claim-adjustment-reason-codes
- Codes maintained by X12. Visit x12.org for official definitions.