CO-3: Co-payment Amount
Contractual adjustment — review against your contract terms. The patient is not liable for this amount.
What Does CO-3 Mean?
With CO (Contractual Obligation), the CARC 3 adjustment for co-payment amount 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 3 appears on a remittance when the payer adjusts payment for the co-payment amount. This is a standard plan-defined cost-sharing amount that the patient is obligated to pay per their insurance benefits. The code confirms the payer processed the claim correctly and applied the plan's benefit structure as designed.
Common scenarios that trigger this adjustment include: patient's plan requires a fixed co-payment amount for office visits and other services; Higher co-payment required for specialist visits versus primary care; ER visits carry a higher co-payment per the patient's plan. The group code paired with CARC 3 determines who bears the financial responsibility — PR shifts it to the patient, OA indicates a coordination of benefits or other payer adjustment, CO places it on the provider as a contractual obligation.
How to Resolve
- Review the adjustment against contract terms Compare the CO-3 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 adjustment does not align with contract terms, file an appeal with contract documentation and supporting evidence.
- 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.
Co-payment Amount recorded under CO is a contractual obligation — the provider absorbs this amount per the payer agreement. Without an error in how the contract was applied, appeals don't apply. Review the accompanying RARC codes for context and accept the adjustment when the contract terms were applied correctly.
How to Prevent CO-3
- Review claims for accuracy before submission
- Stay current with payer-specific requirements and guidelines
Also Filed As
The same CARC 3 may appear with different Group Codes: