CO-306: Type of Bill Inconsistent with Patient Status

What Does CO-306 Mean?

CO-306 is the standard pairing, indicating the type of bill inconsistency is treated as a provider billing error under the contractual agreement. The claim cannot be processed until the data elements are corrected. The CO designation means you absorb the cost of the correction — you cannot bill the patient for the time the claim is in limbo. Once corrected and resubmitted, the claim should process normally.

When CARC 306 appears on a remittance, the payer is flagging a mismatch between the type of bill (TOB) code on your UB-04 and the patient's admission or discharge status. The type of bill is a four-character code that tells the payer the facility type, the care setting (inpatient, outpatient, etc.), and the billing frequency. When this code conflicts with the patient status code — which indicates the patient's condition at discharge or at the end of the billing period — the payer cannot process the claim.

Common scenarios that trigger CARC 306 include submitting an inpatient type of bill (011x) for a patient who was in observation status, using an outpatient type of bill (013x) for a patient who was formally admitted as an inpatient, or having a discharge status code that contradicts the type of bill. The observation-versus-inpatient distinction is a particularly frequent source of this denial, especially when a patient's status changes during the encounter.

This is a correctable billing error. The payer has not made a coverage or medical necessity determination — they simply cannot process the claim because the data elements contradict each other. Once you identify which code is wrong (the type of bill or the patient status), correct it and resubmit.

Common Causes

How to Resolve

Identify whether the type of bill or patient status code is incorrect, correct the mismatched code, and resubmit the claim.

1. Identify the mismatch Compare the type of bill code against the patient status code and the medical record. Determine which code is incorrect.
2. Correct and resubmit Fix the incorrect code on the UB-04 and resubmit the claim using the appropriate replacement or corrected claim submission method for the payer.
3. Verify acceptance Confirm the corrected claim was accepted and is processing. Check the remittance to ensure the CARC 306 does not recur.

Common RARC Pairings

The RARC code tells you exactly what triggered the CO-306:

How to Prevent CO-306

• Implement automated claim edit checks that validate type of bill against patient status before submission
• Train billing staff on the correct type of bill codes for each encounter type, with special attention to observation versus inpatient distinctions
• Establish a workflow for cases where patient status changes during the encounter to ensure the type of bill is updated accordingly
• Audit claims regularly for type of bill and patient status consistency before submission

General Prevention

• Implement automated validation checks that verify the type of bill code matches the patient status before claims are submitted
• Train billing staff on the correct type of bill codes for different encounter types including inpatient, outpatient, observation, and skilled nursing facility stays
• Establish a review process for claims involving patient status changes (e.g., observation to inpatient conversion) to ensure the type of bill is updated accordingly
• Maintain a reference guide for type of bill codes and their corresponding patient status requirements for quick staff reference
• Audit claims regularly for type of bill and patient status consistency to catch systemic errors before they result in denials

Also Filed As

The same CARC 306 may appear with different Group Codes:

Related Denial Codes