CO-307: Medicare Maximum Fair Price Standard Default Refund Amount
CO-307 is a contractual adjustment to the Medicare Maximum Fair Price. Verify the MFP amount against CMS pricing and appeal if the calculation is incorrect.
What Does CO-307 Mean?
When paired with Group Code CO, the MFP adjustment is a contractual reduction to the Maximum Fair Price. The provider absorbs the difference between billed charges and the MFP amount. This cannot be transferred to the patient.
CARC 307 is a Medicare-specific adjustment code related to the Maximum Fair Price (MFP) provisions established by the Inflation Reduction Act (IRA). Under this program, Medicare negotiates maximum prices for certain high-cost drugs. When a provider bills for one of these drugs at an amount exceeding the negotiated MFP, Medicare adjusts the payment to reflect the MFP standard.
This code will typically appear as a payment reduction rather than a full denial. The adjustment represents the difference between the billed amount and the Maximum Fair Price for the applicable drug. CMS publishes the MFP amounts for covered drugs, and providers should reference these published prices to verify the accuracy of the adjustment.
Because this is a regulatory pricing mechanism rather than a coverage determination, the adjustment is generally accepted. However, if the MFP amount applied appears incorrect — for example, the wrong drug was matched or the pricing was not current — an appeal is warranted.
Common Causes
| Cause | Frequency |
|---|---|
| Maximum Fair Price adjustment applied Medicare applied the Maximum Fair Price standard under the Inflation Reduction Act for applicable drugs, resulting in a refund amount adjustment | Most Common |
| Drug price exceeds MFP ceiling The billed amount for a Medicare-covered drug exceeded the negotiated Maximum Fair Price, triggering a default refund adjustment | Most Common |
| Retroactive MFP pricing update A retroactive update to the Maximum Fair Price for a drug resulted in a refund amount adjustment on previously processed claims | Common |
How to Resolve
- Review the remark codes Check the RARC for MFP adjustment details.
- Verify the drug against the MFP list Confirm the correct drug and dosage are reflected in the adjustment.
- Check CMS published pricing Compare the adjustment to the CMS-published Maximum Fair Price.
- Contact MAC if incorrect If the amount does not match, contact the MAC with your pricing documentation.
- Adjust accounts receivable Update your financial records to reflect the MFP-based payment.
Appeal if you believe the MFP adjustment amount is incorrect or the drug should not be subject to Maximum Fair Price provisions. Include documentation of the drug billed, the applicable MFP amount from CMS, and your calculation showing the discrepancy.
Common RARC Pairings
The RARC code tells you exactly what triggered the CO-307:
| RARC | Description |
|---|---|
| N848 | Alert: This adjustment is based on the Maximum Fair Price. Review the MFP amount published by CMS for the billed drug and verify the adjustment calculation → |
How to Prevent CO-307
- Stay current with CMS Maximum Fair Price published amounts for applicable drugs
- Bill at or below the MFP amount when known to avoid refund adjustments
- Monitor CMS updates on the Inflation Reduction Act drug pricing provisions
- Implement drug pricing databases that include MFP amounts in your billing system
Also Filed As
The same CARC 307 may appear with different Group Codes:
Related Denial Codes
Sources
- https://x12.org/codes/claim-adjustment-reason-codes
- https://www.cms.gov/medicare/payment/prospective-payment-systems
- Codes maintained by X12. Visit x12.org for official definitions.