CO-308: Contracted Funding Agreement Adjustment
CO-308 is a contractual adjustment per your funding agreement. Verify the amount matches the agreement and dispute through the contract process if incorrect.
What Does CO-308 Mean?
When paired with Group Code CO, the funding agreement adjustment is a contractual obligation. The provider accepted the funding agreement terms and absorbs the adjustment. Cannot be transferred to the patient. Dispute only if the calculation does not match the contracted terms.
CARC 308 indicates that the payment was adjusted based on a contracted funding agreement between the provider and the payer. This code covers a broad range of contractual payment arrangements including negotiated rate reductions, value-based payment model adjustments, capitation or bundled payment offsets, and risk-sharing arrangement modifications.
Unlike standard fee schedule adjustments, CARC 308 specifically references a "funding agreement" — a formal contractual arrangement that defines how payment is calculated. These agreements may involve alternative payment models where reimbursement is tied to quality outcomes, cost efficiency, or population health metrics rather than traditional fee-for-service rates.
The adjustment amount should align with the specific terms of your contracted funding agreement. If the adjustment does not match the contracted rates or methodology, dispute it through the contract's designated dispute resolution process rather than the standard claims appeal process.
Common Causes
| Cause | Frequency |
|---|---|
| Contractual payment rate adjustment Payment reduced per the contracted funding agreement between the payer and provider — the allowed amount differs from billed charges based on negotiated rates | Most Common |
| Value-based payment adjustment Payment adjusted under a value-based or alternative payment model specified in the provider-payer contract | Common |
| Capitation or bundled payment offset Payment adjusted because services are covered under a capitation or bundled payment arrangement in the funding agreement | Common |
| Risk-sharing arrangement adjustment Payment modified per risk-sharing provisions in the contracted funding agreement | Occasional |
How to Resolve
- Review the funding agreement Check the contracted payment terms and methodology.
- Compare the adjustment Calculate expected payment and compare to the actual adjustment.
- Contact provider relations Request an explanation if the adjustment does not match.
- Dispute if incorrect File a formal dispute with the funding agreement, payment terms, and your calculation showing the discrepancy.
Dispute the adjustment through the contract's dispute resolution process. Provide a copy of the contracted funding agreement, the specific payment terms, and your calculation showing the discrepancy between the expected and actual adjustment amount.
Common RARC Pairings
The RARC code tells you exactly what triggered the CO-308:
| RARC | Description |
|---|---|
| N381 | Alert: Consult your contractual agreement for restrictions, billing, and payment information. Review your contracted funding agreement to verify the adjustment amount and terms → |
| N130 | Alert: You may need to review plan documents or guidelines. Check the specific funding agreement terms for the applicable payment methodology → |
How to Prevent CO-308
- Maintain copies of all contracted funding agreements and understand the payment terms
- Train billing staff on the specific payment adjustments applicable under each payer contract
- Implement contract management software that applies contracted rates during billing
- Regularly review and reconcile contract terms with actual payment adjustments
- Negotiate clear and specific payment terms in future funding agreements
Also Filed As
The same CARC 308 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.