CO-45: Charge Exceeds Fee Schedule/Maximum Allowable
Contractual adjustment — review against your contract terms. The patient is not liable for this amount.
What Does CO-45 Mean?
With CO (Contractual Obligation), the CARC 45 adjustment for charge exceeds fee schedule/maximum allowable 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 45 means the payer adjusted the payment based on charge exceeds fee schedule/maximum allowable. The reimbursement was calculated using the payer's fee schedule, contracted rate, or regulatory payment methodology rather than the billed charge.
Common scenarios that trigger this adjustment include: the provider's charge exceeds the contracted fee schedule rate with the payer; Charges exceed the Medicare Physician Fee Schedule (MPFS) allowed amount; The billed amount is higher than the payer's maximum allowable for the service. The group code paired with CARC 45 determines who bears the financial responsibility — CO places it on the provider as a contractual obligation, PR shifts it to the patient, OA indicates a coordination of benefits or other payer adjustment.
Common Causes
| Cause | Frequency |
|---|---|
| Billed amount exceeds contracted rate The provider's charge exceeds the contracted fee schedule rate with the payer | Most Common |
| Medicare fee schedule reduction Charges exceed the Medicare Physician Fee Schedule (MPFS) allowed amount | Most Common |
| Maximum allowable amount exceeded The billed amount is higher than the payer's maximum allowable for the service | Common |
| Legislated fee cap State or federal law caps the reimbursement for this service below the billed amount | Occasional |
How to Resolve
- Review the adjustment against contract terms Compare the CO-45 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.
- 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-45 reflects the contracted fee schedule or maximum allowable amount. This is the correct application of the provider agreement, not a denial. The difference between the billed charge and the allowed amount is a contractual adjustment. Contact provider relations only if the fee schedule rate itself appears incorrect.
Common RARC Pairings
The RARC code tells you exactly what triggered the CO-45:
| RARC | Description |
|---|---|
| N14 | Payment based on a contractual amount or agreement, fee schedule, or maximum allowable amount Review the contracted fee schedule rate for this service → |
| N381 | Consult contract for restrictions or payment information Review the provider contract for fee schedule details → |
| N669 | Adjusted based on the Medicare fee schedule Check the current Medicare Physician Fee Schedule rate → |
| N448 | Drug/service/supply not included in the fee schedule Verify the service code is in the payer's fee schedule → |
How to Prevent CO-45
- Regularly review and update fee schedules
- Ensure billing charges are aligned with contracted rates
- Monitor payer fee schedule updates (especially Medicare annual updates)
- Implement charge capture systems that flag above-allowable charges
- Conduct regular internal audits of charge amounts vs fee schedules
Also Filed As
The same CARC 45 may appear with different Group Codes:
Related Denial Codes
Sources
- https://x12.org/codes/claim-adjustment-reason-codes
- https://www.mdclarity.com/denial-code/45
- https://www.athelas.com/tbh/decoding-carc-code-45-navigating-fee-schedule-denials-in-medical-billing
- https://cms.officeally.com/blog/understanding-claim-response-codes-co-45-and-n381
- Codes maintained by X12. Visit x12.org for official definitions.