CO-70: Cost Outlier Adjustment

What Does CO-70 Mean?

With CO (Contractual Obligation), the CARC 70 adjustment for cost outlier adjustment 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 70 means the payer adjusted the payment based on cost outlier adjustment. 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 total cost of the inpatient stay exceeds the cost outlier threshold for the assigned DRG, triggering additional outlier payment; Medicare pays a cost outlier amount equal to 80% of the difference between the total costs and the outlier threshold; The standard DRG payment is supplemented with an additional cost outlier payment for exceptionally expensive cases. The group code paired with CARC 70 determines who bears the financial responsibility — CO places it on the provider as a contractual obligation, OA indicates a coordination of benefits or other payer adjustment, PR shifts it to the patient.

Common Causes

How to Resolve

1. Review the adjustment against contract terms Compare the CO-70 adjustment with your payer contract to confirm the reduction is consistent with agreed terms or regulatory methodology.
2. Verify the adjustment amount Confirm the dollar amount of the adjustment is calculated correctly based on the contracted rate and the service provided.
3. Appeal if the adjustment is incorrect If the cost outlier payment appears incorrect, appeal with documentation showing the correct total charges, the applicable cost-to-charge ratio, and the DRG threshold. If charges were not fully captured on the original claim, submit a corrected claim with all charges included.
4. 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.

Common RARC Pairings

The RARC code tells you exactly what triggered the CO-70:

How to Prevent CO-70

• Ensure all charges are captured on the inpatient claim
• Verify DRG coding accuracy for correct outlier threshold
• Monitor cost-to-charge ratio updates from CMS
• Review cost outlier calculations on high-dollar remittances

Also Filed As

The same CARC 70 may appear with different Group Codes:

Related Denial Codes