CO-76: Disproportionate Share Adjustment

What Does CO-76 Mean?

With CO (Contractual Obligation), the CARC 76 adjustment for disproportionate share 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 76 means the payer adjusted the payment based on disproportionate share 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: hospitals qualifying as disproportionate share hospitals receive an additional payment adjustment under Medicare's Inpatient PPS. CARC 76 reflects the difference between billed charges and the DSH-adjusted payment amount; The hospital's disproportionate patient percentage changed, affecting whether the hospital meets the DSH qualification threshold or the size of the DSH adjustment; The hospital's reported Medicaid fraction or SSI fraction used in the DSH calculation was inaccurate, resulting in an incorrect DSH payment adjustment. The group code paired with CARC 76 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-76 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 Appeal if the DSH adjustment amount does not match your expected payment based on reported disproportionate patient percentage and uncompensated care costs. Include cost report data, Medicaid/SSI patient percentages, and the CMS-published DSH factors. For Medicare, file within 120 days.
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-76:

How to Prevent CO-76

• Submit accurate and timely Medicaid and SSI patient percentage data to CMS for DSH qualification calculations
• Ensure uncompensated care cost reports are thoroughly documented and reconciled before submission
• Monitor annual CMS updates to DSH factors and incorporate them into revenue cycle projections
• Conduct regular internal audits of DSH-related cost report data to identify discrepancies early
• Train billing and finance staff on DSH payment methodology to facilitate accurate reconciliation

Also Filed As

The same CARC 76 may appear with different Group Codes:

Related Denial Codes