CO-85: Patient Interest Adjustment

What Does CO-85 Mean?

With CO (Contractual Obligation), the CARC 85 adjustment for patient interest 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 85 appears on a remittance when the payer adjusts payment for the patient interest adjustment. This is a standard plan-defined cost-sharing amount that the patient is obligated to pay per their insurance benefits. The code confirms the payer processed the claim correctly and applied the plan's benefit structure as designed.

Common scenarios that trigger this adjustment include: the payer delayed processing or payment beyond contractual or regulatory timeframes, resulting in interest charges that accrue on the patient's account as part of the overall balance adjustment; The patient failed to make timely payments on their balance according to the agreed-upon payment plan or terms, and interest charges were applied to the outstanding amount; A denied claim made the patient responsible for the full charge, and interest accrued during the time between the denial and patient notification or payment. The group code paired with CARC 85 determines who bears the financial responsibility — PR shifts it to the patient, CO places it on the provider as a contractual obligation, OA indicates a coordination of benefits or other payer adjustment.

How to Resolve

1. Review the adjustment against contract terms Compare the CO-85 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 adjustment does not align with contract terms, file an appeal with contract documentation and supporting evidence.
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.

How to Prevent CO-85

• Review claims for accuracy before submission
• Stay current with payer-specific requirements and guidelines

Also Filed As

The same CARC 85 may appear with different Group Codes:

Related Denial Codes