CO-90: Ingredient Cost Adjustment

What Does CO-90 Mean?

With CO (Contractual Obligation), the CARC 90 adjustment is the provider's responsibility. The payer denied or reduced payment because of the pharmacy or provider billed an ingredient cost higher than the payer's MAC pricing list, and the payer adjusted the payment down to the MAC rate. The patient is not liable for this amount. If the denial is in error, the provider can correct and resubmit the claim or file an appeal with supporting documentation.

CARC 90 means the payer adjusted the payment based on ingredient cost 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 pharmacy or provider billed an ingredient cost higher than the payer's MAC pricing list, and the payer adjusted the payment down to the MAC rate; The billed ingredient cost was based on a different pricing benchmark than the payer uses, such as AWP vs. ASP (Average Sales Price), resulting in a downward adjustment; A generic equivalent is available at a lower ingredient cost, and the payer adjusted the payment to the generic pricing level per formulary rules. The group code paired with CARC 90 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 remittance details Examine the CO-90 adjustment and any accompanying RARC codes to identify the specific reason for the denial.
2. Identify the root cause Determine which issue applies: billed ingredient cost exceeds payer's Maximum Allowable Cost (MAC), average Wholesale Price (AWP) or ASP pricing discrepancy, generic substitution available, among others.
3. Correct the claim Address the identified issue — update the claim data in your billing system to resolve the ingredient cost adjustment problem.
4. Resubmit the corrected claim Submit the corrected claim following the payer's resubmission guidelines. Include any supporting documentation that addresses the denial reason.
5. Appeal if the original claim was correct Appeal with documentation of actual acquisition cost (invoices) if the payer's MAC or ASP rate is lower than your cost. Include the NDC code, quantity dispensed, supplier invoice, and contractual pricing terms. For Medicare Part B drugs, reference the applicable ASP pricing file.

Common RARC Pairings

The RARC code tells you exactly what triggered the CO-90:

How to Prevent CO-90

• Regularly update billing system drug pricing tables with current MAC and ASP rates
• Verify NDC codes and quantities before claim submission to prevent billing errors
• Check payer-specific formulary and pricing rules for compound medications
• Implement automated pricing validation that compares billed amounts to payer MAC lists before submission
• Review acquisition cost invoices to support appeals when payer pricing is lower than actual cost

Also Filed As

The same CARC 90 may appear with different Group Codes:

Related Denial Codes