OA-307: Medicare Drug Price Negotiation Refund
The MFP adjustment is being processed through the MTF or COB system. Verify the adjustment and post accordingly.
What Does OA-307 Mean?
OA-307 may appear when the MFP adjustment involves coordination between multiple payers or when the adjustment is being routed through the Medicare Transaction Facilitator as part of the manufacturer refund process. The adjustment may not fall strictly under a contractual obligation in certain payment scenarios.
When CARC 307 appears on a remittance, the payer is applying a pricing adjustment mandated by the Medicare Drug Price Negotiation Program, a key provision of the Inflation Reduction Act. Under this program, CMS negotiates Maximum Fair Prices for selected high-cost prescription drugs used in Medicare Part B and Part D. When a provider bills for one of these negotiated drugs at a price above the MFP, the payer adjusts payment down to the MFP level.
This is not a denial in the traditional sense — the claim is processed and paid, but the payment is adjusted to reflect the legally mandated negotiated price. The adjustment amount represents the difference between what you billed (typically based on your acquisition cost or average sales price) and the MFP that CMS established through the negotiation process. The Medicare Transaction Facilitator coordinates the refund data between manufacturers and dispensing entities.
CARC 307 is a relatively new code (effective March 2025) that providers dispensing or administering negotiated drugs will encounter with increasing frequency as CMS adds more drugs to the negotiation program. The code requires accompanying remark codes that provide specific details about the drug and the negotiation program parameters.
Common Causes
| Cause | Frequency |
|---|---|
| Drug billed above Maximum Fair Price (MFP) The drug was billed at a price exceeding the Maximum Fair Price negotiated under the Medicare Drug Price Negotiation Program (part of the Inflation Reduction Act), and the payer is adjusting payment to the MFP level | Most Common |
| MFP refund adjustment from manufacturer The manufacturer is required to refund the difference between the actual acquisition cost and the Maximum Fair Price, and this adjustment appears on the remittance to reflect the negotiated pricing | Most Common |
| Medicare Transaction Facilitator processing The Medicare Transaction Facilitator (MTF) processed the refund-related data between the manufacturer and dispensing entity, triggering this adjustment code on the remittance | Common |
How to Resolve
Verify the adjustment against CMS-published Maximum Fair Prices and post the difference as a contractual allowance.
- Review the MTF payment data If the adjustment came through the Medicare Transaction Facilitator, review the MFP refund payment status and confirm the amounts align with the negotiated prices.
- Post the adjustment Record the adjustment in your billing system and reconcile it against the expected MFP amount.
This adjustment is typically correct as processed. Review the specific circumstances before taking further action.
Common RARC Pairings
The RARC code tells you exactly what triggered the OA-307:
| RARC | Description |
|---|---|
| N898 | Alert: This adjustment is related to the Medicare Drug Price Negotiation Program. |
How to Prevent OA-307
- Stay current with CMS guidance on MFP refund processes and Medicare Transaction Facilitator operations
General Prevention
- Stay current with CMS-published Maximum Fair Prices for drugs selected under the Medicare Drug Price Negotiation Program
- Update drug pricing tables in billing systems to reflect MFP rates as they become effective to minimize adjustment volumes
- Monitor CMS announcements regarding new drugs added to the negotiation program and their effective dates
- Coordinate with pharmaceutical wholesalers to ensure acquisition cost data aligns with MFP requirements
- Track MFP refund adjustments systematically to ensure all expected refunds are received and properly reconciled
Also Filed As
The same CARC 307 may appear with different Group Codes:
Related Denial Codes
Sources
- https://x12.org/codes/claim-adjustment-reason-codes
- https://www.cms.gov/inflation-reduction-act-and-medicare/medicare-drug-price-negotiation
- Codes maintained by X12. Visit x12.org for official definitions.