CO-118 Denial Code: ESRD Network Support Adjustment

What CO-118 means

CARC 118 is the ESRD network support adjustment. End-stage renal disease (ESRD) Networks are regional organizations that work under contract with CMS on the quality of dialysis and kidney care. Their funding comes partly from a small amount deducted from Medicare payments for outpatient dialysis treatments. The remittance reports that deduction as CARC 118.

This is a routine adjustment. Dialysis facilities should expect it on paid Medicare dialysis claims, and it does not reflect any problem with the claim.

Example: a facility bills a month of outpatient dialysis. The ERA shows the payment for the treatments, patient coinsurance under PR-2, and a small CO-118 reduction tied to the number of treatments.

Common causes

• Normal Medicare processing of outpatient dialysis treatments.
• A Medicare Advantage plan or other payer that mirrors Medicare pricing, including the network reduction, under its contract.
• Adjustments or reprocessing of earlier dialysis claims, which may change the amount reported.

How to fix it

1. Confirm the claim is for dialysis services. CARC 118 on a non-dialysis claim is unexpected and worth a call to the payer.
2. Check that the reduction is consistent across claims with the same number of treatments. Inconsistencies may point to processing errors.
3. Post it as a contractual adjustment. No corrected claim or appeal is needed for a correct network reduction.
4. Ask the payer to reprocess if the reduction appears on a claim it should not apply to, or if a non-Medicare payer applies it without a contract basis.

How to prevent problems with CO-118

• Map CARC 118 to its own adjustment code so it is easy to reconcile and not confused with write-offs for denials.
• Include the network reduction in expected reimbursement for dialysis claims, so payment variance reports stay accurate.
• Review Medicare Advantage contracts to see whether they mirror Medicare reductions, including this one.
• Keep informational adjustments out of denial metrics. See how to read CARC and RARC codes for a triage approach.

Specialty notes

This code is specific to dialysis providers and ESRD facilities. Physicians billing monthly ESRD-related services on professional claims do not normally see it. Home dialysis programs should confirm that treatments billed for home patients are counted the same way as in-center treatments, since the reduction is tied to treatment counts. If the number of treatments on the remittance differs from the number billed, resolve that discrepancy first, because it affects both the payment and the network amount.