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CO-123 Denial Code (Deactivated): Refund Due to Overpayment

CO-123 identified a payer refund due to overpayment. X12 deactivated it, and its notes refer users to the implementation guide for proper handling of reversals rather than naming another code.

X12 deactivated CARC123 on June 30, 2007. Payers should no longer use it on new remittances, but it can still appear on older ERAs, corrected claims, and appeals.

Code: CO-123 (CARC 123)
Status: Deactivated StoppedJune 30, 2007 (in use since January 1, 1995).
Code set: Claim Adjustment Reason Codes (CARC)
Group codes: CO (Contractual Obligation): The amount related to the payer's correction of its own overpayment, not a patient liability.
Official description: Payer refund due to overpayment.
X12 Claim Adjustment Reason Codes, retrieved September 25, 2026
Last verified: September 24, 2026 against the official X12 list.

What CO-123 meant

CARC 123 was used when the remittance reflected a refund tied to an overpayment. The payer had paid too much on a claim and the transaction on the remittance related to getting that money back or accounting for it.

What replaced it

X12 did not assign a new code. Its note refers to the implementation guide for how reversals should be handled. In practice, current 835 files show a reversal of the original claim, a corrected claim if one applies, and often a provider-level adjustment for the money recovered.

Related active codes that may explain why an overpayment happened include CO-B13 and CO-129. A refund to the patient uses CO-A0.

If you still see CO-123

This belongs to old remittances. When reconciling, find the original payment and confirm whether the payer recovered it by offset or expected a check from you. Post the reversal against the original claim, not the one where the offset happened to occur, and keep the payer’s overpayment letter with the account.

CO-B13 (Previously paid.): Previously paid; payment may have been made in an earlier remittance.
CO-129 (Prior processing information appears incorrect.): Prior processing information appears incorrect.
CO-A0 (Patient refund amount.): Patient refund amount, when money is returned to the patient.

CO-123 FAQ

How are overpayments reversed on a modern 835?

The 835 implementation guide describes reversing the original claim and, where needed, sending a corrected claim. Recovery of money is often shown as a provider-level adjustment rather than a claim adjustment reason.

Should I refund the payer when I see CO-123?

Check first whether the payer already recovered the money by offset. Refunding again would create a double payment back to the payer.

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