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CO-223 Denial Code: Mandated Law or Regulation Adjustment

CO-223 means the payer made an adjustment required by a federal, state, or local law or regulation that is not already covered by another reason code. X12 created it so payers can report newly mandated adjustments before a specific code exists.

Quick facts

Code
CO-223 (CARC 223)
Status
Active In use since June 1, 2008.
Code set
Claim Adjustment Reason Codes (CARC)
Group codes
  • CO (Contractual Obligation): The adjustment is applied to the provider under the mandate. Whether it can be billed to the patient depends on the law involved, and generally it cannot.
  • OA (Other Adjustment): Used when the payer reports a mandated adjustment that is neither provider nor patient liability, such as some government-directed reductions.
  • PR (Patient Responsibility): Used when the mandate itself shifts an amount to the patient.
Official description
Adjustment code for mandated federal, state or local law/regulation that is not already covered by another code and is mandated before a new code can be created.
X12 Claim Adjustment Reason Codes, retrieved September 25, 2026
Last verified
against the official X12 list.

What CO-223 means

CARC 223 is an adjustment code for mandated federal, state, or local law or regulation that is not already covered by another code and is mandated before a new code can be created. In other words, it is a holding code. When a government body requires payers to apply a new reduction, fee, or adjustment faster than X12 can publish a specific code, payers can report it as CARC 223.

Because the code itself says almost nothing about the rule, the meaningful detail lives in the remark codes, the payer’s bulletins, or its provider manual. Expect CARC 223 to be used for a period of time and then replaced by a more specific code once one exists.

Example: a state enacts a rule requiring a small percentage reduction on certain claims starting on a set date. Until a dedicated code exists, payers in that state may show the reduction as CO-223 on each affected line.

Common causes

  • New federal or state payment reductions that take effect before X12 creates a specific code.
  • Local or state assessments applied to certain claim types.
  • Regulatory rate changes effective mid-year.
  • Emergency or temporary mandates applied for a defined period.

How to fix it

  1. Look at the remark codes and REF segments on the ERA for a policy reference.
  2. Check the payer’s recent bulletins for any newly mandated adjustment and its effective date.
  3. Verify the calculation. Confirm the adjustment applies to this claim type, date of service, and amount.
  4. If it was misapplied, for example before the effective date or to an exempt service, request reprocessing or reconsideration with the rule’s details.
  5. If correct, post it as an adjustment using the group code the payer reported. Do not move a CO-223 amount to the patient.
  6. Watch for the code to change. When a specific code replaces 223, update your posting rules.

How to prevent problems

  • Subscribe to payer and state regulatory bulletins so new mandates are known before they hit ERAs.
  • Create a separate posting rule for CARC 223 so it is reviewed rather than silently written off.
  • Track mandated adjustments over time; an ERA Analyzer can show when a new adjustment appears across payers or starts affecting claims it should not.
  • Keep mandated adjustments out of your denial metrics, since they reflect regulation rather than billing errors. See how to read CARC and RARC codes.

Remark codes that may appear with CO-223

  • N130 (Consult plan benefit documents/guidelines for information about restrictions for this service.): Points to plan or program documents that describe the mandate.
  • N381 (Alert: Consult our contractual agreement for restrictions/billing/payment information related to these charges.): Points to the contract language that incorporates regulatory adjustments.
  • N59 (Alert: Please refer to your provider manual for additional program and provider information.): Directs you to the provider manual for program details on the adjustment.
  • CO-253 (Sequestration - reduction in federal payment): The Medicare sequestration reduction, which has its own dedicated code.
  • CO-45 (Charge exceeds fee schedule/maximum allowable or contracted/legislated fee arrangement.): A fee schedule or legislated fee arrangement reduction, which is a more specific reason.
  • CO-P1 (State-mandated Requirement for Property and Casualty, see Claim Payment Remarks Code for specific explanation.): A state-mandated requirement used only by property and casualty payers.

CO-223 FAQ

Why would a payer use CO-223 instead of a specific code?

X12 describes CARC 223 as a stopgap for adjustments mandated by law before a new code can be created. When a new rule takes effect quickly, payers may use 223 until a more specific code exists.

How do I find out which law applies?

Check remark codes and any policy reference on the ERA, then the payer's bulletins or provider manual for recent regulatory changes. If nothing explains it, ask provider services for the specific citation.

Is CO-223 appealable?

You can dispute whether the payer applied the mandate correctly, such as the wrong date or amount. Appealing the mandate itself is generally not possible through a claim appeal.