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CO-232 Code: Institutional DRG Transfer Amount

CO-232 is the institutional transfer amount. It applies only to institutional claims and explains the difference in DRG payment when a patient's care crosses multiple institutions, such as a transfer from one hospital to another before a full stay.

Quick facts

Code
CO-232 (CARC 232)
Status
Active In use since November 1, 2009; last modified July 1, 2017.
Code set
Claim Adjustment Reason Codes (CARC)
Group codes
  • CO (Contractual Obligation): The reduction from the full DRG payment is a contractual or regulatory adjustment borne by the hospital, not billable to the patient.
Official description
Institutional Transfer Amount. Usage: Applies to institutional claims only and explains the DRG amount difference when the patient care crosses multiple institutions.
X12 Claim Adjustment Reason Codes, retrieved September 25, 2026
Last verified
against the official X12 list.

What CO-232 means

CARC 232 is the institutional transfer amount. Its usage note limits it to institutional claims and says it explains the DRG amount difference when the patient care crosses multiple institutions.

DRG-based payment pays a set amount per inpatient stay, based on the diagnosis-related group. When a patient is transferred to another hospital, or in some cases to post-acute care, before the expected length of stay, both facilities cared for the patient during one episode. Many DRG systems, Medicare’s included, then pay the transferring hospital a per diem amount up to the full DRG instead of the full DRG. The difference between the full DRG and what was paid is reported as CO-232.

Example: a hospital’s claim groups to a DRG with a set payment amount. The patient was transferred to another acute hospital after two days, well short of the expected stay. The payer pays a per diem for those days and reports the remainder as CO-232.

Common causes

  • Acute-to-acute transfer before the DRG’s expected length of stay.
  • Post-acute transfer policy for certain DRGs, when the patient goes to a skilled nursing facility, rehab, or home health soon after discharge (payer rules vary).
  • Discharge status code on the UB-04 indicating a transfer.
  • Incorrect discharge status, such as coding a transfer when the patient went home.

How to fix it

  1. Verify the patient discharge status code against the discharge summary.
  2. Check dates and length of stay. An error in admission or discharge dates changes the transfer calculation.
  3. If the status code was wrong, submit a corrected institutional claim with the right status. A post-acute transfer coded when no post-acute care followed may be overturned this way.
  4. Recompute the expected payment under the payer’s transfer formula and compare it with the ERA.
  5. If the math is wrong, request reprocessing with your calculation.
  6. If correct, post as a contractual adjustment. It is not billed to the patient.

How to prevent problems

  • Train case management and HIM staff on discharge status coding, including planned post-acute care.
  • Audit transfer claims to confirm the status matches the record.
  • Load the payer’s transfer rules into contract modeling so expected payments are accurate.
  • Review DRG adjustments separately from denials; an ERA Analyzer can surface transfer reductions that don’t match your calculations.

Remark codes that may appear with CO-232

  • N69 (Alert: PPS (Prospective Payment System) code changed by claims processing system.): The payer's system changed the prospective payment code, which can change how a transfer is priced.
  • N381 (Alert: Consult our contractual agreement for restrictions/billing/payment information related to these charges.): Points to contract terms describing transfer pricing.
  • CO-A8 (Ungroupable DRG.): The claim could not be grouped to a DRG at all.
  • CO-45 (Charge exceeds fee schedule/maximum allowable or contracted/legislated fee arrangement.): A general fee schedule or contracted rate reduction.
  • CO-A5 (Medicare Claim PPS Capital Cost Outlier Amount.): A Medicare PPS capital cost outlier amount, another institutional DRG component.

CO-232 FAQ

Why was my DRG payment reduced for a transfer?

Under many DRG systems, including Medicare's inpatient prospective payment system, a hospital that transfers a patient early may be paid a per diem amount instead of the full DRG. CARC 232 reports the difference.

Can physician offices receive CO-232?

No. Official usage says it applies to institutional claims only.

What should I check when I see CO-232?

Confirm the discharge status code, length of stay, admission and discharge dates, and whether the receiving facility qualifies as a transfer under the payer's rules.

Does the receiving hospital get a transfer reduction too?

Generally the receiving hospital is paid under its own DRG for the stay it provides. The transfer adjustment typically applies to the transferring hospital's claim, although payer rules vary.