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CO-278 Denial Code: Performance Program Proficiency Not Met

CO-278 means the payer adjusted payment because the provider didn't meet the proficiency requirements of a performance program it participates in, such as quality, credentialing, or accreditation standards tied to the contract. X12 allows only group codes CO or PI.

Quick facts

Code
CO-278 (CARC 278)
Status
Active In use since July 1, 2016; last modified July 1, 2017.
Code set
Claim Adjustment Reason Codes (CARC)
Group codes
  • CO (Contractual Obligation): The usual group. The provider absorbs the adjustment under its contract and can't bill the patient.
  • PI (Payer Initiated Reduction): Payer-initiated reduction, used when the payer applies the adjustment under its own program rules rather than a contract term. The patient isn't billed.
Official description
Performance program proficiency requirements not met. (Use only with Group Codes CO or PI) Usage: Refer to the 835 Healthcare Policy Identification Segment (loop 2110 Service Payment Information REF), if present.
X12 Claim Adjustment Reason Codes, retrieved September 25, 2026
Last verified
against the official X12 list.

What CO-278 means

CARC 278 says performance program proficiency requirements were not met. Some payers link payment to meeting specific proficiency or performance standards. When the payer’s records show a provider hasn’t met a program requirement, it reduces or denies payment for affected services and reports the adjustment with CARC 278. X12 limits it to group codes CO or PI, so the patient isn’t responsible.

The usage note points to the 835 Healthcare Policy Identification segment. If the payer includes a policy reference, it identifies the program and requirement involved.

Examples of requirements that may trigger this adjustment include:

  • Accreditation for certain imaging or testing services.
  • Quality or proficiency standards measured by the payer for a program period.
  • Program participation steps, such as required training, attestations, or reporting.

Common causes

  • Accreditation lapsed or wasn’t reported to the payer.
  • Program requirement not completed for the measurement period.
  • Payer records outdated, missing a recent certification or attestation.
  • Provider added to a group without completing program requirements for that provider.
  • Services billed by a location that isn’t covered by the group’s program status.

How to fix it

  1. Look up the policy reference and program terms in your contract or provider manual.
  2. Identify the unmet requirement for the provider or location.
  3. If you met it, send the payer proof and request reprocessing or file an appeal.
  4. If you didn’t, complete the requirement and confirm when the payer will restore full payment.
  5. Post unrecoverable adjustments as contractual. Don’t bill the patient.

How to prevent it

  • Track program requirements and deadlines for each payer program.
  • Send accreditation renewals and attestations to payers as soon as they’re issued.
  • Include program requirements in onboarding for new providers and locations.
  • Watch for performance-related adjustments. An ERA Analyzer can surface CO-278 by payer and location so gaps are found quickly. See provider enrollment denials for related setup issues.

Remark codes that may appear with CO-278

  • N381 (Alert: Consult our contractual agreement for restrictions/billing/payment information related to these charges.): Points to the contract terms that set the program requirements.
  • CO-245 (Provider performance program withhold.): Provider performance program withhold, where a portion is held back rather than reduced.
  • CO-161 (Provider performance bonus): Provider performance bonus, the positive side of performance programs.
  • CO-B23 (Procedure billed is not authorized per your Clinical Laboratory Improvement Amendment (CLIA) proficiency test.): Procedure not authorized per the provider's CLIA proficiency test, a lab-specific proficiency denial.
  • CO-144 (Incentive adjustment, e.g. preferred product/service.): Incentive adjustment, such as for a preferred product or service.

CO-278 FAQ

What kind of programs use CO-278?

Programs where providers must meet standards to receive full payment for certain services, such as quality or proficiency requirements, accreditation for imaging or labs, or payer-specific performance criteria.

How do I find out which requirement wasn't met?

Check the 835 Healthcare Policy Identification segment for a policy reference, then review the program terms in your contract or the payer's provider manual. Contact your provider representative if the reason isn't clear.

Can I appeal CO-278?

Yes, if your practice met the requirement and the payer's records are wrong or outdated. Send proof, such as current accreditation certificates or program reports.

Can I bill the patient for CO-278?

No. X12 limits the code to CO or PI, both of which keep the amount off the patient.

Is CO-278 the same as a withhold?

No. A withhold (CARC 245) holds back part of the payment, which may be returned later based on performance. CO-278 reduces or denies payment because a proficiency requirement wasn't met.