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CO-308 Denial Code: Contracted Funding Agreement Adjustment

CO-308 means the payer adjusted payment because of a contracted funding agreement between the payer and the provider. The claim's payment reflects that arrangement, such as prepaid, budgeted, or otherwise pre-funded amounts, rather than standard fee-for-service pricing.

Quick facts

Code
CO-308 (CARC 308)
Status
Active In use since November 1, 2025.
Code set
Claim Adjustment Reason Codes (CARC)
Group codes
  • CO (Contractual Obligation): The usual group. The adjustment is contractual and can't be billed to the patient.
Official description
Payment is adjusted due to contracted funding agreement between the payer and provider.
X12 Claim Adjustment Reason Codes, retrieved September 25, 2026
Last verified
against the official X12 list.

What CO-308 means

CARC 308 says payment is adjusted due to a contracted funding agreement between the payer and provider. Some payer-provider arrangements don’t pay each claim on a standard fee-for-service basis. The payer may prefund a budget, pay periodic amounts, share risk under a negotiated structure, or otherwise fund care outside the claim. When a claim falls under such an agreement, the payer reports the portion handled by the arrangement with CARC 308.

This is broader than CARC 139, which X12 reserves for funding agreements where the subscriber is an employee of the provider. It’s also distinct from OA-24, which is specific to capitation and managed care arrangements.

Example: a health system has an agreement under which a payer funds a set amount for a program each quarter. Claims for services under the program still go to the payer for data and reconciliation, and the remittances show CO-308 instead of a per-claim payment.

Common causes

  • Prefunded or budget-based agreements covering certain services or populations.
  • Value-based or risk arrangements that pay outside the claim.
  • Periodic payment schedules where claims reconcile against advance payments.
  • Claims linked to the wrong contract, such as a provider under a funding agreement for one line of business but not another.

How to handle it

  1. Confirm the agreement exists and covers this service, patient population, and date.
  2. Reconcile the claim against payments received under the agreement.
  3. Post the adjustment as contractual and don’t bill the patient.
  4. Question it with the payer when no agreement applies or the service is outside its scope, and request reprocessing under the correct contract.

How to prevent problems

  • Document every funding agreement with the services, members, and dates it covers.
  • Share agreement details with billing staff so they recognize expected CO-308 lines.
  • Reconcile regularly to confirm claim activity matches funding.
  • Track contract adjustments separately from denials. An ERA Analyzer can group CO-308 lines by payer and program.

Specialty notes

Integrated delivery systems, provider-sponsored plans, and organizations in alternative payment models are most likely to see this code. Independent practices on standard fee-for-service contracts rarely encounter it.

Remark codes that may appear with CO-308

  • N381 (Alert: Consult our contractual agreement for restrictions/billing/payment information related to these charges.): Points to the contractual agreement that defines the funding arrangement.
  • CO-139 (Contracted funding agreement - Subscriber is employed by the provider of services.): Contracted funding agreement where the subscriber is employed by the provider, a narrower version.
  • OA-24 (Charges are covered under a capitation agreement/managed care plan.): Charges covered under a capitation agreement or managed care plan.
  • OA-271 (Prior contractual reductions related to a current periodic payment as part of a contractual payment schedule when deferred amounts have been…): Prior contractual reductions related to a current periodic payment under a contractual payment schedule.
  • CO-45 (Charge exceeds fee schedule/maximum allowable or contracted/legislated fee arrangement.): Standard fee schedule or contracted rate reduction.

CO-308 FAQ

How is CO-308 different from CO-139?

CARC 139 applies specifically when the subscriber is employed by the provider of services, such as a health system covering its own employees. CARC 308 is broader: any funding agreement between the payer and provider.

Is CO-308 a denial?

No. It shows that the claim's payment is governed by a funding arrangement. The service may already be paid through that arrangement.

Can I bill the patient for CO-308?

No. It's a contractual adjustment between the payer and provider.

When should I question CO-308?

When your organization has no funding agreement with the payer, when the service falls outside the agreement's scope, or when the amounts don't reconcile to the agreement's payments.

Why submit claims at all under a funding agreement?

Payers typically need claim data to track utilization, quality, and reconciliation against the funding, even when payment happens outside the claim.