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CO-45 Denial Code: Charge Exceeds Fee Schedule

CO-45 means the payer reduced your billed charge to its fee schedule, maximum allowable, or contracted amount. Under the CO group code, the difference is a contractual write-off that generally cannot be billed to the patient.

Quick facts

Code
CO-45 (CARC 45)
Status
Active In use since January 1, 1995; last modified July 1, 2017.
Code set
Claim Adjustment Reason Codes (CARC)
Group codes
  • CO (Contractual Obligation): The reduction is a contractual write-off. Under a participating (in-network) contract it generally cannot be billed to the patient.
  • PR (Patient Responsibility): The payer indicates the patient may be liable for the amount above the allowed amount, for example in some out-of-network situations. Whether you can bill it depends on the plan, your agreements, and federal and state balance-billing laws.
Official description
Charge exceeds fee schedule/maximum allowable or contracted/legislated fee arrangement. Usage: This adjustment amount cannot equal the total service or claim charge amount; and must not duplicate provider adjustment amounts (payments and contractual reductions) that have resulted from prior payer(s) adjudication. (Use only with Group Codes PR or CO depending upon liability)
X12 Claim Adjustment Reason Codes, retrieved September 25, 2026
Last verified
against the official X12 list.

What CO-45 means

Every payer has an allowed amount for each service: the most it will recognize under its fee schedule or your contract. When your billed charge is higher than that amount, the payer reduces the charge and reports the difference on the ERA (835) as CARC 45.

A simple example:

  • You bill $200 for a service.
  • The payer’s allowed amount is $120.
  • The ERA shows CO-45 for $80. That is the contractual write-off.
  • The remaining $120 is split between the payer’s payment and any patient cost-sharing, for example $96 paid by the payer and PR-2 coinsurance of $24.

In most cases CO-45 is expected and correct. It is an adjustment, not a rejection of the claim.

When CO-45 signals a problem

CO-45 is worth a closer look when:

  • The allowed amount is lower than your contract. The payer may be applying the wrong fee schedule year, the wrong place of service rate, the wrong provider or network tier, or a pricing rule that doesn’t match your agreement.
  • CO-45 equals the entire charge. The official usage note says this adjustment should not equal the total service or claim charge. If it does, ask the payer what actually happened, because a different reason may apply.
  • PR-45 appears on an in-network claim. Before billing the patient, confirm the patient’s plan and your participation status. You may not be allowed to balance bill.
  • Participation doesn’t match. If a rendering provider or location isn’t set up correctly with the payer, claims can price at out-of-network rates. See provider enrollment denials.

How to fix it

  1. Check the group code. CO means the provider writes off the difference; PR means the patient may be responsible.
  2. Compare the allowed amount to your expected rate for that service, modifiers, place of service, date of service, and rendering provider.
  3. If it matches your contract, post the amount as a contractual adjustment. Do not bill the patient for a CO-45 amount.
  4. If the allowed amount is too low, gather the contract or fee schedule and contact the payer’s provider services. Request reprocessing, or follow the payer’s reconsideration or appeal process within its deadlines. Keep a record of each underpaid claim.
  5. If CO-45 wipes out the whole charge, contact the payer before writing anything off, since the official usage says that shouldn’t happen.

How to prevent CO-45 problems

  • Load current payer fee schedules into your practice management system so every payment can be compared to what you expected.
  • Review your charges at least once a year. Many payers pay the lesser of your billed charge or the allowed amount, so charges set below a contracted rate can leave money unpaid.
  • Verify network participation for every rendering provider and location with each payer before claims go out.
  • Watch allowed amounts, not just denials. An ERA analysis that compares allowed amounts to expected rates catches underpayment patterns that a denial report misses.
  • Keep CO-45 out of your denial rate. Routine contractual adjustments are not denials. See how to read CARC and RARC codes.

Remark codes that may appear with CO-45

  • N130 (Consult plan benefit documents/guidelines for information about restrictions for this service.): The payer is pointing to plan documents for the specific limit it applied.
  • N381 (Alert: Consult our contractual agreement for restrictions/billing/payment information related to these charges.): The payer is pointing to your contract as the basis for the reduction.
  • MA01 (Alert: If you do not agree with what we approved for these services, you may appeal our decision.): Medicare appeal-rights alert. Read the full text on your remittance for the deadline that applies.
  • CO-42Deactivated (Charges exceed our fee schedule or maximum allowable amount. (Use CARC 45)): Deactivated in 2007. X12 directs payers to use CARC 45 instead.
  • CO-131 (Claim specific negotiated discount.): A discount negotiated for this particular claim, rather than a standard fee schedule reduction.
  • CO-59 (Processed based on multiple or concurrent procedure rules. (For example multiple surgery or diagnostic imaging, concurrent anesthesia.)): A reduction from multiple-procedure rules, not from the fee schedule itself.
  • CO-97 (The benefit for this service is included in the payment/allowance for another service/procedure that has already been adjudicated.): A bundling issue, not a pricing issue. The service was paid as part of another one.
  • CO-253 (Sequestration - reduction in federal payment): A federal payment reduction applied separately from the fee schedule.
  • PR-1 / PR-2 / PR-3 (Deductible, coinsurance, and co-payment amounts.): Patient cost-sharing. These often appear on the same service line as CO-45, and they are billable to the patient.

Related articles

CO-45 FAQ

Is CO-45 a denial?

Usually not. CO-45 is a contractual adjustment: the payer processed the claim and reduced the billed charge to the allowed amount. It becomes a problem only when the allowed amount is lower than your contract, or when the adjustment wipes out the entire charge.

Can I bill the patient for a CO-45 amount?

Generally no. The CO group code means the provider is contractually responsible for the difference. PR-45 is different: check the patient's plan, your network status, and applicable balance-billing laws before billing the patient.

Why does CO-45 appear on almost every paid claim?

Because most practices set their charges above what payers allow. Whenever the billed charge is higher than the allowed amount, the payer reports the difference as CO-45.

How do I know if a CO-45 means I was underpaid?

Compare the allowed amount on the ERA to your contracted rate for that service, date of service, place of service, and rendering provider. If the allowed amount is lower than your contract, contact the payer and follow its reconsideration or appeal process.

Should CO-45 count toward my denial rate?

No. Counting routine contractual adjustments as denials makes your denial rate look far worse than it is. Track CO-45 separately and monitor the allowed amount instead.