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CO-76 Denial Code: Disproportionate Share Adjustment

CARC 76 is a disproportionate share (DSH) adjustment. Hospitals that serve a large share of low-income patients may receive DSH add-on payments. The code shows that portion of the payment, or its removal when a payer excludes it from its rates.

Quick facts

Code
CO-76 (CARC 76)
Status
Active In use since January 1, 1995.
Code set
Claim Adjustment Reason Codes (CARC)
Group codes
  • CO (Contractual Obligation): The usual group. The adjustment is part of the payment calculation and isn't billed to the patient.
  • OA (Other Adjustment): Some payers report DSH amounts under OA as informational adjustments.
Official description
Disproportionate Share Adjustment.
X12 Claim Adjustment Reason Codes, retrieved September 25, 2026
Last verified
against the official X12 list.

What CARC 76 means

CARC 76 is the disproportionate share adjustment. Hospitals that treat a large proportion of low-income patients face higher uncompensated costs. Medicare pays qualifying hospitals a disproportionate share hospital (DSH) add-on on inpatient prospective payments, and Medicaid runs its own DSH program. Payers that follow these methods may show the DSH portion of a claim’s payment with CARC 76.

The code can mean an addition (often reported as a negative adjustment amount on an 835, which increases payment) or a removal, when a payer’s contract excludes DSH from its rates. This is a facility code.

Medicare also pays a separate uncompensated care amount to DSH hospitals that isn’t tied to individual claims, so not all DSH-related money appears on remittances.

Example: a qualifying hospital’s inpatient claim under a Medicare-based contract is priced at the DRG rate plus a DSH add-on. The remittance shows the add-on with CARC 76. Under another payer whose rates exclude DSH, the same code could instead show the add-on being taken out. Reading the sign of the amount, and the contract, tells you which case you’re looking at.

Common causes

  • Inpatient claims for a DSH-qualifying hospital paid under a Medicare-based methodology.
  • Medicare Advantage or commercial contracts that exclude DSH from negotiated rates.
  • Changes in the hospital’s DSH percentage not yet updated in payer pricing.
  • Medicaid methodologies that include DSH-related components.

How to check it

  1. Check your contract for whether DSH is included in rates.
  2. Confirm the DSH factor the payer applied is current.
  3. Compare the ERA to the expected payment with or without DSH.
  4. Dispute differences that conflict with the contract.

How to prevent problems

  • Keep DSH terms in contract summaries for each payer.
  • Share updated DSH factors with payers that price using them.
  • Separate DSH adjustments from denials in reporting. An ERA Analyzer can isolate CARC 76 lines.

Specialty notes

Safety-net hospitals, public hospitals, and urban teaching hospitals are most affected. Independent physician practices don’t receive DSH payments and shouldn’t see this code on professional claims.

Remark codes that may appear with CO-76

  • N381 (Alert: Consult our contractual agreement for restrictions/billing/payment information related to these charges.): Directs you to the contract terms that govern DSH treatment.
  • CO-74 (Indirect Medical Education Adjustment.): Indirect medical education adjustment, another hospital-specific add-on.
  • CO-75 (Direct Medical Education Adjustment.): Direct medical education adjustment.
  • CO-70 (Cost outlier - Adjustment to compensate for additional costs.): Cost outlier adjustment.
  • CO-45 (Charge exceeds fee schedule/maximum allowable or contracted/legislated fee arrangement.): The standard contractual adjustment.

CO-76 FAQ

What is a disproportionate share hospital?

A hospital that serves a significantly larger share of low-income patients than typical. Medicare and Medicaid have separate DSH programs with their own qualification formulas.

How does Medicare pay DSH?

Medicare pays qualifying hospitals a DSH add-on to inpatient PPS payments, and a separate uncompensated care payment that isn't tied to individual claims. The add-on can appear at the claim level.

Why might a commercial or Medicare Advantage payer remove DSH?

Their contracts may define rates without DSH add-ons. Whether that's correct depends on your contract terms.

Is CO-76 something my billing team needs to work?

Usually not as a denial. It belongs with contract and reimbursement review, where staff compare DSH treatment to the payer agreement.

Does Medicaid DSH show up on claims?

Medicaid DSH payments are commonly made as lump-sum supplemental payments rather than per claim, although state methods differ. Check your state Medicaid program's rules.