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CO-P5 Denial Code: P&C Reasonable and Customary Fee

CO-P5 means a property and casualty payer priced the service at its own reasonable and customary fee because no state-legislated fee schedule sets a maximum allowable. The difference between your charge and that amount is reported as an adjustment.

Quick facts

Code
CO-P5 (CARC P5)
Status
Active In use since November 1, 2013.
Code set
Claim Adjustment Reason Codes (CARC)
Group codes
  • CO (Contractual Obligation): The usual group. The provider absorbs the reduction unless it's successfully disputed; state rules may restrict billing the claimant.
  • PR (Patient Responsibility): Occasionally used when the policy or state law lets the provider collect the difference from the claimant. Check before billing.
Official description
Based on payer reasonable and customary fees. No maximum allowable defined by legislated fee arrangement. To be used for Property and Casualty only.
X12 Claim Adjustment Reason Codes, retrieved September 25, 2026
Last verified
against the official X12 list.

What CO-P5 means

CARC P5 says based on payer reasonable and customary fees. No maximum allowable defined by legislated fee arrangement. X12 limits it to property and casualty claims. It replaced deactivated CARC 217.

Many workers’ comp and some auto no-fault systems use state fee schedules that set the maximum allowed amount. Where no such schedule applies, a P&C carrier still has to decide what it will pay, and many use a “reasonable and customary” (or “usual and customary”) amount based on charge data for similar services in the area. CO-P5 reports the reduction from your billed charge to that amount.

The key difference from CO-P12 or CO-P23: with P5, there’s no legislated schedule. The amount comes from the carrier’s own methodology, which is often easier to challenge.

Common causes

  • No state fee schedule for the coverage line, such as auto medical payments coverage or third-party liability in many states.
  • Service not included in an applicable fee schedule, so the carrier falls back on reasonable and customary pricing.
  • Billed charges above the carrier’s reference data.
  • Bill review vendor applying a database percentile.

How to fix it

  1. Ask for the pricing basis: the database, percentile, and geographic area used.
  2. Compare with your data, such as your usual charges and what other payers allow for the service locally.
  3. Submit a reconsideration with supporting evidence and a clear explanation of why your charge is reasonable.
  4. Escalate through the carrier’s appeal process or the state insurance department if needed.
  5. Check state balance billing rules before billing the claimant.

How to prevent problems

  • Know which states and coverage lines use fee schedules and which don’t.
  • Keep charges consistent across payers so they stand up as reasonable.
  • Track reductions by carrier and bill review company. An ERA Analyzer can surface CO-P5 patterns worth disputing.

Specialty notes

Emergency physicians, surgeons, and imaging providers treating auto accident patients often see CO-P5 on medical payments and liability claims in states without no-fault fee schedules.

Remark codes that may appear with CO-P5

  • N599 (Our payment for this service is based upon a reasonable amount pursuant to both the terms and conditions of the policy of insurance under which the…): Payment is based on a reasonable amount under the policy terms and applicable law.
  • N600 (Adjusted based on the applicable fee schedule for the region in which the service was rendered.): Adjusted based on the applicable fee schedule for the region where the service was rendered.
  • CO-217Deactivated (Based on payer reasonable and customary fees.): The deactivated code that CARC P5 replaced.
  • CO-45 (Charge exceeds fee schedule/maximum allowable or contracted/legislated fee arrangement.): The general fee schedule or maximum allowable reduction used outside P&C.
  • CO-P12 (Workers' compensation jurisdictional fee schedule adjustment.): A workers' comp jurisdictional fee schedule adjustment, where a legislated schedule does exist.
  • CO-P29 (Liability Benefits jurisdictional fee schedule adjustment.): A liability benefits jurisdictional fee schedule adjustment.

CO-P5 FAQ

When does CO-P5 apply?

When a property and casualty payer, such as an auto medical payments or liability carrier, pays a medical bill in a state or coverage line where no fee schedule sets the allowed amount.

How is reasonable and customary determined?

Payers typically use databases of charges for similar services in the same geographic area. The method varies by carrier and must meet state law and policy terms.

Can I dispute CO-P5?

Yes. Ask the carrier or bill review company for its basis, then submit a reconsideration with your own data, such as local charge comparisons or prior payments for the same service.

Can I bill the injured person the difference?

It depends on state law and the coverage type. Some states limit balance billing for auto or liability medical claims. Confirm the rules first.

Is CO-P5 used by health plans?

No. X12 limits it to property and casualty claims. Group health plans report fee schedule and allowed amount reductions with other codes, most often CO-45.