CO-108 denial code
Rent or purchase guidelines were not met
How to fix it
Confirm whether the item should have been billed as rental or purchase and whether the rental cap was reached.
How to prevent it
Track DME rental months against caps; the transition point is a recurring denial source.
In practice
A supplier bills the fourteenth rental month for a wheelchair. The claim returns CO-108, because the item's rental cap was reached at month thirteen and ownership transferred to the patient.
Durable medical equipment payment follows category-specific rules about whether an item is rented, purchased, or rented for a capped period after which title transfers. Billing past that transition is the single most common source of this denial.
The correction is to stop billing rental and, where applicable, bill only the maintenance and servicing the rules permit after transfer. Recovering the position requires knowing which category the item falls into, which is published and checkable.
What sits behind it
The categories carry genuinely different rules. Capped rental items transfer after a defined number of continuous months. Inexpensive or routinely purchased items may be rented or purchased at the supplier's election. Oxygen equipment follows its own separate schedule, and complex rehabilitative items have their own treatment again.
Continuity is what makes the count difficult in practice. A break in medical need, a hospital admission, or a change of supplier can restart or suspend the rental sequence depending on the length of the interruption, and getting that wrong produces denials in both directions.
Because the transition point is predictable, this belongs in a tracking report rather than a denial queue. A supplier that knows which items reach their cap next month bills correctly through the transition instead of discovering it afterwards.
Related codes
Terms used here — HCPCS · Denial · Medical Necessity
How we handle it — Claims Management · Denial Management · Practice Analytics
Primary sources
The rules behind CO-108, at the bodies that publish them.
- Medicare Coverage Database (LCD/NCD) (opens in a new tab)
Centers for Medicare & Medicaid Services — Searchable national and local coverage determinations. The direct answer to whether a diagnosis supports medical necessity for a given procedure.
- Medicare Benefit Policy Manual (opens in a new tab)
Centers for Medicare & Medicaid Services — What Medicare covers and under what conditions, as distinct from how a claim is processed. The starting point for any coverage or medical necessity question.
- Advance Beneficiary Notice of Noncoverage (ABN) (opens in a new tab)
Centers for Medicare & Medicaid Services — The form and the rules for issuing it. Whether a non-covered service can be billed to the patient usually turns on whether a valid ABN was obtained beforehand.
Looking for a different code? Search all 190 CARC and RARC codes
Questions about CO-108
After the defined number of continuous rental months for that category, at which point title passes and further rental billing is not payable. Only maintenance and servicing permitted under the rules remains billable, and the specific month count depends on the item category.
It can, and the effect depends on the length of the interruption and whether medical need continued. Short breaks generally suspend rather than restart the sequence while longer ones can reset it, so the count has to be tracked against actual continuity rather than calendar months.
By tracking rental months against caps in a report rather than discovering the transition through a denial. Knowing which items reach their cap in the coming month lets billing change before the transition rather than after, which also avoids refunding rental collected in error.
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