CO-246 denial code
This non-payable code is for required reporting only
How to fix it
No action needed. The code exists for reporting rather than reimbursement.
How to prevent it
Understand which quality and reporting codes carry no payment so they are not worked as denials.
The CO prefix marks this a contractual obligation. The balance is absorbed by the provider under the payer agreement and cannot be transferred to the patient.
In practice
A practice submits quality measure codes alongside its clinical claims. The remittance shows those lines adjusted under CO-246 with no payment, and the denial queue fills with them each month.
These codes exist for reporting rather than reimbursement. They carry no payment by design, and the adjustment is the system working correctly rather than a claim failing.
The useful change is configuration rather than appeal. Excluding known non-payable reporting codes from the denial queue removes recurring work that has no possible resolution.
What sits behind it
Category II performance measurement codes are the largest group. They exist to capture quality data as a by-product of billing, carry no relative value, and are expected to adjust to zero on every claim.
Several other code families behave similarly, including certain status codes and add-on reporting codes used for program participation. Knowing which of them your practice submits routinely is what makes the exclusion list accurate.
The cost of not doing this is measured in staff time rather than revenue. A practice reporting quality measures on every claim can generate hundreds of unresolvable denial lines a month, each consuming a moment of attention for nothing.
Related codes
Terms used here — CPT Code · Denial Rate · Payment Posting
How we handle it — Practice Analytics · Claims Management · Revenue Cycle Management
Primary sources
The rules behind CO-246, at the bodies that publish them.
- Medicare Physician Fee Schedule lookup (opens in a new tab)
Centers for Medicare & Medicaid Services — Official allowed amounts by CPT/HCPCS code and locality. The reference point most commercial contracts are written against as a percentage.
- Medicare Claims Processing Manual (opens in a new tab)
Centers for Medicare & Medicaid Services — The operative manual for how Medicare claims must be coded, submitted, adjusted and appealed. When a payer policy and a vendor's advice disagree, this settles it.
- Claim Adjustment Reason Codes (CARC) (opens in a new tab)
X12 — The authoritative, maintained CARC list. Our denial code lookup explains these in plain English; X12 is where the canonical definitions live.
Looking for a different code? Search all 190 CARC and RARC codes
Questions about CO-246
Because the remittance reports them as adjusted, and most denial workflows treat any adjustment without payment as work. The codes are functioning exactly as intended; the queue is simply not distinguishing them from genuine denials.
Category II performance measurement codes are the largest group, alongside certain status codes and add-on reporting codes tied to program participation. Building the exclusion list from what your practice actually submits is more reliable than a generic list.
Staff time rather than revenue. A practice reporting quality measures on every claim can produce hundreds of unresolvable lines monthly, each taking a moment of someone's attention and none of them capable of resolution.
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