CO-45 denial code
Charge exceeds the fee schedule or contracted maximum allowable
How to fix it
No action if the allowed amount matches your contract. If it is lower than contracted, this is an underpayment worth disputing.
How to prevent it
Load contracted rates into your system and reconcile allowed amounts against them. Underpayments hide inside routine CO-45 adjustments.
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 bills $340 for an office visit. The remittance shows an allowed amount of $118, with $222 adjusted under CO-45. Nothing was denied — the payer paid its contracted rate and wrote off the difference between the charge and the contract.
This is the most frequently occurring code on any remittance and it usually requires no action. The exception is the one worth building a process around: if the contracted rate for that code is $131 and the payer allowed $118, the difference is an underpayment hiding inside a routine adjustment.
Because CO-45 appears on nearly every line of nearly every remittance, underpayments in this form are close to invisible without a systematic comparison of allowed amounts against loaded contract rates.
What sits behind it
CO-45 is not a denial and treating it as one wastes effort. It is the mechanical expression of the difference between what a practice charges and what it agreed to accept, and that gap exists by design in every contracted relationship.
The practical significance is what it conceals. Payers periodically load incorrect fee schedules, apply the wrong contract year, or process a claim against a different product's rates. Each produces a CO-45 that looks entirely ordinary on the remittance and is materially wrong.
Detecting it requires contracted rates loaded in the practice management system and an automated comparison at payment posting. A practice that cannot state its contracted rate for a given code and payer cannot know whether it was paid correctly, and in that state every CO-45 is accepted on trust.
Related codes
Terms used here — Allowed Amount · Contractual Adjustment · Underpayment
How we handle it — Practice Analytics · AR Management · Denial Management
Primary sources
The rules behind CO-45, 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.
Every denial code with a guide
Authorization
Bundling
Contractual
- CO-45A Contractual Adjustment
- CO-253Sequestration Reduction
- CO-147Contracted Rate Expired
- CO-222Contracted Unit Cap Exceeded
Coverage
Data quality
Documentation
Eligibility
Liability and workers comp
Patient responsibility
Provider eligibility
Timely filing
Looking for a different code? Search all 190 CARC and RARC codes
Questions about CO-45
No. It is the contractual adjustment between the billed charge and the contracted allowable — the routine difference that exists in every payer agreement. It appears on nearly every remittance line and normally requires no action.
Yes, when the allowed amount is below the contracted rate. That is an underpayment presented in the form of a routine adjustment, and it is invisible without comparing allowed amounts against loaded contract rates at payment posting.
No. The CO prefix means contractual obligation. Billing the patient for a contractual adjustment is balance billing and generally breaches the payer agreement.
Because practices typically set charges well above contracted rates, often as a percentage of a benchmark. A large adjustment simply reflects the gap between the charge master and the contract, and says nothing about whether payment was correct.
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