CO-45 at a glance
CO-45 | |
|---|---|
Group code | CO, Contractual Obligation (X12) |
CARC 45 text (X12) | Charge exceeds fee schedule/maximum allowable or contracted/legislated fee arrangement. |
X12 usage note | The adjustment can't equal the total charge, and the code is used only with group PR or CO depending on who is liable |
In the X12 list since | January 1, 1995. Last modified July 1, 2017 |
What it means for a therapy practice | Your fee is above the payer's rate. The excess is written off |
Who owes the CO-45 amount | Nobody. The provider writes it off |
Usual action | Post it as a contractual adjustment. Compare the allowed amount with your fee schedule |
What the CO 45 denial code description means
The X12 text for CARC 45 is "Charge exceeds fee schedule/maximum allowable or contracted/legislated fee arrangement." CO is the Contractual Obligation group. Together they say: you billed more than your agreement with this payer allows, and the agreement says you absorb the difference.
Here's an illustrative 90837 line from a fictional practice whose full fee is $200 and whose contract rate with this plan is $130:
Line item | Amount |
|---|---|
Billed charge | $200.00 |
CO-45 adjustment | $70.00 |
Allowed amount | $130.00 |
PR-3 copay owed by the client | $25.00 |
Paid by the plan | $105.00 |
The client owes the $25 copay. The $70 under CO‑45 is gone. Sending it to the client would break the contract, and with Medicare it would break the assignment agreement too: a provider who accepts assignment takes "the Medicare‑approved amount as payment in full for a covered service," in Medicare.gov's words.
CO-45 vs PR-45
The X12 usage note allows CARC 45 with either group, "depending upon liability." With CO, the excess is yours to write off. With PR, the payer is telling you the patient is liable for it.
For Medicare, the clearest case where the patient can owe more than the approved amount is a non‑participating provider who doesn't accept assignment. Medicare.gov says that charge generally can't be more than 15% above the Medicare‑approved amount, which is the limiting charge. If you're a participating Medicare provider, the excess is a CO write‑off.
When CO-45 is a real problem
- The allowed amount is lower than your contract. Compare it with your fee schedule for that CPT code, plan and year. A rate that didn't update in January, or a plan paying the wrong product's rates, shows up here first.
- The whole line is adjusted to zero under CO-45. X12 says this adjustment can't equal the total charge. A full-line CO-45 usually means another reason belongs on the claim, so call the payer and ask for the actual reason.
- The allowed amount reflects the wrong code or modifier. For example, 90834 paid where you billed 90837, or a telehealth modifier paying at a different rate than your contract states.
- Your fee is below the allowed amount. Then there's no CO-45. If your contract pays the lower of your charge or the fee schedule, you're being paid less than the rate you agreed.
How to handle CO-45
- Post the CO-45 amount as a contractual adjustment in your billing system, not as bad debt and not to the client's balance.
- Check the allowed amount against your contracted rate for that code. Keep a simple rate table per payer and update it each January.
- If the rate is wrong, send a payment dispute or reconsideration with the contract page or fee schedule that shows the right rate.
- If the CO-45 equals the whole charge, call the payer, ask what the real reason is, and get it reprocessed.
To see the session codes this applies to most often, read 90837, 90832, 90791 and 90847.
CPT is a registered trademark of the American Medical Association. CPT codes copyright 2026 American Medical Association. All rights reserved.
Related remittance codes: PR-1 for deductible, PR-2 for coinsurance, PR-3 for copay, CO-131 for a claim‑specific negotiated discount, and CO-24 for capitation.
Checked against the X12 Claim Adjustment Reason Code list on October 19, 2026. CARC 45 was last modified on July 1, 2017, and nothing about it changed this year.