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What this denial means
CO-45 means the amount you billed exceeds the payer's contracted rate or fee schedule maximum. The payer will pay the allowed amount and adjust off the difference. This is typically a contractual adjustment, not a coverage denial — the equipment is covered, you just charged more than allowed.
Official description: "Charge exceeds fee schedule or maximum allowable amount."
Why DME claims hit CO-45
- Billing above the Medicare fee schedule. Medicare publishes DMEPOS fee schedules quarterly. If your billed charge exceeds the current allowed amount, the excess is automatically adjusted as CO-45. This is normal and expected.
- Competitive bidding area pricing mismatches. Medicare's DMEPOS competitive bidding program sets below-schedule prices in designated CBAs. Billing the national fee schedule rate in a CBA generates CO-45 for the difference.
- Out-of-contract commercial billing. If you're billing a commercial payer you're in-network with and your charge master exceeds the contracted rate, CO-45 applies the contractual adjustment.
- Rate change lag. Fee schedules update; your charge master doesn't. If you're billing 2024 rates in 2025, every claim generates CO-45 for the gap.
How to fix it
- Verify the payer applied the correct fee schedule. Check the current DMEPOS fee schedule for the HCPCS code and your jurisdiction. If the payer underpaid relative to the current allowed amount, appeal with the fee schedule documentation.
- Check for CBA applicability. If you're in a non-CBA area but the payer applied CBA rates, appeal with your address documentation.
- Do not bill patients for CO-45 adjustments. Contractual adjustments cannot be shifted to patients under your network agreement.
- Update your charge master if CO-45 is appearing systematically. Your billed charges should be at or just above the highest expected allowed amount to maximize legitimate reimbursement.
Typical overturn likelihood
10–20% — CO-45 is a contractual adjustment, not a denial of coverage. Appeals succeed when the payer applied the wrong fee schedule rate, wrong CBA status, or an outdated contract rate. Otherwise, the adjustment stands.
Frequently asked questions
Is CO-45 a denial or just an adjustment?
Technically an adjustment — the claim is paid at the allowed amount, not the billed amount. It's not a denial of coverage, it's a contractual rate reduction.
Can I bill the patient for the CO-45 difference?
No. If you're in-network, the contractual write-off is your obligation. The exception: if the patient owes a copay or deductible as their portion of the allowed amount.
What's the difference between CO-45 and PR-45?
CO-45 is the provider's contractual write-off. PR-45 means the amount is the patient's responsibility — different situation, typically involving out-of-network or special agreements.