What does denial code CO-23 mean?

CO-23 reports the impact of a prior payer's adjudication — including its payments and adjustments — on what the current payer will pay. It appears on secondary and tertiary claims and represents the portion of the charge that the secondary payer is not paying because the primary payer already resolved it. It is a coordination of benefits accounting entry rather than a denial in the usual sense.

Is CO-23 actually a denial?

Usually not. In most cases CO-23 is a legitimate contractual adjustment reflecting that the primary payer already covered the service and the secondary owes little or nothing under its coordination of benefits methodology. It becomes a problem when it is used to zero out a balance the secondary should have paid, or when it was calculated from incorrect primary payer data transmitted on the claim. The adjustment itself is neutral; whether it is correct depends on the math behind it.

Can I bill the patient for a CO-23 adjustment?

No. CO is the contractual obligation group code, which means the amount cannot be transferred to the patient. Patient responsibility on a coordination of benefits claim is reported under PR group codes such as PR-1 for deductible, PR-2 for coinsurance, and PR-3 for copay. If a balance appears under CO-23 and you believe the patient should owe it, the classification is wrong and needs to be resolved with the payer, not billed.

COContractual Obligation · CARC Code 23

CO-23

The Impact of Prior Payer Adjudication, Including Payments and Adjustments

CO-23 is not really a denial. It is the secondary payer telling you how much of this charge the primary payer already resolved. Most of the time it is correct and should simply be posted. But because it looks exactly like a routine contractual write-off, it is also where legitimate secondary revenue quietly disappears — absorbed by auto-adjustment rules and never appearing in any denial report.

Updated August 2026·Group: CO (never billable to the patient)·Root cause: COB methodology; incorrect primary data on the 837; MSP calculation

CO-23 in plain English

CO-23 means "the primary payer already handled this part, so we are not paying it." When a patient has more than one plan, the secondary payer has to account for what the primary already did before deciding its own liability. CO-23 is the line item where that accounting appears. Whether it is correct depends entirely on the coordination of benefits method in the secondary's contract — and on whether the primary's adjudication data was transmitted accurately in the first place. Neither of those can be judged from the secondary remittance alone.

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The real risk with CO-23 is not denial — it is silent write-off

CO-23 rarely reaches a denial work queue. Most payment posting configurations treat it as a contractual adjustment and post it automatically, which means an incorrect CO-23 never surfaces anywhere a human would see it. It does not appear in denial rate reporting, it does not create a work item, and it does not age in AR. It simply reduces the expected balance to zero. Secondary underpayment is among the least-worked recoverable revenue in most billing operations for exactly this reason.

Coordination of Benefits

Where CO-23 sits in the secondary claim sequence

CO-23 only exists because a prior payer already adjudicated. Understanding where it comes from makes it obvious why the primary remittance is required to evaluate it.

STEP 01

Determine order of benefits

Establish which plan is primary using the payer's order-of-benefits rules — employment status, birthday rule for dependents, Medicare secondary payer provisions. Getting this wrong produces CO-22 rather than CO-23.

STEP 02

Primary adjudicates

The primary applies its own allowed amount, contractual adjustment, and patient responsibility split. Its remittance becomes the source data every downstream payer depends on.

STEP 03

COB data loads onto the secondary claim

The primary's paid amount, allowed amount, and adjustment reason codes are populated into the COB loops of the 837 secondary claim. Errors introduced here propagate into an incorrect CO-23.

STEP 04

Secondary applies its methodology

The secondary compares its own allowed amount against what the primary paid, using either the come-out-whole or lesser-of method. The difference it will not pay is reported as CO-23.

STEP 05

Posting decides whether anyone looks

The CO-23 amount is either auto-adjusted and forgotten, or routed to review and recalculated. This step, not the payer's math, determines whether underpayments get caught.

The Math Behind CO-23

Two coordination methods, two very different outcomes

The same claim can produce a full secondary payment or a zero payment depending purely on which methodology the secondary's contract specifies. You cannot evaluate a CO-23 without knowing which one applies.

Method A

Come-Out-Whole (Traditional COB)

The secondary pays the remaining patient responsibility left by the primary, up to its own allowed amount. The patient ends up owing nothing or close to it. Under this method a secondary that pays zero while a deductible or coinsurance balance remains is a candidate underpayment worth challenging.

Method B

Lesser-Of / Non-Duplication

The secondary pays only the difference between its own allowed amount and what the primary already paid. If the primary paid at or above the secondary's allowed amount, the secondary owes nothing and the whole remaining balance becomes CO-23. This is contractually correct and increasingly the default in commercial secondary coverage.

Method C

Medicare Secondary Payer

Medicare as secondary pays the lowest of several comparisons: what Medicare would have paid as primary, the charge minus the primary payment, or the Medicare allowed amount minus the primary payment. When a commercial primary pays at or above Medicare rates the result is frequently zero, which is why MSP claims routinely show large and correct CO-23 amounts.

Method D

Medicaid as Payer of Last Resort

Medicaid pays only after all other coverage and only up to the Medicaid allowed amount, which is typically well below commercial rates. A commercial primary payment usually exhausts the Medicaid liability entirely, producing a full CO-23 adjustment. Medicaid balances also cannot be billed to the patient under federal rules.

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The recalculation that catches most secondary underpayments

Take the secondary's allowed amount, subtract the primary's payment, and compare the result to what the secondary actually paid. If the secondary allowed more than the primary paid but still paid nothing, the balance should have been paid rather than adjusted under CO-23 — unless the contract specifies non-duplication. That one subtraction, run across a sample of CO-23 lines each month, surfaces most of what is recoverable.

8 Common CO-23 Scenarios

When to post it and when to push back

Scenario	What Is Happening	Correct Action
Commercial primary paid above the secondary's allowed amount	Under a lesser-of contract the secondary owes nothing. The entire remaining balance is reported as CO-23.	Post the adjustment This is correct. Confirm the contract specifies non-duplication, then close the balance.
Secondary paid zero but a patient coinsurance balance remains, come-out-whole contract	Under traditional COB the secondary should have paid the remaining coinsurance up to its allowed amount. It did not.	Recalculate and appeal Attach both remittances and the contract's COB clause with an explicit calculation of what was owed.
Primary paid amount transmitted incorrectly in the 837 COB loop	The secondary calculated CO-23 from wrong source data. Its math may be internally correct while the inputs were not.	Correct the COB data and resubmit Verify the paid amount, allowed amount, and CAS segments match the primary remittance exactly.
Patient responsibility split between deductible and coinsurance was reported wrong	Some secondary contracts treat deductible and coinsurance differently. A miscategorized split changes the secondary's liability.	Correct the CAS segments Report PR-1 deductible, PR-2 coinsurance, and PR-3 copay exactly as the primary reported them.
Medicare secondary claim shows a large CO-23 and zero payment	The commercial primary paid at or above Medicare rates, so the MSP formula produces zero liability.	Post the adjustment Normal and correct for MSP. Spot-check the calculation, but expect this outcome routinely.
CO-23 amount exceeds the total remaining balance after the primary	The arithmetic does not reconcile. The secondary is adjusting more than was actually outstanding.	Challenge the calculation Request a recalculation with both remittances attached. This is a payer processing error, not a contractual outcome.
Secondary claim submitted before the primary finished adjudicating	The claim carried no valid COB data, so the secondary either denied it or adjusted the full balance under CO-23 by default.	Resubmit after the primary posts Sequence the workflow so secondary claims release only once the primary remittance is received and posted.
CO-23 balance was transferred to patient statement	A posting rule mapped a contractual obligation to patient responsibility. CO group amounts can never be billed to the patient.	Reverse immediately Remove the balance from the patient account and correct the posting rule. Billing a CO amount violates the payer contract.

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CO-23 versus CO-22 — a common point of confusion

CO-22 means the claim went to the wrong payer first: another plan is primary and should have adjudicated before this one. It is a routing problem, fixed by determining the correct order of benefits and rebilling in sequence. CO-23 means the routing was right and the prior payer already adjudicated — this payer is simply accounting for that. CO-22 requires resubmission to a different payer; CO-23 usually requires nothing more than accurate posting.

Step-by-Step Review

Verifying whether a CO-23 adjustment is correct

Place the primary and secondary remittances side by side
CO-23 describes a relationship between two adjudications, so it cannot be evaluated from the secondary remittance alone. From the primary, record: billed amount, allowed amount, paid amount, contractual adjustment, and the patient responsibility split across deductible, coinsurance, and copay. From the secondary, record: allowed amount, the CO-23 adjustment amount, and the actual payment. Any review that skips this step is guessing.
Identify the coordination of benefits methodology in the contract
Find the COB clause in the secondary payer's contract and determine whether it uses come-out-whole, lesser-of / non-duplication, or a plan-specific formula. This single fact determines whether a zero payment is correct or is an underpayment. Under come-out-whole the secondary should cover remaining patient responsibility up to its allowed amount; under non-duplication a zero payment is entirely expected when the primary paid well.
Recalculate the secondary's liability independently
Do the arithmetic yourself rather than accepting the remittance. Subtract the primary's payment from the secondary's allowed amount and compare the result to what the secondary actually paid. Where the secondary allowed more than the primary paid and moved the balance to CO-23 instead of paying it, flag it. Also confirm the CO-23 amount does not exceed the balance that was actually outstanding after the primary — when it does, the payer has a processing error.
Verify the primary's adjudication data was transmitted correctly
A large share of incorrect CO-23 adjustments are self-inflicted, caused by bad COB data on the outgoing secondary claim rather than by the secondary's pricing. Confirm the primary's paid amount, allowed amount, and adjustment reason codes were populated accurately in the 837 COB loops, and that the CAS segments split patient responsibility correctly between PR-1 deductible, PR-2 coinsurance, and PR-3 copay. A secondary payer given wrong inputs will produce a wrong CO-23 every time, and the fix is on your side.
Appeal genuine underpayments and change the posting rule for everything else
Where the recalculation shows an underpayment, appeal with both remittances attached and an explicit calculation citing the contract's COB language — secondary appeals succeed far more often when they show the arithmetic than when they assert a general shortfall. Then fix the systemic issue: configure posting so CO-23 adjustments above a dollar threshold route to a review queue rather than auto-adjusting. Without that change, the next underpayment disappears exactly the same way this one did.

Prevention

Protecting secondary revenue from silent write-off

Stop auto-adjusting CO-23 above a dollar threshold. This is the single highest-value change. Route CO-23 amounts over a threshold appropriate to your case mix into a review queue instead of writing them off automatically. Underpayments cannot be recovered if nothing ever creates a work item for them, and by default nothing does.
Capture full coverage information at registration, every visit. CO-23 problems begin upstream as coordination of benefits problems. Ask about secondary coverage at every registration rather than relying on what was captured at the first visit, and verify order of benefits — coverage changes far more often than patients volunteer.
Sequence secondary claims behind the primary remittance. A secondary claim released before the primary finishes adjudicating carries no valid COB data and produces either a denial or a full default CO-23 adjustment. Configure the workflow so secondary claims release only after the primary payment posts.
Audit your 837 COB loop mapping once, thoroughly. Verify that the primary's paid amount, allowed amount, and CAS adjustment segments are populating correctly and that patient responsibility is split accurately across PR-1, PR-2, and PR-3. A mapping error here produces systematically wrong CO-23 amounts across every secondary claim, and it is invisible until someone reconciles a remittance by hand.
Document each secondary payer's COB methodology in one reference. Keep a single sheet listing which of your secondary contracts use come-out-whole versus non-duplication. Posting staff cannot judge whether a CO-23 is correct without it, and chasing the answer per claim is why the review never happens.
Sample CO-23 adjustments monthly against the primary remittance. Pull twenty CO-23 lines a month and recalculate each by hand. If the sample is clean, your posting rules are trustworthy. If it is not, you have just found a recurring underpayment pattern worth pursuing across every claim from that payer.

Frequently Asked Questions: CO-23

CO-23 reports the impact of a prior payer's adjudication — including its payments and adjustments — on what the current payer will pay. It appears on secondary and tertiary claims and represents the portion of the charge the secondary payer is not paying because the primary already resolved it. It is a coordination of benefits accounting entry rather than a denial in the usual sense.

Usually not. In most cases CO-23 is a legitimate contractual adjustment reflecting that the primary payer already covered the service and the secondary owes little or nothing under its coordination of benefits methodology. It becomes a problem when it zeroes out a balance the secondary should have paid, or when it was calculated from incorrect primary payer data transmitted on the claim. The adjustment itself is neutral; whether it is correct depends on the math behind it.

No. CO is the contractual obligation group code, which means the amount cannot be transferred to the patient. Patient responsibility on a coordination of benefits claim is reported under PR group codes — PR-1 for deductible, PR-2 for coinsurance, PR-3 for copay. If a balance appears under CO-23 and you believe the patient should owe it, the classification is wrong and needs to be resolved with the payer rather than billed.

Most often because the secondary uses a lesser-of or non-duplication methodology, under which it pays only the difference between its own allowed amount and what the primary already paid. When the primary's payment equals or exceeds the secondary's allowed amount, the secondary owes nothing and the entire remaining balance appears as a CO-23 adjustment. This is contractually correct even though it produces a zero payment.

Medicare secondary payer liability is generally the lowest of several comparisons: the amount Medicare would have paid as primary, the provider's charge minus the primary payment, or the Medicare allowed amount minus the primary payment. The result is frequently zero when a commercial primary paid at or above Medicare rates. This is why MSP claims routinely show large CO-23 adjustments with no payment, and why those adjustments are usually correct.

Change the posting rule. Most payment posting configurations auto-adjust CO-23 without review, so underpayments are absorbed silently and never appear in any denial report. Route CO-23 adjustments above a dollar threshold to a review queue, sample them monthly against the primary remittance, and recalculate the secondary's liability by hand. Secondary underpayment recovery is one of the least-worked revenue sources in most billing operations precisely because CO-23 looks like a normal contractual write-off.