CO-106: Patient Payment Option Not in Effect

What Does CO-106 Mean?

CO-106 indicates a contractual adjustment where the provider must write off the denied amount because the patient's payment option was not in effect. Under CO, this typically means the billing mismatch is on the provider's side — the claim was submitted under a payment arrangement that does not match the payer's records. The patient cannot be billed for the denied amount under CO.

CARC 106 fires when the payer's system determines that the payment option or coverage election the patient chose is not currently in effect for the date of service. This typically involves situations where a patient enrolled in a specific plan type — such as an HMO, Medicare MSA, capitated arrangement, or a particular payment plan — but that election expired, lapsed, or was never properly activated in the payer's records.

This denial is distinct from a general eligibility denial. The patient may have active coverage with the payer, but the specific payment arrangement under which the claim was submitted does not match the patient's current election. For example, a patient who switched from a fee-for-service plan to an HMO during open enrollment may trigger CARC 106 if the provider bills under the old arrangement.

The financial impact depends on the Group Code. CO-106 means the provider must absorb the denied amount as a contractual write-off, typically because the billing mismatch is a provider-side issue. PR-106 shifts the cost to the patient, usually because the patient's own failure to maintain their elected payment option caused the coverage gap. Always verify which group code applies before taking action, as the resolution path differs significantly.

Common Causes

How to Resolve

Verify the patient's current payment election status, determine whether the denial reflects a genuine lapse or a system error, and either resubmit to the correct arrangement or collect from the patient.

1. Confirm the payer's election records Contact the payer to verify what payment option is on file for the patient and compare it against what the claim was submitted under.
2. Verify enrollment documentation Check the patient's enrollment confirmation or eligibility records to determine if the election was genuinely active on the date of service.
3. Resubmit under the correct arrangement If the patient has a different active payment option, resubmit the claim under the correct arrangement with the proper payer ID and billing codes.
4. Appeal with enrollment proof If the election was active and the payer's system is incorrect, file an appeal with enrollment confirmation letters, eligibility verification records, and any payer correspondence.

Common RARC Pairings

The RARC code tells you exactly what triggered the CO-106:

How to Prevent CO-106

• Verify the patient's specific payment election and plan type before every encounter, especially during open enrollment transition periods
• Maintain current records of patient coverage elections and cross-reference with real-time eligibility verification before claim submission
• Implement billing system checks that match the claim's payment arrangement against the patient's verified election before submission
• Train front-desk staff to ask about recent plan changes during patient check-in, particularly at the start of new plan years

General Prevention

• Verify the patient's current payment election and coverage status before rendering services, particularly during open enrollment transition periods
• Maintain updated records of patient payment options and coverage elections, cross-referencing with payer eligibility systems
• Implement real-time eligibility verification to confirm the patient's active payment arrangement matches the billing plan before claim submission
• Train front-desk staff to ask about recent changes to insurance plans or payment elections during patient check-in

Also Filed As

The same CARC 106 may appear with different Group Codes:

Related Denial Codes