CO-241: Low Income Subsidy Co-payment Adjustment
The co-payment reduction is a contractual write-off. Verify the LIS level, write off the correct amount, and bill the patient only for the LIS co-payment.
What Does CO-241 Mean?
CO-241 means the difference between the standard co-payment and the LIS-reduced co-payment is absorbed as a contractual write-off. The provider or plan absorbs this reduction rather than billing the patient for the difference.
CARC 241 communicates the Low Income Subsidy (LIS) co-payment adjustment for Medicare Part D beneficiaries who qualify for financial assistance. The LIS program (also called Extra Help) reduces the co-payment amounts for Medicare beneficiaries with limited income and resources. This code is not a denial — it is an adjustment that shows the reduced co-payment amount the patient is responsible for based on their LIS eligibility level.
There are different LIS levels with corresponding co-payment amounts. Full LIS beneficiaries (those receiving full Medicaid benefits or SSI) pay very low co-payments (often $0 to a few dollars per prescription). Partial LIS beneficiaries have higher but still reduced co-payments. The co-payment schedule is updated annually by CMS.
This code can appear with PR (the adjusted co-payment is the patient's responsibility to pay) or CO (the co-payment reduction is absorbed by the provider or plan as a contractual adjustment). The most important action is verifying the patient's current LIS eligibility level to ensure the correct co-payment is being applied.
Common Causes
| Cause | Frequency |
|---|---|
| Co-payment reduction absorbed as contractual write-off The difference between the standard co-payment and the LIS-reduced co-payment is treated as a contractual obligation that the provider must write off rather than collect from the patient | Most Common |
| LIS status incorrectly triggers contractual adjustment The patient's LIS status is incorrectly classified, causing the payer to apply a contractual adjustment that should not have been applied, or applying the wrong LIS level reduction | Common |
How to Resolve
Verify the patient's LIS eligibility level, confirm the co-payment amount matches their eligibility category, and collect the correct amount or request reprocessing if wrong.
- Confirm the adjustment amount Verify that the contractual adjustment correctly reflects the difference between the standard co-payment and the LIS-approved co-payment for the patient's eligibility level.
- Write off the adjustment Record the adjustment as a contractual write-off. Do not attempt to collect this difference from the patient.
This is a standard contractual adjustment. The amount is a provider write-off per your payer contract.
Common RARC Pairings
The RARC code tells you exactly what triggered the CO-241:
| RARC | Description |
|---|---|
| N130 | Remainder of charges are the patient's responsibility. |
| N657 | This adjustment reflects the Low Income Subsidy co-payment amount. |
How to Prevent CO-241
- Verify LIS eligibility before providing services to set correct payment expectations
- Implement automated billing checks that apply LIS co-payment rates based on verified eligibility
- Reconcile LIS adjustments regularly to catch discrepancies early
General Prevention
- Confirm LIS eligibility before dispensing or providing services to ensure the correct co-payment level is applied
- Set up automated billing system checks that apply the correct LIS co-payment based on verified eligibility data
- Regularly reconcile LIS adjustments against expected amounts to catch discrepancies early
Also Filed As
The same CARC 241 may appear with different Group Codes:
Related Denial Codes
Sources
- https://www.mdclarity.com/denial-code/241
- https://x12.org/codes/claim-adjustment-reason-codes
- Codes maintained by X12. Visit x12.org for official definitions.