CO-246: Non-Payable Code — Required Reporting Only
The submitted code is non-payable and exists only for reporting. Write it off unless the service was miscoded — then correct the code and resubmit for payment.
What Does CO-246 Mean?
CO-246 indicates the non-payable reporting code amount is a contractual adjustment. The provider cannot bill the patient for services designated as reporting-only. This code reflects the payer's classification of the submitted procedure code as a tracking code with no reimbursement value under the contract. If the code is correctly applied, the amount is written off as a contractual obligation.
CARC 246 appears on remittances when a payer classifies the submitted procedure or service code as non-payable — it exists solely for reporting, tracking, or statistical purposes. The code was designed to capture utilization data, quality metrics, or regulatory information without generating reimbursement. This is not a denial in the traditional sense; the code was never intended to produce a payment.
The most important distinction with CARC 246 is whether the non-payable designation is correct. If the code is genuinely a reporting-only code in the payer's fee schedule, no payment will ever be made and the amount should be written off. However, if a payable service was accidentally billed under a reporting-only code, the provider is leaving money on the table — the fix is to identify the correct billable code and resubmit.
CARC 246 appears almost exclusively with Group Code CO, meaning the non-payable amount is a contractual adjustment that the provider absorbs. The patient cannot be billed for amounts associated with reporting-only codes.
Common Causes
| Cause | Frequency |
|---|---|
| Service designated as reporting-only by payer The procedure or service code submitted is classified by the payer as a tracking or reporting code that carries no reimbursement value — it exists to capture utilization data, quality metrics, or statistical information | Most Common |
| Informational code submitted for data tracking The provider billed a code that is intended solely for reporting purposes, such as tracking specific diagnoses, procedures, or patient demographics for regulatory or quality measurement requirements | Most Common |
| Incorrect code assignment on billable service A payable service was mistakenly billed with a reporting-only code, or the wrong HCPCS/CPT code was selected, resulting in the payer treating it as non-payable when the service should have been reimbursed | Common |
| Payer policy classifies service as non-payable The payer's fee schedule or coverage policy designates the specific service as non-payable under the provider's contract, even though the service was rendered and documented | Common |
How to Resolve
Determine whether the code is correctly classified as reporting-only, then either write off the adjustment or rebill with the correct payable code.
- Confirm the non-payable designation Review the payer's fee schedule or code lookup tool to verify the billed code is classified as non-payable and reporting-only. Cross-reference against the provider contract if the designation seems inconsistent.
- Identify coding discrepancies Compare the submitted code against the medical record documentation. If the service rendered is payable but was billed under a reporting-only code, identify the correct billable CPT/HCPCS code.
- Rebill with correct code If a coding error occurred, correct the claim with the appropriate payable code and resubmit. Include any required documentation to support the corrected code.
- Post as contractual write-off If the reporting-only designation is correct, post the CO-246 adjustment as a contractual write-off. Update internal tracking to flag this code as non-payable for future billing reference.
CARC 246 is a non-payable reporting code by definition. If the code is correctly applied, no payment was ever expected — write off the amount. If the service should have been billed under a different, payable code, correct the coding and resubmit rather than appealing the non-payable designation.
Common RARC Pairings
The RARC code tells you exactly what triggered the CO-246:
| RARC | Description |
|---|---|
| N522 | Non-payable code — for reporting purposes only Confirm the code is genuinely reporting-only; if incorrect code was used, correct and resubmit → |
| N517 | Payment adjusted based on payer policy or fee schedule Review payer fee schedule to confirm the code's payment status → |
How to Prevent CO-246
- Maintain an updated list of reporting-only codes for each payer so billing staff knows which codes will not generate payment
- Flag reporting-only codes in the billing system with alerts to prevent unexpected zero-payment remittances
- Verify the fee schedule status of each procedure code before submission, particularly for new or infrequently used codes
- Train billing staff to distinguish between payable and reporting-only codes, especially for quality tracking and regulatory reporting codes
- Review payer fee schedules annually to identify codes that have been reclassified as non-payable
General Prevention
- Maintain an updated list of reporting-only codes for each payer to prevent billing these codes with an expectation of payment
- Flag reporting-only codes in your billing system so staff is alerted when these codes are submitted — prevent surprise zero-payment remittances
- Verify the fee schedule status of each code before submission, particularly for new or infrequently used procedure codes
- Train billing staff to distinguish between payable and reporting-only codes, especially for tracking codes used in quality programs or regulatory reporting
- Review payer contracts annually to identify any codes that have been reclassified as reporting-only or non-payable
Related Denial Codes
Sources
- https://www.mdclarity.com/denial-code/246
- https://x12.org/codes/claim-adjustment-reason-codes
- Codes maintained by X12. Visit x12.org for official definitions.