CO-278: Performance Program Proficiency Requirements Not Met

What Does CO-278 Mean?

CO-278 means the payment reduction is a contractual obligation — the provider agreed to performance requirements as part of their payer contract and did not meet them. The patient cannot be billed for the reduced amount. The provider must either demonstrate the requirements were met (and request correction) or accept the adjustment.

CARC 278 indicates a payment adjustment because the provider failed to meet the proficiency requirements of a quality or performance program. These programs — including CMS's Merit-based Incentive Payment System (MIPS), commercial value-based payment arrangements, and other pay-for-performance contracts — set specific benchmarks that providers must achieve to receive full payment.

The adjustment can stem from genuinely failing to meet quality metrics, but it can also result from incomplete or incorrect data reporting. If the provider met the benchmarks but the data was not properly submitted or was submitted late, the payer may incorrectly apply the adjustment. The 835 Healthcare Policy Identification Segment (loop 2110 REF) typically identifies which specific program triggered the adjustment.

This code uses only Group Codes CO or PI. Under CO, the adjustment is treated as a contractual obligation — the provider agreed to the performance terms and did not meet them. Under PI, the payer initiated the reduction based on their assessment of the provider's performance metrics.

Common Causes

How to Resolve

Identify the specific performance program from the 835 remittance, review your performance data, and either correct reporting errors or develop an improvement plan for future periods.

1. Identify the program Review the 835 Healthcare Policy Identification Segment to determine which performance program triggered the adjustment.
2. Request performance report Contact the payer for the detailed performance scorecard showing which metrics you did not meet.
3. Verify data accuracy Cross-check the payer's data against your internal quality reporting to find any discrepancies.
4. Submit corrected data If reporting errors caused the adjustment, submit corrected quality data and request reprocessing.
5. Appeal if warranted If you have evidence the proficiency requirements were met, file an appeal with corrected performance documentation.

How to Prevent CO-278

• Submit all required quality reporting data on time and verify receipt
• Track performance metrics throughout the measurement period to catch gaps early
• Implement quality improvement workflows aligned with program benchmarks
• Stay informed about changes to performance program criteria and deadlines

General Prevention

• Monitor performance program requirements and ensure timely submission of all required quality data
• Track provider performance metrics against program benchmarks throughout the measurement period
• Provide ongoing staff training on performance program requirements and clinical protocols
• Implement quality improvement workflows aligned with program standards
• Stay informed about changes to performance program criteria and reporting deadlines
• Use technology solutions to automate quality measure tracking and reporting

Also Filed As

The same CARC 278 may appear with different Group Codes:

Related Denial Codes