OA-70: Cost Outlier Adjustment
The cost outlier balance is flagged for the secondary payer. Forward the claim with the primary ERA attached.
What Does OA-70 Mean?
OA-70 appears in coordination of benefits scenarios where the primary payer's cost outlier adjustment is forwarded to a secondary payer. This is an informational adjustment indicating the secondary payer should evaluate the remaining balance under its own payment rules.
CARC 70 appears on remittances when a hospital case qualifies as a cost outlier under the payer's prospective payment system. Unlike CARC 69 (day outlier), which adjusts per-diem charges for extended stays, CARC 70 addresses the total cost of the case. When a hospital's billed charges — converted to costs using the cost-to-charge ratio — exceed the DRG payment plus a fixed-loss threshold, the case becomes a cost outlier and the payer reimburses a percentage of the costs above that threshold.
Cost outlier cases typically involve patients with severe complications, extended ICU stays, multiple procedures, or rare conditions that demand resource-intensive care far beyond the norm for their DRG. The adjustment amount on the ERA reflects the difference between the hospital's billed charges and the calculated outlier payment. Because the cost outlier payment is a defined portion of costs above the threshold (Medicare pays 80% of costs exceeding the threshold), there will always be a write-off component.
CARC 70 almost exclusively carries Group Code CO, making it a contractual adjustment the provider absorbs. You will occasionally see OA-70 in coordination of benefits situations. Monitoring cost outlier frequency by DRG helps identify charge capture problems, coding opportunities, and cases where clinical documentation improvement could shift a case to a higher-weighted DRG with a more favorable payment.
Common Causes
| Cause | Frequency |
|---|---|
| Coordination of benefits cost outlier adjustment In multi-payer situations, the primary payer's cost outlier adjustment is passed to the secondary payer under OA for evaluation | Most Common |
| Medicare secondary payer cost outlier processing When Medicare is secondary, cost outlier amounts from the primary payer are adjusted under OA to reflect the coordination of benefits calculation | Common |
How to Resolve
Validate the cost outlier threshold calculation, audit coding and charge accuracy, then post the contractual write-off or challenge the calculation with supporting data.
- Identify and bill the secondary payer Submit the cost outlier balance to the secondary payer with the primary remittance showing the OA-70 adjustment. Include complete charge and clinical documentation.
- Process the secondary remittance Review the secondary payer's adjudication. Post the payment or adjustment. Any remaining balance after all payers adjudicate may need further resolution.
This adjustment is typically correct as processed. Review the specific circumstances before taking further action.
How to Prevent OA-70
- Verify all insurance coverage at admission to sequence payers correctly from the start
- Set up automated secondary claim submission workflows triggered by OA adjustments on primary remittances
General Prevention
- Verify all insurance coverage details at admission to ensure proper coordination of benefits sequencing
- Automate secondary claim submission when OA adjustments appear on primary remittances
Also Filed As
The same CARC 70 may appear with different Group Codes:
Related Denial Codes
Sources
- https://www.mdclarity.com/denial-code/70
- https://med.noridianmedicare.com/web/jea/provider-types/acute-ipps-hospital/inpatient-pps-billing-cost-outlier
- https://ambci.org/medical-billing-and-coding-certification-blog/guide-to-claim-adjustment-reason-codes-carcs
- Codes maintained by X12. Visit x12.org for official definitions.