CO-307 Denial Code: Medicare Maximum Fair Price (Drug Price Negotiation)

CO-307 is a Claim Adjustment Reason Code added for the Medicare Drug Price Negotiation Program. It reports a Maximum Fair Price (MFP) standard default refund amount adjustment — not a classic coverage denial. X12 says it is to be used only for that program. (Primary sources: X12 Claim Adjustment Reason Codes · CMS, Selected Drugs and Negotiated Prices · CMS, Negotiation Program guidance)

Quick answer: CO-307 means Medicare applied a Maximum Fair Price adjustment under the Inflation Reduction Act Drug Price Negotiation Program. Confirm the drug/NDC is on CMS’s selected-drug list, compare the adjustment to the published MFP, read the required remark code, and contact the MAC only if the NDC or calculation looks wrong. Do not treat it like a missing-auth denial.

Part of our denial codes library. Written by Manikandan, a revenue cycle management specialist with more than 10 years of US medical billing experience. Last reviewed: 9 October 2026. Official code wording is quoted word for word from X12; Medicare rules link to their CMS or Medicare contractor source.

CO-307 denial code description (official X12 wording)

X12 Claim Adjustment Reason Code 307, verbatim:

“Medicare Maximum Fair Price Standard Default Refund Amount Adjustment. At least one Remark Code must be provided (may be comprised of either the NCPDP Reject Reason Code, or Remittance Advice Remark Code that is not an ALERT.) Usage: To be used only for the Medicare Drug Price Negotiation Program.”

Source: X12 Claim Adjustment Reason Codes, checked 9 October 2026. Start: 03/01/2025.

Two things stand out. First, this code is Medicare Drug Price Negotiation only. Second, X12 requires at least one non-Alert remark code (or NCPDP reject reason), so always read the RARC before you act.

What CO-307 means in plain English

Each part of the code answers a different question:

• CO (Contractual Obligation) is the payer’s classification of who carries the amount. CMS says these adjustments are “Generally… considered a write off for the provider and are not billed to the patient” (Medicare Claims Processing Manual, Ch. 22, §60.1).
• CARC 307 tells you why: Medicare applied the Maximum Fair Price standard default refund amount under the Negotiation Program.

For example, the Inflation Reduction Act directed CMS to negotiate maximum fair prices for selected high-spend drugs. For first price year 2026, CMS published negotiated prices and an NDC file for the selected drugs (CMS selected drugs and negotiated prices). CO-307 is how that pricing rollout can appear on the remittance.

In plain terms: Medicare cut or adjusted the drug payment to the negotiated fair price. Review the CMS price file before you fight the remit.

CO-307 vs CO-45, CO-96, CO-45 and PR-204

Code	Official X12 text	What it tells you
307	“Medicare Maximum Fair Price Standard Default Refund Amount Adjustment. … Usage: To be used only for the Medicare Drug Price Negotiation Program.”	MFP refund/pricing adjustment for a negotiated drug
45	“Charge exceeds fee schedule/maximum allowable or contracted/legislated fee arrangement. …”	Ordinary fee-schedule or contracted allowable. See CO-45
96	“Non-covered charge(s). …”	Non-covered service/charge. See CO-96
204	“This service/equipment/drug is not covered under the patient’s current benefit plan”	Benefit exclusion. See PR-204

CO-307 is a program-specific pricing adjustment, not a statement that the drug is non-covered. Don’t work it like a CO-96 or prior-auth denial.

CO-307 vs PR-307 vs OA-307 vs PI-307

Group + 307	Who carries the amount	Can you bill the patient?	When you’ll typically see it
CO-307	Provider / contractual	No for the MFP contractual piece	Expected when Medicare reports the MFP refund adjustment
PR-307	Patient	Only if the remit truly assigns patient liability	Uncommon; verify before billing
OA-307	Neither group fits	Check remark codes	Possible when no other group code fits
PI-307	Payer-initiated reduction	No	Non-Medicare remits only

Because X12 limits usage to the Medicare Drug Price Negotiation Program, treat unexpected commercial PI/PR 307 lines as a data review item with the payer.

Remark codes that help with CARC 307

X12 requires at least one non-Alert remark code with 307. Exact RARC pairings can evolve as CMS and the MACs operationalize MFP rollout; always quote the remark on your remit:

RARC (examples to watch)	Official X12 text	What it adds
N130	“Consult plan benefit documents/guidelines for information about restrictions for this service.”	Points you back to program/plan rules
N381	“Alert: Consult our contractual agreement for restrictions/billing/payment information related to these charges.”	Contractual/billing restriction alert (Alert codes alone do not satisfy 307’s non-Alert requirement)
N211	“Alert: You may not appeal this decision.”	Informational alert — still need a non-Alert remark if this is the only code present

RARC wording is quoted from the X12 RARC list, checked 9 October 2026. If the remit lacks a non-Alert remark, that itself is a reason to query the MAC.

Where CO-307 shows up in the 835

Here’s a trimmed, illustrative example for a Part B drug line:

CLP*PT20260315A*1*2500.00*1800.00*700.00*MB*2626000555123~
SVC*HC:J9999*2500.00*1800.00~
CAS*CO*307*700.00~
LQ*HE*N130~

• CAS*CO*307*700.00 is the MFP standard default refund amount adjustment (illustrative dollars).
• LQ*HE*N130 stands in for the required remark; your live remit may use a different non-Alert RARC.

This 835 snippet is illustrative only.

How to work CO-307: decision path

1. Confirm it is really CARC 307. Read the full CAS segment and every remark code. X12 requires a non-Alert remark.
2. Confirm the drug and NDC. Match the billed HCPCS/NDC to CMS’s selected-drug NDC file for the applicable price year (CMS selected drugs).
3. Compare the adjustment to the published MFP. CMS publishes the negotiated 30-day-equivalent MFP, NDC-9 per-unit and NDC-11 per-package prices, and updates the file for inflation and NDC changes.
4. Check DOS against the price year. Initial MFPs for the first selected drugs apply beginning with first price year 2026 per CMS program materials.
5. If the NDC or math is wrong, contact the MAC. Ask them to recalculate or reprocess. Keep the CMS file excerpt with your ticket.
6. If the drug was billed under the wrong code/NDC, correct and resubmit per MAC corrected-claim rules.
7. Do not bill the patient for a CO MFP contractual adjustment. Update AR to the net payment.

Medicare and major payer notes

CMS Drug Price Negotiation Program. CMS maintains guidance and policy documents for manufacturer rollout of the MFP in 2026, 2027 and 2028, and publishes the selected-drug negotiated price file in xlsx and csv formats (CMS guidance page). Use those files — not third-party blogs — to verify amounts.

Freshness. CARC 307’s X12 start date is 03/01/2025, ahead of the first price year. Expect more remits as MFP rollout matures through 2026.

Part D vs Part B. Negotiation Program rules differ by setting. Confirm whether your claim is Part B buy-and-bill, a pharmacy claim, or another pathway before you assume the same refund logic.

Commercial payers. X12 usage is Medicare Negotiation Program only. A commercial remit showing 307 needs a payer inquiry.

Worked example (illustrative)

A clinic bills a selected Part B drug. The remit pays less than the usual ASP-based expectation and shows CAS*CO*307 plus a non-Alert remark.

Reading it: For example, this is an MFP refund/pricing adjustment, not a medical-necessity denial.

Fix: pull the CMS NDC/MFP file for that DOS, confirm the NDC-11 and units, and verify the adjustment math. If the NDC on the claim was wrong, submit a corrected claim. If the file matches and the math is right, post the contractual adjustment and close the balance.

Prevention: flag selected-drug HCPCS/NDCs in the PM system and store the current CMS MFP file next to your fee schedule.

CO-307 verification request template

Use this when the NDC or MFP math does not match CMS’s published file.

[Date]
[MAC name] Provider Contact / Claims
[Address, fax or portal reference]

Re: CO-307 MFP adjustment — request to verify calculation
Patient: [Name]   MBI: [MBI]   DOB: [MM/DD/YYYY]
Claim number: [Claim #]   Date(s) of service: [MM/DD/YYYY]
HCPCS / NDC-11: [Code / NDC]   Units: [N]   NPI: [NPI]

The remittance shows CAS*CO*307*[amount] with remark [code]. Please:
[ ] Confirm the selected-drug status and MFP used for this NDC on the
    date of service (CMS file version / effective date).
[ ] Recalculate the Maximum Fair Price Standard Default Refund Amount
    Adjustment if our enclosed CMS file excerpt differs.
[ ] Advise whether a corrected claim is required for [NDC / unit] errors.

Enclosed: remittance advice, claim copy, CMS selected-drug/MFP excerpt
for [drug], invoice / acquisition record.

[Name, credentials]  [Practice, NPI]  [Phone / email]

CO-307 prevention checklist

• Maintain CMS’s current selected-drug NDC and MFP file in billing.
• Flag Negotiation Program drugs in the charge master / PM system.
• Bill the correct NDC-11 and units for the DOS.
• Train posters that CO-307 is a pricing adjustment, not CO-197/CO-50.
• Never bill the patient for a CO MFP contractual amount.
• Escalate only when NDC, units or math disagree with CMS.
• Track CO-307 volume by drug as 2026 rollout ramps up.
• Re-check the CMS file after each published update.

Related denial codes

• CO-45: charge exceeds fee schedule or contracted allowable.
• CO-96: non-covered charge.
• PR-204: not covered under the patient’s benefit plan.
• CO-50: medical necessity denial.
• CO-16: claim lacks information.
• CO-252: attachment or documentation required.

Quick tip from denial queues

For example, keep the CMS selected-drug file next to your fee schedule. When CO-307 appears, your first move should be an NDC match, not a medical-necessity appeal packet.

In short

CO-307 is a Medicare drug price adjustment. Match the NDC to the CMS price file. Check the math. Do not treat it like a missing-auth denial. Do not bill the patient for the CO amount.

FAQ

Sources

• X12, Claim Adjustment Reason Codes (CARC 307). Start 03/01/2025. Accessed 9 Oct 2026.
• X12, Remittance Advice Remark Codes. Accessed 9 Oct 2026.
• CMS, Selected Drugs and Negotiated Prices
• CMS, Medicare Drug Price Negotiation Program — Guidance and Policy Documents
• CMS, Fact Sheet: Negotiated Prices for Initial Price Applicability Year 2026 (PDF)
• CMS, Medicare Claims Processing Manual (IOM 100-04), Ch. 22, §60.1 Group Codes

Last reviewed: 9 October 2026 · This page is educational and doesn’t replace payer-specific instructions.