The CO-262 denial code shows up on pharmacy remits when the payer reduced or refused the delivery cost that came with a prescription claim. The drug itself may have paid in full. Only the delivery charge, sent in the NCPDP other amount claimed fields, was adjusted. (Primary source: X12 Claim Adjustment Reason Codes)
In brief: reason code 262 reads “Adjustment for delivery cost. Usage: To be used for pharmaceuticals only.” Check the payer sheet: if the plan does not pay delivery, write off the amount and stop sending it. If it does, fix the qualifier or the amount.
Part of our denial codes library. Written by Manikandan J, CPC, CRCR, who has reconciled pharmacy 835s against NCPDP claim data for retail and home-delivery pharmacies. Published 27 October 2026. Last updated: 27 October 2026. Code wording quoted word for word from X12. Read about the author and our editorial policy, or contact us to report an error.
Official CARC 262 description
| Field | Value |
|---|---|
| Code | 262 |
| Description | “Adjustment for delivery cost. Usage: To be used for pharmaceuticals only.” |
| Start | 11/01/2014 |
| Last modified | 07/01/2017 |
Source: X12 Claim Adjustment Reason Codes, checked 27 October 2026. CARC 262 is one of five pharmacy cost codes added together, 262 to 266, one for each kind of extra cost a pharmacy can claim.
Key terms: A CARC is a Claim Adjustment Reason Code from the X12 list, and it says why a line was paid differently than billed. A RARC is a Remittance Advice Remark Code that adds detail to the CARC. The group code is the two-letter prefix on the adjustment; CO means contractual obligation: the provider owns the balance and it cannot be billed to the patient.
Methodology: the code wording above is copied from the X12 list, and each fix step below links to the payer or CMS page it comes from.
Example scenario (fictional names), part 1
CO-262 Denial Example: What Happened
Tomas Reyes handles third-party billing for Harbor Lane Pharmacy, a fictional independent pharmacy that delivers to homebound patients. For three months he added a $6.50 delivery charge to each claim for one plan.
The plan’s 835s paid the drug and the dispensing fee but showed CAS*CO*262*6.50 on every line. The pharmacy had $1,170 in open delivery charges on its books.
Should Tomas appeal these, or bill the patients? Keep reading, or jump to how it was resolved. Keep reading, or jump to how the CO-262 denial was resolved.
Where the delivery cost sits on a pharmacy claim
Pharmacy claims use the NCPDP D.0 format, not the CMS-1500. The delivery charge goes in the pricing segment (Nebraska Medicaid D.0 payer sheet):
| NCPDP field | What goes in it |
|---|---|
| 478-H7 Other Amount Claimed Submitted Count | How many extra amounts follow |
| 479-H8 Other Amount Claimed Submitted Qualifier | 01 = Delivery Cost |
| 480-H9 Other Amount Claimed Submitted | The dollar amount |
| 564-J3 / 565-J4 Other Amount Paid (response) | What the plan paid back |
The same qualifier list maps to the CARCs: 01 delivery (262), 02 shipping (263), 03 postage (264), 04 administrative (265) and 09 compound preparation (266). For example, the New York EPIC payer sheet lists the same five values for 479-H8.
CO-262 compared with other pharmacy codes
| Code | Part of the claim adjusted |
|---|---|
| CO-262 | Delivery cost |
| CO-90 | Ingredient cost |
| CO-91 | Dispensing fee |
| CO-235 | Sales tax |
Matching the CARC to the pricing field tells you which part of the claim to look at. A CO-262 line says nothing about the drug price.
How to work a CO-262 adjustment
- Compare 480-H9 with 565-J4. The difference between delivery claimed and other amount paid should equal the CO-262 amount.
- Read the payer sheet. Look for whether 478-H7 to 480-H9 are accepted and whether delivery is ever paid.
- Check the qualifier. Delivery is 01. A home courier sent as 02 (shipping) or a mail-order fee sent as 01 can be cut.
- Check your contract. Some plans pay delivery only for certain programs, such as home infusion. Your network agreement is the final word.
- Write off or correct. If delivery is not payable, write off the CO amount and stop sending it to that plan. If it is payable, reverse and resubmit the claim with the right fields.
Claim form note
No claim form visual is shown here. CARC 262 applies to pharmaceuticals, which are billed on NCPDP pharmacy claims, so there is no CMS-1500 box or UB-04 form locator to fix.
Example scenario (fictional names), part 2
How the CO-262 Denial Was Resolved
Tomas read the plan’s payer sheet. It listed 480-H9 as “not used,” and his network agreement had no delivery fee. The plan had never paid delivery for retail claims.
Fix: he wrote off the $1,170 as contractual, since the CO group means the patient could not be billed for it. He then removed the delivery charge from that plan’s billing profile.
Outcome: new claims went out without the fee, and the remits stopped carrying CARC 262. Tomas kept the fee on two plans whose contracts paid it, and he now checks 565-J4 on their remits each week.
Names and details are illustrative; no real patient data.
Names and details are illustrative; no real patient data.
Related codes
| Code | Meaning | Where to start |
|---|---|---|
| CO-45 | Charge over the fee schedule | Contract rate |
FAQ
What does CO-262 mean?
The payer reduced or refused the delivery cost on a pharmacy claim.
Is CO-262 used on medical claims?
No. X12 limits it to pharmaceuticals.
Can the pharmacy bill the patient for a CO-262 amount?
Not under the CO group. Collect a delivery fee only if your contract and state rules allow it, and not from this claim balance.
Which NCPDP field holds the delivery cost?
480-H9, with qualifier 01 in 479-H8.
How is CO-262 different from CO-263?
CARC 262 is delivery cost. CARC 263 is shipping cost, qualifier 02.
Sources
How we checked: the CARC 262 quote was matched word for word with the X12 CARC list on 27 October 2026, and the NCPDP fields with two state payer sheets.
- X12, Claim Adjustment Reason Codes (CARC 262). Accessed 27 Oct 2026.
- Nebraska Medicaid, NCPDP D.0 payer specification. Accessed 27 Oct 2026.
- New York EPIC, NCPDP D.0 payer specifications (2025). Accessed 27 Oct 2026.
- CMS, Medicare Claims Processing Manual, chapter 22 (remittance advice). Accessed 27 Oct 2026.
Last updated: 27 October 2026 · Educational content; not legal advice.
Related denial codes
- CO-263: Pharmacy Shipping Cost Adjustment
- CO-211: NDC Not Eligible for Rebate
- CO-205: Pharmacy Discount Card Processing Fee
- CO-188: Covered Only When Used per FDA Recommendations
- CO-176: Prescription Is Not Current
- CO-175: Prescription Is Incomplete
- CO-174: Service Was Not Prescribed Prior to Delivery
- CO-173: Service or Equipment Was Not Prescribed by a Physician