CO-89 Denial Code (CARC 89) 2026: Professional Fees Removed From Charges

CO-89 means the payer took professional fees out of a facility claim. A hospital sent a UB-04 (837I) with the doctor’s own charges on it. The payer won’t pay those on a facility claim. In most cases the doctor’s work must be billed on its own claim, a CMS-1500 or 837P. The main exception is a small rural hospital that has picked the optional method, often called Method II, for Medicare. (Primary sources: X12 Claim Adjustment Reason Codes · CMS Claims Processing Manual, Ch. 4).

In brief: CO-89 means “Professional fees removed from charges.” Find the professional fee lines on the facility claim, usually revenue codes 096X, 097X and 098X. Check if the facility may bill them, such as a CAH under the optional method. If not, take them off and bill the doctor’s work on an 837P.

Part of our denial codes library. Written by Manikandan J, CPC, CRCR, who has billed facility and professional claims for payers and billing companies. Published 20 October 2026. Last updated: 20 October 2026. Code wording is quoted word for word from X12.

X12 text: CARC 89

Field	Official X12 text
Description	“Professional fees removed from charges.”
Start	01/01/1995

Source: X12 Claim Adjustment Reason Codes, checked 20 October 2026.

Denial code 89, CARC 89 and reason code 89

Denial code 89, CARC 89 and reason code 89 all mean professional fees were removed. With the CO group, the facility can’t bill the patient for those removed charges. The money isn’t lost if the right claim is sent.

Facility fee vs professional fee

A facility fee is the charge for the room, staff, supplies and tools, billed on a UB-04. A professional fee is the charge for the doctor’s own work, billed on a CMS-1500. A critical access hospital is a small rural hospital with its own Medicare pay rules. Under the optional method, it may bill some doctor fees on its own claim.

Item	Facility claim (837I / UB-04)	Professional claim (837P / CMS-1500)
Who bills	Hospital or facility	Physician, NPP or group
Typical codes	Revenue codes plus HCPCS	CPT or HCPCS with modifiers
Professional fee revenue codes	096X, 097X, 098X only in allowed cases	Not used
Place of service	Not used	POS such as 22 or 23

Revenue codes that trigger CO-89

• 096X professional fees, such as 0960 general.
• 097X professional fees for other services, such as lab or radiology reads.
• 098X professional fees for more services, such as emergency room physician fees.

When these show up on a facility claim for a payer that won’t take them, CO-89 is the usual result. Many payers also deny pro fee lines rolled into a room or ER line.

The CAH optional method exception

Medicare lets a CAH pick the optional pay method for outpatient care. Under it, doctors who sign their billing rights over to the CAH can have their work billed on the CAH’s claim. The CAH uses revenue codes 096X, 097X or 098X. Medicare pays the doctor part at a set share of the fee schedule. If your CAH uses this method and gets CO-89 from Medicare, check that the doctor’s form is on file. Also check that the CAH’s choice is current. Other payers set their own rules, so the CAH may still need an 837P for them. The CMS Claims Processing Manual, Chapter 4 covers CAH outpatient billing.

How to fix a CO-89

1. Spot the pro fee lines with revenue codes 096X to 098X on the remit.
2. Confirm the billing method. Is this a CAH with the optional method and a reassignment on file?
3. Split the claim if the payer wants separate billing. Remove the pro fees from the facility claim.
4. Bill the professional part on an 837P under the rendering NPI, with the right CPT, modifiers and POS.
5. Rebill the facility claim as a corrected claim (frequency code 7) if needed, or leave it as paid.
6. Fix the chargemaster so pro fee lines don’t drop onto facility claims for that payer.

Worked example (illustrative)

A small hospital’s ER bills a commercial plan on a UB-04 with revenue code 0450 for the ER visit and 0981 for the ER physician’s fee. The plan pays the 0450 line and removes the 0981 line with CAS*CO*89*410.00. The hospital isn’t a CAH, so the physician’s work must go on an 837P. The billing team sends a professional claim with CPT 99284 and POS 23 under the ER physician’s NPI. They also change the chargemaster so 0981 no longer posts to UB-04s for that plan.

Consider a CAH case. A CAH under the optional method bills Medicare with 0960 for a family doctor’s clinic visit and gets CO-89. The team finds the doctor’s reassignment form was never processed. Once the reassignment is on file, they rebill and the line pays.

Prevention checklist

• [ ] Set chargemaster rules so 096X to 098X lines only go to payers that accept them.
• [ ] Keep practitioner reassignments current for CAH optional method billing.
• [ ] Build a daily split-bill check for ER and hospitalist services.
• [ ] Confirm each payer’s facility vs professional billing rules at contracting.
• [ ] Track CO-89 by revenue code and payer.

Related denial codes

• CO-97: service included in another service.
• CO-16: claim lacks information needed for adjudication.
• CO-5: procedure code or bill type inconsistent with place of service.
• CO-58: invalid place of service.
• CO-45: charge exceeds fee schedule or contracted amount.
• Denial codes hub for every code we cover.

Key takeaways

CO-89 means the payer stripped professional fees from a facility claim. Find the 096X to 098X lines, check whether the facility may bill them, such as a CAH under the optional method, and otherwise bill the professional work on an 837P under the rendering provider. Fix the charge list so it doesn’t happen again.

FAQ

Sources

How we checked: every code quote on this page was compared word for word with the X12 CARC list on 20 October 2026.

• X12, Claim Adjustment Reason Codes (CARC 89). Accessed 20 Oct 2026.
• CMS, Medicare Claims Processing Manual, Ch. 4, Part B Hospital. Accessed 20 Oct 2026.
• CMS, Critical Access Hospitals. Accessed 20 Oct 2026.

Last updated: 20 October 2026 · This page is educational and doesn’t replace payer contracts or coding rules.