CO-45 Denial Code: Billed charge is above the payer's allowed or contracted rate

What CO-45 means

CO-45 shows up on nearly every commercial and Medicare remittance, so it is usually routine rather than a true denial. It represents the contractual gap between what you billed and the payer's allowed amount. Because the group code is CO (Contractual Obligation), that difference must be written off and may not be balance-billed to the patient. A line can still be paid in full alongside a CO-45 adjustment, since the adjustment only reflects the billed-vs-allowed spread.

Common causes

• Your billed charge is simply higher than the contracted/allowed rate. This is normal and expected.
• The payer loaded an outdated or incorrect fee schedule for your contract.
• The claim priced against the wrong fee schedule (wrong locality, wrong contract, or an out-of-network rate).
• A negotiated fee-schedule amendment was not yet loaded on the payer side.

How to fix it

• Confirm the allowed amount matches your contracted rate. If it does, post the CO-45 as a contractual write-off and move on.
• If the allowed amount looks too low, pull your contract/fee schedule and compare line by line.
• If the payer mispriced the claim, request reprocessing with your contracted rate and its effective date.
• Trend CO-45 amounts by payer and CPT. Persistent under-allowance is a contract or fee-schedule-load problem, not a per-claim one.

How to prevent it

• Keep payer fee schedules current in your practice-management system so expected vs. actual allowed amounts reconcile automatically.
• Set your charge master at or above your highest contracted rate. You can never collect more than you bill.
• Audit allowed amounts by payer each quarter to catch silent fee-schedule erosion.

Dispute / correction letter

Fill in the bracketed fields, attach your supporting documentation, and send through the payer's correction or dispute channel. This is a starting point — adjust to your payer's requirements.

Re: Underpayment Dispute - Claim [Claim Number]

Patient: [Patient Name]   |   Member ID: [Member ID]
Date(s) of Service: [DOS]   |   CPT/HCPCS: [Code(s)]

To Whom It May Concern:

Claim [Claim Number] was adjusted under reason code CO-45 to an allowed amount of $[Allowed Amount]. Per our participating-provider agreement effective [Contract Effective Date], the contracted rate for [CPT/HCPCS] is $[Contracted Rate]. The amount allowed does not match our contracted rate.

We request reprocessing of this claim at the correct contracted rate. A copy of the applicable fee-schedule page is enclosed. Please issue the additional payment of $[Difference].

Sincerely,
[Your Name], [Practice Name]   |   [Phone]   |   [NPI/TIN]