CO 104 denial code

Claim adjustment reason code 104. Often reported as CO 104.

Managed care withhold

Unofficial reference. This is our own plain-English explanation, not the official code text. Payer rules differ. Verify with the payer and the official X12 code list. AlphaPrefix is not affiliated with X12, CMS or any payer. Data last updated Nov 11, 2026.

What 104 means

Part of the payment was held back under a managed care arrangement that may return it later based on results.

Some managed care contracts withhold a percentage of each payment. The payer keeps that money in a pool and may pay some or all of it back at year end or another settlement point, usually depending on cost or quality results.

This is a contract term, not a denial. Track the withheld amounts so you can reconcile any later settlement.

Group codes seen with 104

On a remittance, 104 comes after a group code. These are the ones it is most often reported with:

• CO 104 (Contractual Obligation): The provider's side of the ledger. The reduction comes from the payer contract or a rule the provider has to follow, and the patient normally cannot be billed for it.

The payer chooses the group code for each adjustment, so the same reason code can appear with another group code on your remittance. Read the two together. More about group codes.

Common causes

• The provider's managed care contract includes a withhold percentage.
• The payer changed the withhold rate for a new contract period.
• The claim falls under a risk arrangement that applies withholds to that service type.

What to do next

1. Check that the withheld amount matches the percentage in your contract.
2. Record withholds in a separate account so year end settlements can be matched.
3. Ask the payer for the settlement schedule and the metrics that decide the return.

Related codes

• 45 (reason code) Charge exceeds the allowed amount