CO 108 denial code

Claim adjustment reason code 108. Often reported as CO 108.

Rent or purchase rules not met

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 108 means

The equipment claim did not meet the payer's rules for renting versus buying that item.

This shows up mainly on durable medical equipment claims. The payer has rules about which items must be rented, which may be bought, how many rental months are paid and when ownership passes. The claim did not fit those rules.

A policy reference at the service line may point to the payer's rule. Check the modifiers used for new, used, rental and purchase, and the rental month count.

Group codes seen with 108

On a remittance, 108 comes after a group code. These are the ones it is most often reported with:

• CO 108 (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 item was billed as a purchase when the payer only pays it as a rental.
• Rental months billed exceed the cap the payer allows for the item.
• The rental or purchase modifiers on the claim are missing or wrong.

What to do next

1. Check the payer's rental and purchase policy for the item's code.
2. Correct the modifiers or rental month count and resubmit if the claim was billed incorrectly.
3. Review the item's rental history for this patient, including periods billed by another supplier.

Related codes

• 96 (reason code) Service not covered by the plan
• 16 (reason code) Missing information or billing error
• 4 (reason code) Procedure code and modifier do not match