CO 245 denial code

Claim adjustment reason code 245. Often reported as CO 245.

Provider performance program 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 245 means

Part of the payment was held back under a provider performance or incentive program.

Some contracts withhold a share of each payment, then pay some or all of it back later based on quality, cost or other targets.

The withheld amount is not a denial and not the patient's responsibility. Track it so you can reconcile it when the program settles.

Group codes seen with 245

On a remittance, 245 comes after a group code. These are the ones it is most often reported with:

• CO 245 (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 contract includes a withhold tied to performance measures.
• A value based or risk sharing program started a new year with a withhold.
• The withhold percentage changed under a contract renewal.

What to do next

1. Confirm the withhold percentage matches the contract.
2. Post the withheld amount to a receivable or tracking account, not to patient balance.
3. Reconcile withholds when the payer issues the program settlement.

Related codes

• 45 (reason code) Charge exceeds the allowed amount
• 237 (reason code) Legislated or regulatory penalty