CO 256 denial code

Claim adjustment reason code 256. Often reported as CO 256.

Not payable under managed care contract

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 256 means

The managed care plan's contract with the provider does not pay for this service, so it was adjusted rather than paid.

The payer is saying the service falls outside what your managed care agreement pays for. That can mean the service is carved out to another vendor, included in a capitation payment, or simply not a payable service under the terms you signed.

With CO the amount is normally the provider's to absorb unless the contract says otherwise, so the contract is the first place to look.

Group codes seen with 256

On a remittance, 256 comes after a group code. These are the ones it is most often reported with:

• CO 256 (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 service is included in a capitation or global payment and is not separately payable.
• The service is carved out to a different vendor or delegated entity under the plan.
• The provider's contract does not include that service line or location.

What to do next

1. Read the contract or fee schedule exhibit for the service and date of service.
2. Check whether the service should be billed to a carve out vendor or delegated group instead.
3. Ask provider relations to explain the contract basis if it is unclear, and appeal if the contract does cover the service.

Related codes

• 45 (reason code) Charge exceeds the allowed amount
• 97 (reason code) Service included in another payment
• 279 (reason code) Out of the member's preferred network