CO 263 denial code

Claim adjustment reason code 263. Often reported as CO 263.

Drug shipping cost adjustment

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 263 means

A pharmaceutical claim was adjusted for shipping costs, and this code is used only on pharmacy claims.

This is one of the pharmacy pricing codes. It tells you the adjustment on the claim relates to the cost of shipping the medication, separate from delivery, postage, or administrative charges.

Because it is pharmacy specific, it is mostly seen by specialty and mail order pharmacies rather than physician offices.

Group codes seen with 263

On a remittance, 263 comes after a group code. These are the ones it is most often reported with:

• CO 263 (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

• Shipping charges were billed and the plan prices or limits them under the pharmacy contract.
• The plan does not pay shipping separately for that drug or dispensing channel.
• The shipping amount billed was more than the contract allows.

What to do next

1. Check the pharmacy contract for how shipping is reimbursed.
2. Confirm the shipping charge was submitted in the right field on the pharmacy claim.
3. Raise any pattern of unexpected shipping adjustments with the pharmacy benefit manager.

Related codes

• 262 (reason code) Drug delivery cost adjustment
• 264 (reason code) Drug postage cost adjustment