CO 278 denial code

Claim adjustment reason code 278. Often reported as CO 278 or PI 278.

Performance program 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 278 means

The payment was adjusted because the provider did not meet the proficiency standards of a payer performance program.

Some payers tie payment to quality or performance programs. This code says the provider fell short of that program's standards, and the payment was reduced or withheld as a result.

It is only used with group codes CO or PI, so the patient is not responsible. The 835 may name the program policy in the Healthcare Policy Identification segment (loop 2110 REF).

Group codes seen with 278

On a remittance, 278 comes after a group code. These are the ones it is most often reported with:

• CO 278 (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.
• PI 278 (Payer Initiated Reduction): A reduction the payer made on its own, typically after reviewing the claim, rather than one set by a contract term. The payer does not treat it as the patient's share.

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 did not meet quality or performance thresholds in a payer program.
• Required program reporting was not submitted or was late.
• The payer applied a penalty or withhold under a value based contract.

What to do next

1. Read any policy reference on the 835 to identify the program.
2. Review your performance scores and reporting for the measurement period.
3. Dispute the result with the payer if your data shows the standards were met.

Related codes

• 45 (reason code) Charge exceeds the allowed amount
• 97 (reason code) Service included in another payment