CO 306 denial code

Claim adjustment reason code 306. Often reported as CO 306.

Bill type does not match patient status

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 306 means

The type of bill on the claim does not agree with the patient's status, such as inpatient versus outpatient.

On institutional claims, the type of bill and the patient's status (for example admitted, discharged, or still a patient) need to agree. This code says they did not.

The 835 may name the policy in the Healthcare Policy Identification segment (loop 2110 REF). It often comes down to an admit or discharge detail entered wrong.

Group codes seen with 306

On a remittance, 306 comes after a group code. These are the ones it is most often reported with:

• CO 306 (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

• An interim bill type was used with a discharge status, or the reverse.
• The patient was billed as inpatient when the stay was observation or outpatient.
• The patient status code on the claim was entered incorrectly.

What to do next

1. Compare the type of bill, admission and discharge dates, and patient status code.
2. Correct the bill type or status and send a corrected claim.
3. Check the payer's billing guide for which bill types fit each patient status.

Related codes

• 282 (reason code) Code does not fit the type of bill
• 16 (reason code) Missing information or billing error