CO 74 denial code
Claim adjustment reason code 74. Often reported as CO 74.
Indirect teaching 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 .
What 74 means
The inpatient payment includes an add-on or adjustment tied to the hospital's teaching activity.
Teaching hospitals often receive an extra percentage on inpatient payments to reflect the higher operating costs of training residents. This code reports that indirect medical education amount on the claim.
It is informational for most billers. The figure comes from the hospital's teaching ratio and the payer's rate setup, so questions about it usually go to reimbursement or contracting staff rather than to a denial queue.
Group codes seen with 74
On a remittance, 74 comes after a group code. These are the ones it is most often reported with:
- CO 74 (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 facility is recognized as a teaching hospital and the payer applies an education add-on.
- The payer updated the hospital's resident-to-bed ratio or rate file.
- The payer reduced the add-on for a specific claim based on its pricing rules.
What to do next
- Post the line as a pricing detail and confirm the total paid matches the expected inpatient rate.
- Ask your reimbursement team to check the payer's teaching factor if the amount looks off.
- Track the adjustment over time to catch rate file errors that affect many claims.
Related codes
Source
Official wording: X12 Claim Adjustment Reason Codes list. The explanation on this page is our own plain-English wording, not the X12 text.
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