People search for “CO-23,” but in an ordinary secondary-remittance context, current X12 instructions say reason code 23 must use OA, the Other Adjustment group. OA-23 reports the effect of a previous payer’s adjudication on a secondary or tertiary claim. It can appear on a claim the later payer paid, so the pair is not by itself a denial or a new write-off.
Reconcile OA-23 by matching the primary payer’s payment and adjustments already posted to the amount carried into the secondary result. If they agree, post the secondary payer’s own payment and responsibility codes separately. If they do not, compare the primary remittance, secondary claim, and secondary remittance before appealing or changing a patient balance.
The ordinary secondary-remittance code is OA-23
X12 defines reason code 23 as the impact of prior payer adjudication, including payments and adjustments. Its usage instruction says to use only Group Code OA. The group is part of the meaning: OA identifies an other adjustment, while CO identifies a contractual obligation and PR identifies patient responsibility.
Billing sites and software may call every reason code a denial code, which helps explain the “CO-23” search wording. There is also a narrow Medicare exception: CMS instructs Part B and DME MACs to pair CO-23 with M32, and sometimes N4, for certain non-group health plan conditional payments outside the 120-day period. If that pair appears, follow the full Medicare message instead of relabeling it. Preserve any other CO-23 output and ask the payer or clearinghouse to explain it.
For Medicare DME remittances, Noridian explains that an OA amount belongs to neither the beneficiary nor the supplier. That is a contractor explanation of OA responsibility, not permission to ignore the rest of a commercial plan’s remittance.
The secondary remittance is balancing against the primary result
A coordination-of-benefits claim carries the earlier payer’s adjudication to the next payer. CMS describes these claims as secondary submissions that include the prior payer’s claim payment information. The secondary payer uses that history when calculating what it owes.
X12’s coordination-of-benefits example explains why code 23 matters to the provider’s accounting system. Primary payments and adjustments may already be posted. OA-23 identifies their effect on the secondary result so software does not post those same amounts again and create a false write-off or negative balance.
OA-23 can appear once at the claim level or on the affected service lines. CMS’s current Medicare implementation says to report the prior-payer impact once at the claim level or once for each service line, as appropriate. Check the placement before adding several OA-23 amounts together.
A $200 pharmacy claim through two payers
Suppose a pharmacy bills a $200 medical claim for a covered clinical service. This example is hypothetical. The primary payer allows $120, applies an $80 contractual adjustment, pays $96, and assigns $24 to coinsurance. The primary remittance balances: $80 adjustment plus $96 payment plus $24 coinsurance equals the $200 charge.
The pharmacy then sends the secondary medical claim with the primary adjudication. The secondary payer pays the remaining $24 and reports OA-23 of $176. That $176 is the primary payer’s $96 payment plus its $80 adjustment, both of which are already represented in the account. The secondary remittance balances the original charge: $176 of prior-payer impact plus the secondary payer’s $24 payment equals $200.
Post the $24 secondary payment. Do not post OA-23 as another $176 contractual adjustment, and do not add it to the patient balance. This clean equation is an example, not a universal formula: OA-23 can be smaller than the primary payment and adjustments when the secondary payer considers more than the primary allowed. If the secondary payer paid $0 instead, OA-23 alone would not explain the remainder. Read the secondary payer’s other adjustment and responsibility codes to learn what it did with the $24.
Use the primary medical remittance for this comparison. A prescription response under the pharmacy benefit is a different transaction and may involve different plans and coverage rules. The medical benefit versus pharmacy benefit guide explains that boundary.
When the OA-23 amount does not reconcile
Start with the three records for the same medical claim: the primary remittance, the secondary claim as sent, and the secondary remittance. Compare the payer identities, claim control numbers, service lines, primary payment, primary adjustments, and adjudication date. The MA04 guide covers the earlier state in which the secondary payer could not use the primary information at all.
A mismatch can come from prior-payer amounts entered incorrectly on the secondary claim, a primary reversal or replacement that did not reach the secondary payer, line mapping that changed in transit, or a secondary calculation that does not match the evidence. Public software guidance shows that current claim tools can validate prior-payer fields and adjudication dates. That capability can catch missing data, but it does not prove that the payer’s calculation or a proposed posting action is correct.
Correct the secondary claim only when the submitted prior-payer data is demonstrably wrong and the payer’s instructions identify the correction route. Ask the payer to review its processing when the submitted data matches the final primary remittance but OA-23 or the secondary payment does not. OA-23 itself is not a reason to appeal a reconciled claim.
Hold the account for qualified billing review when CO-23 appears without the defined Medicare M32 or N4 context, PR-23 appears, payer order is disputed, the primary claim was denied or reversed, more than one prior payer is involved, claim-level and line-level amounts appear duplicated, or the evidence does not establish patient responsibility. CMS guidance says OA-23 does not apply to denied services. The Medicare Secondary Payer guide covers the separate question of which plan should have paid first.
OA-23 does not decide the remaining patient balance
Use the secondary payer’s separate PR amounts, other adjustment reasons, contract, coverage order, and applicable patient protections to decide whether anything remains collectible. OA-23 accounts for prior-payer activity. It does not convert that amount into a copayment, coinsurance, deductible, contractual write-off, or appealable denial.
Keep the primary remittance and secondary remittance attached to the same claim history until the payment batch also reconciles. The ERA reconciliation guide explains how the claim result connects to the actual EFT or check before the pharmacy closes the account.
