266Denial Code (CARC)Active
CO 266 Denial Code - Compound Preparation Cost Adjustment
Code 266 indicates an adjustment related to the cost of preparing a compound pharmaceutical. When you see this code on an ERA, it means the payer has adjusted the amount reimbursed for a compound drug preparation, separate from the medication itself.
Who Pays: Group Code Liability
For code 266, the adjustment typically falls under the CO group code, meaning it's a contractual write-off and the patient cannot be billed for this amount.
Why Claims Get Code 266
- The compound preparation cost exceeded the allowable amount under the payer's guidelines.
- The submitted claim included incorrect or incomplete cost details for the compound preparation.
- Payer policy does not cover certain compound preparation costs.
- Incorrect billing of a non-compound pharmaceutical as a compound.
- Lack of prior authorization for the compound preparation.
How to Fix & Resubmit
- Verify the details of the compound preparation costs submitted on the claim.
- Check the payer's policy to ensure the compound preparation costs are covered and within allowable limits.
- Contact the payer for clarification if the adjustment seems incorrect based on your contract.
- If the costs were incorrectly reported, adjust the claim details and submit a corrected claim.
- If necessary, obtain required authorizations and resubmit the claim with correct information.
Corrected Claim or Appeal?
For code 266, submit a corrected claim if there were errors in the reported costs or missing authorizations. If your contract supports the costs and the adjustment seems incorrect, consider a formal appeal.
Preventing Future 266 Denials
- Ensure all compound preparation costs are correctly documented and submitted according to payer guidelines.
- Review payer policies regularly to stay updated on allowable compound preparation costs.
- Implement a verification step for prior authorizations specific to compound pharmaceuticals.
- Train billing staff on the nuances of billing for compound drugs to avoid misclassification.