CARC Code
266
Compound Preparation Cost Adjustment
The payer has adjusted the reimbursement amount for a compounded medication, which is a customized pharmaceutical preparation made by combining multiple ingredients. This adjustment reflects the payer's contractual allowance for the labor and overhead involved in creating the compound.
contractualHow to resolve this denial
Review and resolve CARC 266: Adjustment for compound preparation cost.
- 1
Review the full denial on the 835 ERA for CARC 266: "Adjustment for compound preparation cost."
- 2
Pull the original claim and all supporting documentation for the date of service.
- 3
Identify the specific data element, policy requirement, or documentation gap that triggered this adjustment.
- 4
Correct the identified issue — update claim data, gather missing documentation, or verify coverage details.
- 5
Resubmit as a corrected claim (frequency type 7) or file a written appeal with supporting documentation.
- 6
Follow up with the payer within 10-15 business days to confirm adjudication.
▶✓ Pre-action checklist — verify before contacting the payer
Review the full remittance advice (ERA/EOB) for additional RARC codes that explain the denial.
Verify the claim was submitted with correct patient eligibility and benefit information.
Check if this denial applies to a specific line item or the entire claim.
▶More about CO-266 — stats, related codes, appeal template
85%
Recovery Rate
3-7 days
Avg. Resolution
Easy
Difficulty
Rare
Frequency
Payer-Specific Notes
How major payers handle CARC 266 by specialty.
General
Confirm payer-specific policy for CARC 266 and submit corrected claim or appeal as appropriate.
Appeal Letter Template
Generic appeal template for CARC 266 denials.
Dear [Payer Name] Appeals Department, We are writing to appeal the denial of claim [CLAIM #] for patient [PATIENT NAME] (Member ID: [ID]) for services rendered on [DATE OF SERVICE]. The claim was denied with CARC 266: "Adjustment for compound preparation cost." We believe this denial is in error for the following reasons: [INSERT CLINICAL/ADMINISTRATIVE JUSTIFICATION] We respectfully request reconsideration and payment of this claim. Sincerely, [Provider Name / Billing Contact]
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