What Is CARC?
A Claim Adjustment Reason Code is a standardized code maintained by the X12 External Code List committee that explains why a claim line was adjusted (paid less than billed, denied, or transferred to patient responsibility) on a payer's 835 ERA.
- Build a denial work-queue routing matrix that maps every CARC + RARC combination to a specific workflow (eligibility re-verification, appeal with medical records, rebill with corrected modifier, write-off, etc.).
- Which pairs fill the queue depends on your specialty and payer mix, so rank your own 835 data to decide where to start.
CARC
Also known as: Claim Adjustment Reason Code; Claim Adjustment Reason Codes
A Claim Adjustment Reason Code is a standardized code maintained by the X12 External Code List committee that explains why a claim line was adjusted (paid less than billed, denied, or transferred to patient responsibility) on a payer's 835 ERA.
Definition
CARCs are part of the X12 standard codes used in the 835 transaction's CAS (Claim Adjustment Segment) to communicate adjudication results. Each CARC pairs with a Group Code (CO = Contractual Obligation, OA = Other Adjustment, PI = Payer Initiated, PR = Patient Responsibility) and an adjustment dollar amount. The X12 CARC list is published and updated three times per year. Examples include 1 (deductible), 2 (coinsurance), 3 (copayment), 16 (lacks information), 27 (coverage terminated), 29 (timely filing), 45 (charge exceeds fee schedule), 50 (not medically necessary), 96 (non-covered), 97 (bundled), 197 (prior auth not obtained).
Example
An 835 claim line shows: paid amount $98, with CAS*CO*45*52 (CARC 45 = $52 contractual adjustment) and CAS*PR*1*30 (CARC 1 = $30 deductible to patient). The total of $98 + $52 + $30 reconciles to the $180 billed charge.
Common Misconceptions
CARCs are not payer-specific — they are standard codes. But each payer has discretion on which CARC to use for a given denial reason; the same business issue may carry CARC 16 at one payer and CARC 96 at another. Always read the CARC paired with any RARC for the full picture.
Practical Application
Build a denial work-queue routing matrix that maps every CARC + RARC combination to a specific workflow (eligibility re-verification, appeal with medical records, rebill with corrected modifier, write-off, etc.). Which pairs fill the queue depends on your specialty and payer mix, so rank your own 835 data to decide where to start.
Related Terms
RARC
A Remittance Advice Remark Code is a code carried on the 835 ERA that either adds explanation to an adjustment already described by a CARC or conveys information about remittance processing. X12 publishes the list as external code list 411 and names CMS as its maintainer.
Read definitionERA (Electronic Remittance Advice / 835)
The ERA (X12 835 transaction) is the HIPAA-standard electronic file payers send to providers detailing claim adjudication results — payments, adjustments, denials with CARC/RARC codes — typically paired with EFT funds transfer.
Read definitionCARC 97
CARC 97 indicates the payer denied or reduced payment because the service is bundled with another service on the same claim under NCCI Procedure-to-Procedure edits (the payer treats the service as already paid for within another service it adjudicated).
Read definitionCARC 50
CARC 50 is the X12 claim adjustment reason code a payer returns when it has determined that a service does not meet its coverage criteria for medical necessity — a Medicare local or national coverage determination, or a commercial plan’s own medical policy.
Read definitionCARC 197
CARC 197 is the X12 claim adjustment reason code a payer returns when the plan’s own prior-approval step for a service was not completed before the claim was adjudicated; the remark codes alongside it usually indicate which approval the payer was looking for.
Read definitionCARC 27
CARC 27 indicates a denial because the patient's coverage with the payer had terminated before the date of service, meaning the patient was not insured by this payer on the day services were rendered.
Read definitionWhere This Applies on MedPrecision
Need help with billing?
If this term is showing up in your denials, EOBs, or A/R aging, we can help. Get a free billing audit and we will trace the issue to its root cause.
- No contract
- No setup fees
- Reply within 1 business day