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.).
- The 10-15 most common CARC/RARC pairs typically drive 80% of denial volume.
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 (March, July, November). Common CARCs 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.). The 10-15 most common CARC/RARC pairs typically drive 80% of denial volume.
Related Terms
RARC
A Remittance Advice Remark Code is a supplemental code used on the 835 ERA to provide additional information about an adjustment, often clarifying or specifying the reason behind a CARC; RARCs are maintained by CMS and the Remittance Advice Code Committee.
Read definition arrow_forwardERA (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 definition arrow_forwardCARC 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 benefit for this service is included in the payment/allowance for another service/procedure that has already been adjudicated.'
Read definition arrow_forwardCARC 50
CARC 50 indicates the payer denied a claim because it determined the services were not medically necessary based on its medical-necessity policy, LCD, NCD, or commercial medical-policy criteria.
Read definition arrow_forwardCARC 197
CARC 197 indicates a denial because precertification, authorization, or notification required by the payer was not obtained before the service was rendered, often paired with RARCs identifying the specific authorization missing.
Read definition arrow_forwardCARC 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 definition arrow_forwardWhere This Applies on MedPrecision
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