What Are CARC and RARC Codes?
CARC (Claim Adjustment Reason Codes) and RARC (Remittance Advice Remark Codes) are the X12-standardized codes payers use on the 835 Electronic Remittance Advice (ERA) to explain claim adjustments. CARC tells you what the payer did and is paired with a Group Code — CO (Contractual Obligation, provider write-off), PR (Patient Responsibility), OA (Other Adjustment), PI (Payer-Initiated Reduction), CR (Corrections and Reversals). RARC provides the why context. CARC is maintained by X12 (x12.org); RARC is maintained by CMS through Washington Publishing Company.
- ~20 CARC codes drive 80% of denial volume (16, 27, 29, 50, 97, 109, 197)
- CO group = provider write-off; PR group = bill the patient
- CO-97 = bundled service; CO-50 = not medically necessary
- Tables update quarterly; refresh PM/clearinghouse rules each quarter
CARC and RARC Denial Codes Explained
By MedPrecision Operations Team · Published
CARC (Claim Adjustment Reason Codes) and RARC (Remittance Advice Remark Codes) are the standardized codes payers use to explain why a medical claim was denied or partially paid. CARC says what was adjusted; RARC says why. Together, they appear on the 835 Electronic Remittance Advice (ERA) and on paper Explanation of Benefits (EOB) statements, and they are the only standardized language across all payers — Medicare, Medicaid, and commercial — for communicating claim adjudication decisions. Understanding these codes is the first step in any working denial management process: until the billing team can read the codes accurately and route them to the right operational fix, denials cannot be worked systematically. This guide explains the difference between CARC and RARC, lists the most commonly seen CARC codes with one-line meaning and operational fix, and points to the official maintenance sources where the latest lists live.
CARC vs RARC: The Difference
CARC and RARC are both X12-standardized code sets used on the 835 Electronic Remittance Advice (ERA), but they answer different questions. **CARC (Claim Adjustment Reason Code).** Maintained by the Claim Adjustment Status Code Maintenance Committee under X12. CARC tells you *what* the payer did — adjusted, denied, or reduced — and the financial-responsibility category for the adjustment. Each CARC line on the ERA is paired with a Group Code that indicates who owes the money: CO (Contractual Obligation, written off by provider), PR (Patient Responsibility, billed to patient), OA (Other Adjustment), PI (Payer-Initiated Reduction), CR (Corrections and Reversals). So a denial line of 'CO-97' means the payer applied Reason Code 97 (Bundled) as a Contractual Obligation that the provider must absorb. **RARC (Remittance Advice Remark Code).** Maintained by CMS through Washington Publishing Company. RARC tells you *why* — additional context, reference to a specific policy, or instruction on what to do next. A single ERA line can have one CARC and zero, one, or multiple RARCs explaining it. Example of how they appear together on an ERA: > Line 1: CO-50 (CARC: non-covered service, contractual obligation) + N115 (RARC: This decision was based on a Local Coverage Determination — LCD) The CARC tells you the claim was denied as non-covered with provider write-off. The RARC tells you the specific reason was an LCD policy. Together, they direct the operational fix: review the LCD, determine if documentation supports medical necessity, and either appeal with documentation or write off. CARC and RARC are mandated standards under HIPAA's electronic transaction rules. All HIPAA-covered payers must use them in 835 transactions. Internal payer-specific reason codes are not HIPAA-compliant on the 835 and should be translated to standard CARC/RARC pairs. **Group Codes you will see paired with CARC:** - **CO** — Contractual Obligation. Provider write-off; cannot be billed to patient. - **PR** — Patient Responsibility. Bill the patient. - **OA** — Other Adjustment. Neither provider nor patient — usually a coordination-of-benefits or payer-policy adjustment that is informational. - **PI** — Payer-Initiated Reduction. Adjustments where neither contract nor regulation applies, but the payer reduced payment. - **CR** — Corrections and Reversals. Used to reverse a previously paid claim or correct an earlier ERA line.
The Most Common CARC Codes (with One-Line Meaning and Operational Fix)
These are the CARC codes that account for the majority of denial volume in physician practices. Each entry shows the official code, the X12 short description, and the operational workflow that fixes or prevents it. | CARC | Meaning | Operational fix | |---|---|---| | **1** | Deductible amount. Patient deductible has not been met. | Bill to patient (PR group); verify accurate deductible accumulation at next eligibility check. | | **2** | Coinsurance amount. | Bill to patient (PR group); verify benefit details. | | **3** | Co-payment amount. | Bill to patient (PR group); collect at point of service next visit. | | **11** | The diagnosis is inconsistent with the procedure. | Review ICD-10 / CPT linkage; correct diagnosis pointers and resubmit. | | **16** | Claim/service lacks information or has submission/billing error(s). | Read RARC for specifics; pre-submission scrubbing prevents most. | | **18** | Exact duplicate claim/service. | Submission deduplication logic; do not resubmit as new line — file as corrected claim if needed. | | **22** | This care may be covered by another payer per coordination of benefits. | Verify primary/secondary payer at scheduling; bill primary first. | | **23** | The impact of prior payer(s) adjudication including payments and/or adjustments. | Informational on secondary claims; review primary EOB. | | **24** | Charges are covered under a capitation agreement / managed care plan. | Update payer setup; service belongs in capitation, not fee-for-service. | | **27** | Expenses incurred after coverage terminated. | Real-time eligibility on date of service; verify coverage start/end. | | **29** | The time limit for filing has expired. | Same-day charge entry SLA; daily timely-filing aging report. | | **45** | Charge exceeds fee schedule/maximum allowable or contracted rate. | Verify contract rate; appeal underpayment if claim was at contracted rate. | | **50** | Non-covered services because this is not deemed a 'medical necessity' by the payer. | Review LCD/NCD; documentation must support medical necessity to appeal; ABN where applicable. | | **96** | Non-covered charge(s). | Verify coverage before service; not appealable when non-covered. | | **97** | Payment is included in the allowance for another service/procedure (bundled). | NCCI PTP edit review; modifier 59 / X-modifier when documentation supports distinct service. | | **109** | Claim/service not covered by this payer. | Re-bill to correct payer; verify payer routing at registration. | | **197** | Precertification / authorization / notification absent. | Pre-auth tracking integrated with scheduling; no service without confirmed auth. | | **204** | This service/equipment/drug is not covered under the patient's current benefit plan. | Verify benefits at scheduling; not appealable when out-of-benefit. | | **B15** | This service/procedure requires that a qualifying service/procedure be received and covered. | Often global-period related; bill the qualifying service first. | | **B16** | New patient qualifications were not met. | Verify last DOS history; correct E/M new-vs-established selection. | This is not the complete list — the X12 CARC table contains hundreds of codes — but in most physician practices these account for roughly 80% of denial volume.
Reading Group Code + CARC Combinations
The Group Code in front of the CARC determines how the denial is worked. The same CARC reads differently depending on its Group Code. **CO-97 (Contractual Obligation, Bundled).** The bundling write-off is the provider's contractual obligation. Worked as a denial: review NCCI edit, decide whether to appeal with modifier 59 / X-modifier, or write off if Modifier Indicator 0. **CO-50 (Contractual Obligation, Not Medically Necessary).** Provider write-off. Worked as a denial: review LCD/NCD, gather documentation, appeal if medical necessity is supported. **PR-1 (Patient Responsibility, Deductible).** Bill the patient. Not a denial in the operational sense — this is a normal patient-balance adjudication. **PR-3 (Patient Responsibility, Co-payment).** Bill the patient. Reconcile against expected co-pay collected at the point of service. **OA-23 (Other Adjustment, Impact of Prior Payer).** Informational on secondary claims. Confirms the primary payer adjudication was incorporated; not a denial. **CO-22 (Contractual Obligation, Coordination of Benefits).** Provider write-off because the payer believes another insurance is primary. Worked by verifying COB at next visit and re-billing if coverage hierarchy was correct. **CO-109 (Contractual Obligation, Not Covered by This Payer).** Provider write-off pending re-bill. Worked by identifying the correct payer and re-billing. The CO/PR distinction is especially important: CO denials cannot be balance-billed to the patient (they are contractual provider write-offs), while PR amounts must be billed to the patient. Misclassifying the two — billing a patient for a CO amount — is both a contract violation and, in most states, a regulatory violation.
RARC: The 'Why' Behind the CARC
RARC codes provide the additional context that the CARC alone does not give. Where the CARC explains what category of adjustment was applied, the RARC explains the specific policy, missing information, or required next step. There are two main RARC classes: **Informational RARCs (no specific action required).** These provide context that helps explain the adjudication decision but do not require the provider to do anything in response. **Action-required RARCs (provider must act).** These signal a specific deficiency or requirement that the provider needs to address — submit additional documentation, correct an error, contact the patient. Action-required RARCs are sometimes flagged with the prefix 'M' or 'N' depending on the maintenance subset. RARC codes are maintained by CMS and published by Washington Publishing Company. The official current list lives at washingtonpublishing.com/Codes/RemittanceAdviceRemarkCodes — the canonical source for the most up-to-date set of codes, including newly added codes (added quarterly) and recently retired codes. Examples of common RARC patterns: - N115 — This decision was based on a Local Coverage Determination (LCD). - N130 — Consult plan benefit documents/guidelines for information about restrictions for this service. - M76 — Missing/incomplete/invalid diagnosis or condition. When working a denial, read the RARC together with the CARC. CO-50 alone tells you the claim was denied as not medically necessary; CO-50 paired with N115 tells you specifically that an LCD applied — meaning the appeal needs to address the LCD criteria specifically, generic medical-necessity language.
Where to Look Up the Latest CARC and RARC Lists
Both code sets are maintained externally and updated on a quarterly cycle. Always work from the current authoritative source rather than a cached internal copy that may be out of date. **CARC (Claim Adjustment Reason Codes).** Maintained by the Claim Adjustment Status Code Maintenance Committee under X12. The current code list is published at x12.org. CARC updates take effect quarterly: March, July, September, and November (publication months may shift slightly year to year). New codes are added, retired codes are deactivated, and existing code descriptions occasionally clarified. Practice management and clearinghouse systems should auto-refresh CARC tables on the same quarterly cadence. **RARC (Remittance Advice Remark Codes).** Maintained by CMS and published by Washington Publishing Company at washingtonpublishing.com/Codes/RemittanceAdviceRemarkCodes. Updates take effect quarterly. The Washington Publishing site provides the complete current list, the previous quarter's list (for back-reference), and a record of recent changes (newly added, modified, deactivated). **CMS guidance.** CMS publishes guidance on CARC/RARC use in Medicare Fee-for-Service through Medicare Administrative Contractor (MAC) bulletins and Change Requests. CR transmittals frequently introduce new CARC/RARC pairs that providers should be aware of — for example, when a new policy is introduced and CMS needs a new code combination to communicate it. **Operational implication for practices.** Build a quarterly review checkpoint: confirm the practice management system / clearinghouse has refreshed the CARC and RARC tables at the start of each quarter, review the change log for codes affecting your specialty, and update internal denial-categorization rules if any of the codes you commonly see have been retired or modified. A stale CARC/RARC table generates subtle denial-management failures: codes that no longer mean what your team thinks they mean.
Putting CARC and RARC Into Action
Reading codes is the easy part. Operationalizing them — building a denial workflow that uses CARC/RARC reliably — is where most practices fall short. **1. Auto-categorize incoming denials by CARC family.** Group CARCs into operational categories at ERA ingestion time: eligibility (27, 31, 39, 140), authorization (197, 198), coding/bundling (97, 11, 50), timely filing (29), payer routing (109, 22), and payer-policy non-coverage (96, 204). Assign each category to the team that owns the prevention workflow. **2. Track Modifier Indicators on bundling denials.** For CARC 97 specifically, the NCCI PTP Modifier Indicator (0, 1, or 9) determines whether the denial is appealable. Adding the Modifier Indicator as a queryable field on the denial worklist eliminates wasted appeal effort on Indicator 0 cases. **3. Pair RARC into the denial categorization.** A CARC 50 with RARC N115 is an LCD denial — different appeal path than CARC 50 with RARC M76 (missing diagnosis), which is a documentation fix. Treating CARC 50 as a single category misses the distinction. **4. Track outcomes by CARC, by payer, and by reason for denial reversal.** Patterns reveal which payers are systematically wrong on specific code combinations. A 70% reversal rate on CARC 97 appeals at one payer but a 20% reversal rate at another tells you which payer to keep pushing on and which to stop wasting appeal time on. **5. Feed prevention data back to front-end teams weekly.** Eligibility denials (CARC 27, 31, 39) get routed back to the front desk. Authorization denials (197) get routed to the auth team. Bundling denials (97) get routed to the coding team for documentation training. Without the prevention loop, the denial worklist runs forever without ever getting smaller.
CARC field guide
The codes you actually see in remittance advice, and what to do with each. Hover or tap a card for the meaning and the fix pattern.
Reference — X12 Claim Adjustment Reason Codes (x12.org) and CMS WPC code list. Meanings paraphrased for brevity; consult x12.org for the canonical text and current revision dates. RARC pairings vary by payer.
Common Questions
Common questions about common carc and rarc codes: denial codes reference.
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Get a Free Billing Audit arrow_forwardWhat is the difference between CARC and RARC codes?
CARC (Claim Adjustment Reason Codes) and RARC (Remittance Advice Remark Codes) are both X12-standardized codes that appear on 835 Electronic Remittance Advice (ERA) transactions, but they answer different questions. CARC explains what the payer did — adjusted, denied, or reduced — and assigns the financial-responsibility category through a paired Group Code (CO for contractual obligation, PR for patient responsibility, OA for other adjustment, PI for payer-initiated reduction, CR for corrections and reversals). RARC provides the additional why context: which specific policy applied, which information was missing, what the next step is. A single ERA line typically has one CARC and zero or more RARCs explaining it. CARC is maintained by X12; RARC is maintained by CMS and published by Washington Publishing Company.
What does CO-97 mean on a remittance advice?
CO-97 means the payer applied Reason Code 97 — 'Payment is included in the allowance for another service/procedure' — as a Contractual Obligation (CO group code) that the provider must absorb. The denial typically signals that the National Correct Coding Initiative (NCCI) Procedure-to-Procedure edit table flags the two codes as a bundled pair where one is considered a component of the other. The fix depends on the NCCI Modifier Indicator: indicator 1 means the bundling can be unbundled with modifier 59 or one of the X-modifiers when documentation supports a distinct service; indicator 0 means the bundling cannot be overridden and the denial is final; indicator 9 means the edit was deleted. Because CO-97 is a CO denial, the amount cannot be balance-billed to the patient — it is a provider write-off if the appeal does not succeed.
What are the most common CARC denial codes?
In most physician practices, roughly twenty CARC codes account for about 80% of denial volume. The most common are CARC 16 (claim lacks information — often a catch-all for submission errors), 27 (coverage terminated), 29 (timely filing expired), 45 (charge exceeds fee schedule), 50 (not medically necessary), 96 (non-covered charge), 97 (bundled service), 109 (not covered by this payer — wrong payer billed), 197 (precertification absent), and 204 (not covered under current benefit plan). Patient-responsibility codes that appear routinely include 1 (deductible), 2 (coinsurance), and 3 (copay). Industry surveys from MGMA and HFMA consistently identify eligibility, authorization, medical necessity, bundling, and timely filing as the top denial categories — which corresponds to CARC 27, 197, 50, 97, and 29 respectively. The exact mix varies by specialty: surgical specialties see more CARC 97; mental health sees more CARC 50.
Where can I find the official list of CARC and RARC codes?
The official CARC list is maintained by the Claim Adjustment Status Code Maintenance Committee under X12 and is published at x12.org. The official RARC list is maintained by CMS and published by Washington Publishing Company at washingtonpublishing.com/Codes/RemittanceAdviceRemarkCodes. Both code sets are updated on a quarterly cycle: new codes added, retired codes deactivated, and existing descriptions occasionally clarified. CMS also publishes guidance on CARC and RARC use in Medicare Fee-for-Service through Medicare Administrative Contractor bulletins and Change Request transmittals, and these are the canonical references whenever there is ambiguity about how a specific code should be interpreted. Practice management and clearinghouse systems should auto-refresh CARC and RARC tables on the quarterly cadence to ensure denial categorization rules continue to map correctly.
What does the Group Code in front of a CARC mean?
The Group Code is a two-letter prefix on each adjustment line that tells you who owes the money. CO (Contractual Obligation) means the adjustment is a provider write-off based on the contract with the payer; the amount cannot be balance-billed to the patient. PR (Patient Responsibility) means the amount is billable to the patient — typically deductible, coinsurance, or copay. OA (Other Adjustment) is informational, often coordination-of-benefits or payer-policy related. PI (Payer-Initiated Reduction) is a reduction applied by the payer where neither contract nor regulation explicitly applies. CR (Corrections and Reversals) is used to reverse a previously paid claim or correct an earlier ERA line. The CO/PR distinction matters operationally and legally: billing a patient for a CO amount is both a contract violation and, in most states, a regulatory violation that can trigger payer audits and state insurance department complaints.
How often are CARC and RARC codes updated?
Both code sets are updated on a quarterly cycle — typically with publication months in March, July, September, and November, though specific dates can shift slightly year to year. Updates include newly added codes, deactivation of retired codes, and clarifications to existing code descriptions. Practice management systems and clearinghouses should refresh their CARC and RARC tables on the same quarterly cadence to keep denial-categorization logic accurate. A stale CARC or RARC table can generate subtle denial-management failures where codes no longer mean what the internal mapping assumes. Operationally, build a quarterly checkpoint: confirm the system refresh, review the change log for codes affecting your specialty, and update internal denial categorization rules if any commonly seen codes have been retired, modified, or replaced. CMS Change Request transmittals are the best source for advance notice of upcoming changes.
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