Denial codes (CARC & RARC)

Understanding Claim Adjustment Reason Codes and Remittance Advice Remark Codes

When a payer adjusts or denies a claim, the 835 ERA (Electronic Remittance Advice) includes standardized codes that explain why. Understanding these codes is the first step toward resolving denials and recovering revenue.

CARC — Claim Adjustment Reason Codes

CARCs explain why a claim line was adjusted. Every adjustment on an 835 includes at least one CARC. These codes are maintained by the X12 organization and used by all payers.

Group codes

Each CARC is paired with a group code that indicates financial responsibility:

Group	Name	Meaning
CO	Contractual Obligation	Adjustment per contract — provider cannot bill patient
PR	Patient Responsibility	Patient owes this amount (deductible, copay, coinsurance)
OA	Other Adjustment	Adjustment not attributable to contract or patient
PI	Payer Initiated	Payer-initiated reduction not related to adjudication

Most common CARCs

CARC	Description	Common Cause	Resolution Strategy
4	Procedure code inconsistent with modifier or missing modifier	Wrong modifier, missing LT/RT/26/TC	Correct modifier and resubmit
16	Claim/service lacks information needed for adjudication	Missing data element on claim	Identify missing field, resubmit with complete data
18	Duplicate claim/service	Same claim submitted twice	Verify original claim status; do not resubmit
29	Timely filing limit expired	Claim filed after payer deadline	Check if exception applies; appeal with proof of timely filing
50	Non-covered service (not deemed a medical necessity)	Diagnosis doesn’t support procedure	Appeal with medical necessity documentation
96	Non-covered charge	Service excluded from benefit plan	Verify coverage; appeal or bill patient with ABN
97	Payment adjusted — benefit for this service included in another service	Bundled into primary procedure	Review NCCI edits; modifier 59/X if distinct
197	Precertification/authorization/notification absent	No prior auth on file	Obtain retro-auth or appeal with medical records
204	This service/equipment/drug is not covered under the patient’s current benefit plan	Not a covered benefit	Verify eligibility; appeal if coverage should apply
252	An attachment/other documentation is required to adjudicate	Clinical documentation not submitted	Submit required records and reprocess

RARC — Remittance Advice Remark Codes

RARCs provide additional context alongside CARCs. They don’t change the adjustment amount — they explain it further.

RARC	Description	Paired With
N479	Missing prior authorization	CARC 197
N362	Missing/incomplete/invalid medical records	CARC 252
N657	Claim submitted beyond timely filing limit	CARC 29
M76	Missing incomplete/invalid diagnosis code	CARC 16
N432	Alert: non-covered service per benefit plan	CARC 96
MA130	Claim specific negotiated discount	CARC 45
N425	Duplicate of a previously processed claim	CARC 18

How RCI interprets denial codes

The denial resolution agent accepts CARC and RARC codes and returns actionable resolution strategies:

curl -X POST https://api-dev.rcintell.com/v1/agents/denial-resolution \
  -H "X-API-Key: kp_test_..." \
  -H "Content-Type: application/json" \
  -d '{
    "query": "Claim denied with CO-97, how do I unbundle?",
    "carc": "97",
    "ccn": "170001"
  }'

The agent cross-references the CARC with:

• NCCI PTP edits to determine if the code pair is truly bundled
• L4 payer rules for the facility’s primary payer
• Modifier applicability (59, XE, XP, XS, XU) to determine if unbundling is appropriate
• Appeal deadlines from the payer’s timely filing rules

CARC/RARC codes are standardized, but payer interpretation varies. A CARC 50 from Medicare (no LCD/NCD support) requires different documentation than a CARC 50 from a commercial payer (plan exclusion). Always check L4 payer context.

Reading an 835 adjustment

A typical 835 adjustment line looks like:

CAS*CO*97*45.00~

Segment	Value	Meaning
CAS	Claim Adjustment Segment	Start of adjustment
CO	Group code	Contractual Obligation — provider write-off
97	CARC	Bundled with another service
45.00	Amount	$45.00 adjusted

The corresponding RARC (in the RMK segment) provides additional detail on why the bundling occurred.