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CARC and RARC Denial Codes: A Billing Company Reference
What CARC, RARC, and group codes mean, how they combine on an 835, the most common codes with the billing action each calls for, and how to triage denials.
Short answer
Three code types on an 835 remittance explain a denial. A Claim Adjustment Reason Code (CARC) names why a payer reduced or denied a charge. A Remittance Advice Remark Code (RARC) adds the specific detail or conveys process information. A group code (CO, PR, OA, or PI) sets who is financially responsible. Read them together: the group code sets the action category, the CARC names the reason, the RARC fills the exact gap. ASC X12 maintains both code sets and publishes updates three times a year (effective dates near March 1, July 1, and November 1), so verify any code against the current X12 CARC list and RARC list before building workflow rules.
Sources: ASC X12 CARC list · ASC X12 RARC list · CMS ERA remittance guidance
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What CARC and RARC codes are
CARCs and RARCs are HIPAA-mandated standard code sets, maintained by ASC X12. Payers must use them on every electronic remittance advice (ERA), the 835 transaction, when they adjust or deny a claim.
A CARC appears on every adjusted service line; there is no 835 without one. It answers "why is this charge being reduced?" A RARC is not on every line, but it appears whenever the CARC alone is ambiguous. RARCs come in two kinds: supplemental RARCs add detail to the reason, and informational RARCs convey process facts (appeal rights, coordination-of-benefits routing) that do not change the payment amount.
x12.org is the authoritative list for both sets. CMS mirrors them and issues a Change Request when codes are added, revised, or retired. A definition you confirmed six months ago may since have changed, so any logic hard-coded against CARC/RARC descriptions needs a periodic review against the X12 source.
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Group codes: CO, PR, OA, PI
Group codes are two-letter prefixes that appear before the CARC on the 835 and set the financial routing of the adjustment. Every CARC travels with exactly one group code, and it tells you whether to write the amount off, bill the patient, or investigate a payment difference.
| Group code | Full name | What it means |
|---|---|---|
| CO | Contractual Obligation | The provider or facility has a contract with the payer that obligates acceptance of the adjusted amount. This portion cannot be billed to the patient. Typically a write-off. |
| PR | Patient Responsibility | The patient owes this amount — deductible, copay, coinsurance, or non-covered service the patient agreed to pay. Bill the patient. |
| OA | Other Adjustment | An adjustment that does not fit CO or PR — often used for Medicare secondary payer situations, coordination of benefits adjustments where the math does not cleanly follow a contract, or global surgery adjustments. |
| PI | Payer Initiated Reductions | The payer is unilaterally reducing the payment based on its own determination, outside a contracted rate. Less common than CO. |
A fifth code, CR (Corrections and Reversals), appears when a prior payment is being reversed or corrected. It is not used for standard denials.
The combination you will see most often is CO with codes like 45 (fee schedule reduction) or 97 (bundling). PR appears almost exclusively with codes 1 (deductible) and 2 (coinsurance). When you see OA with code 23 (impact of prior payer adjudication), that line is reporting a coordination-of-benefits math result, not a denial.
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How to read a denial line on an 835
An 835 is built from claim and service-line segments. Adjustment reasons live in the CAS (Claim Adjustment) segment. Each CAS segment carries:
- Group code (position 1)
- CARC (position 2)
- Dollar amount adjusted (position 3)
- Optionally a second group code, CARC, and amount on the same segment
- RARCs in the MIA, MOA, or REF segments tied to that service line
In plain English, a denial line looks like this:
CO | 16 | $185.00 | N264
The payer is reducing the charge by $185 as a contractual adjustment (CO) because the claim lacks required information (CARC 16), specifically a missing or incomplete ordering provider name (RARC N264).
The CARC alone, which is all most printed EOBs show, tells you something is missing but not what. The RARC carries the actionable answer. When the work queue shows the RARC next to the CARC, staff resolve CO-16 denials in minutes instead of hours.
A second common pattern puts two adjustments on one segment:
CO | 45 | $62.00 | PR | 2 | $18.00
That reads: $62 written off against the contracted rate (CO-45) and $18 applied to the patient's coinsurance (PR-2). Two adjustments, one service line, both posted before the balance clears.
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Common CARC reference table
The codes below are verified against the ASC X12 CARC list as of June 2026. Confirm against the live list before automating against any code number.
| CARC | X12 description (condensed) | Typical group code | Billing action |
|---|---|---|---|
| 1 | Deductible amount | PR | Bill patient for the deductible portion |
| 2 | Coinsurance amount | PR | Bill patient for the coinsurance portion |
| 4 | The procedure code is inconsistent with the modifier used | CO | Correct the modifier or the procedure code and resubmit |
| 16 | Claim/service lacks information or has submission/billing errors | CO | Read the paired RARC first — it names the specific missing field. Correct and resubmit. |
| 18 | Exact duplicate claim/service | CO | Confirm the original was received and paid. If paid, close. If not, contact payer with submission proof. |
| 22 | Care may be covered by another payer per coordination of benefits | OA | Verify payer order, resubmit to correct primary payer, or attach primary EOB for secondary processing |
| 23 | Impact of prior payer adjudication including payments and adjustments | OA | Informational — records what the primary payer paid. Verify math and post; usually no action required. |
| 27 | Expenses incurred after coverage terminated | CO | Verify the patient's coverage dates. If coverage was active, appeal with proof of eligibility. If truly terminated, explore self-pay or bill patient. |
| 29 | The time limit for filing has expired | CO | Pull clearinghouse submission history and 277CA acknowledgment. If timely filing proof exists, appeal with the acknowledgment. |
| 45 | Charge exceeds fee schedule/maximum allowable or contracted/legislated fee arrangement | CO | Verify the allowed amount matches the contract. If correct, write off. If the paid amount is below the contracted rate, escalate as an underpayment. |
| 50 | Non-covered service — not deemed medically necessary | CO | Pull the applicable LCD/NCD. If documentation supports a covered diagnosis, submit a corrected claim. If the service is genuinely non-covered, write off or bill patient per ABN. |
| 96 | Non-covered charge(s) | CO | Confirm the service is excluded by the payer. If correctly excluded, write off or route to patient if an ABN was signed. |
| 97 | Benefit for this service is included in payment for another adjudicated service | CO | Check NCCI edit tables to confirm the bundling edit. Determine whether a modifier (25, 59, or X-modifier) legitimately applies. Resubmit with modifier if appropriate. |
| 109 | Claim/service not covered by this payer/contractor — send to correct payer | CO | Identify the correct payer. Resubmit to the right entity. Verify enrollment and eligibility for this payer. |
| 119 | Benefit maximum for this time period or occurrence has been reached | CO | Confirm the benefit limit is actually exhausted. If so, explore secondary coverage or bill patient. If the limit appears incorrectly applied, appeal with benefit documents. |
| 197 | Precertification/authorization/notification absent | CO | Verify whether authorization was actually obtained and whether a late-authorization exception process exists. Most payers will not reverse this on appeal without an exception pathway. Prevention is the only reliable fix. |
| 204 | Service/equipment/drug not covered under the patient's current benefit plan | CO | Confirm the exclusion in plan documents. Bill patient if a financial responsibility waiver is in place, or route to secondary coverage. |
| 236 | Procedure is not compatible with another procedure or modifier combination on the same day | CO | Check NCCI for the specific PTP edit. Correct coding if the services should not have been billed together; apply a valid modifier if the services were legitimately separate and a modifier override is available. |
CARC codes 1 and 2 with group code PR appear on nearly every 835 that includes a patient responsibility amount. They are not denials. They are routing instructions. Staff who treat PR-1 and PR-2 as "denied" are inflating denial rates.
For a ranked editorial view of which of these codes appear most in billing-company queues, see 10 CARC Codes Billing Companies See Most.
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Common RARC reference table
RARCs are verified against the ASC X12 RARC list and CMS ERA documentation as of June 2026. Confirm any code against the live list before embedding it in automation.
| RARC | Description | What a biller does with it |
|---|---|---|
| M15 | Services/tests have been bundled as components of the same procedure | Confirms the CO-97 bundling decision. Check NCCI tables. |
| M86 | Service denied because payment already made for same/similar procedure within set time frame | Frequency or duplicate issue — review claim history before resubmitting |
| MA01 | If you disagree with the payment, you have appeal rights — submit appeal within 120 days of this notice | Informational: appeal window is open. Note the date and calendar the deadline. |
| MA04 | Secondary payment cannot be considered without identity of or payment information from the primary payer | Submit with primary payer's EOB attached before the secondary will process |
| MA18 | Claim information is being forwarded to the patient's supplemental insurer | Informational: no action needed on this line; monitor for supplemental payment |
| MA130 | Claim contains incomplete and/or invalid information; no appeal rights because the claim is unprocessable | Correct every identified error and submit a brand-new claim — this is a rejected claim, not an appealable denial |
| N20 | Service not payable with other service rendered on the same date | Bundling or mutual exclusivity — review what was billed together and check payer guidelines |
| N30 | Patient ineligible for this service | Coverage or eligibility issue at the service level — verify plan, dates, and eligibility criteria |
| N115 | This decision was based on a Local Coverage Determination (LCD) | Pull the specific LCD from the applicable Medicare Administrative Contractor and review covered indications |
| N130 | Consult plan benefit documents/guidelines for information about restrictions for this service | Coverage restriction — request the plan's benefit document or specific guideline referenced |
MA130 is frequently misclassified by billing staff as a denial. It is a rejection: no appeal exists. The claim must be corrected and resubmitted from scratch. This distinction has a direct impact on your denial rate denominator if you are tracking appeal success rates.
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How billers triage by code
Triage reads CARC, group code, and RARC together to route work without reviewing every claim by hand. High-volume queues across many practices sort into four buckets:
- Write-off: CO codes where the amount matches the contracted rate (CO-45, CO-24) or the service is genuinely excluded with no appeal path (CO-96, CO-204). These close once the adjustment posts correctly.
- Correct and resubmit: fixable errors such as CO-16 with a specific RARC, CO-4 (modifier mismatch), and CO-109 (wrong payer). Staff make the correction and push the claim back through the clearinghouse.
- Appeal: contestable determinations such as CO-50 (medical necessity), CO-27 (post-termination where eligibility was active), and CO-29 (timely filing with proof). These need a documentation packet and a formal appeal letter.
- Patient responsibility: PR-1 (deductible) and PR-2 (coinsurance) move to the patient statement queue. PR-96 needs an ABN check before the patient is billed.
Read the group code before the CARC. CO means investigate before touching the patient balance; PR means bill the patient now. That one habit prevents the most common over-billing and under-collection errors.
MA01 is a triage signal in itself: on any line it means the payer is acknowledging appeal rights. Tracking which MA01 lines were appealed inside the 120-day window surfaces the unclaimed appeals sitting in the queue.
For the full appeal workflow including packet contents and escalation paths, see the Denial Management Workflow Guide.
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How Medi handles CARC and RARC codes
When an 835 ERA posts in Medi, every service line's CARC and RARC are stored against the claim. The denial queue shows both codes side by side with the plain-English translation, not the raw code number buried in a remittance file.
CO-16 shows its paired RARC translation on the same row, because CO-16 is not actionable without it. CO-45 lines that match the contracted fee schedule are pre-classified as contractual write-offs so they do not inflate the queue. PR-1 and PR-2 route to the patient statement workflow instead of the denial queue.
Medi is built for billing companies running many practices. CARC and RARC breakdowns are visible per practice and rolled up across the full client portfolio, so a spike in CO-197 at one practice or a payer-specific CO-29 problem across three clients surfaces in the same view.
Medi translates and surfaces codes. It does not decide whether the payer applied a code correctly; that takes a biller who knows the contract, the documentation, and the payer's adjudication logic. Medi removes the queue management and data assembly so that judgment is the only step left.
To see how the denial queue works in practice: request a demo. For the editorial ranking of codes by volume: 10 CARC Codes Billing Companies See Most. For full appeal workflow guidance: Denial Management Workflow Guide.
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When Medi is not the right fit
Medi is a post-coding workflow tool. It does not assign procedure or diagnosis codes, generate prior authorization requests, or write clinical documentation. If coding is your billing company's main bottleneck, a different tool addresses that.
Medi also does not replace the billers who read denials and decide what to do. The CARC and RARC translation cuts the information-gathering step, but the call to correct, appeal, or write off belongs to the person who knows the contract and the clinical record.
If you run fewer than five practices and mainly need a clearinghouse connection and basic claim status, a simpler clearinghouse-integrated platform may be enough. Medi is built for billing companies where managing many practices at once is the core problem.
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Frequently asked questions
What is the difference between CARC and RARC?
A CARC (Claim Adjustment Reason Code) is mandatory on every adjusted 835 service line and names the primary reason for the reduction or denial. A RARC (Remittance Advice Remark Code) is supplemental: it adds specificity to a CARC or conveys process facts. A line can carry a CARC with no RARC, but never a RARC with no CARC. On vague CARCs like CO-16, the RARC is where the actionable answer lives. ASC X12 maintains both sets.
What does CO vs PR mean on an ERA?
CO (Contractual Obligation) means the provider agreed, through a payer contract, to accept a reduced amount, and the CO portion cannot be billed to the patient. PR (Patient Responsibility) means the patient owes that portion (deductible, copay, or coinsurance) and should be billed. Check the group code before acting on any line. Billing a CO line to the patient is a balance-billing violation; writing off a PR line leaves revenue on the table.
What does OA mean as a group code?
OA (Other Adjustment) covers adjustments that do not fall cleanly into CO or PR. The most common is OA-23 on secondary-payer 835s, reporting the impact of primary-payer adjudication; it is a math result, not a denial. OA also appears in global surgery package adjustments and in coordination-of-benefits situations where the liability split does not follow the standard CO/PR pattern.
Are CARC codes the same across all payers?
The code numbers and X12 definitions are standardized: CARC 29 means "time limit for filing has expired" whether the payer is Medicare, Medicaid, or commercial. What differs by payer is which CARCs they use, how they pair them with RARCs, and the adjudication rule behind the code (a 90-day timely-filing window at one commercial payer versus 180 days at another). Confirm against the current X12 list when building payer-specific automation.
What should I do when a denial line shows MA130?
MA130 means the claim was deemed unprocessable: incomplete or invalid information that stops the payer from adjudicating it at all. No appeal rights exist for MA130 lines. Identify every error, correct them, and submit a brand-new claim. This is distinct from an appealable denial, which carries CARCs like CO-50 or CO-197 and usually includes MA01 to flag appeal rights. Filing a formal appeal on an MA130 line spends time on a path that will not pay.
How often do CARC and RARC codes change?
X12 updates both code sets three times a year, with effective dates around March 1, July 1, and November 1. CMS issues a matching Change Request each cycle telling Medicare contractors to update their systems. Codes can be added, revised, or retired. The official sources are x12.org/codes/claim-adjustment-reason-codes for CARCs and x12.org/codes/remittance-advice-remark-codes for RARCs. Treat any reference page, including this one, as a snapshot rather than a substitute for the live list.
References
These public sources provide background for standards, terminology, or competitor context discussed on this page.
- X12 external code listsX12
- CMS Health Care Payment and Remittance AdviceCenters for Medicare and Medicaid Services
- MGMA detecting and fixing leaks across the revenue cycleMedical Group Management Association