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CARC and RARC Denial Codes Explained
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.
CARC and RARC Denial Codes: A Billing Company Reference
Short answer
Every 835 electronic remittance advice carries a structured denial vocabulary maintained by ASC X12. A Claim Adjustment Reason Code (CARC) is the primary explanation for why a payer reduced or denied a charge. A Remittance Advice Remark Code (RARC) adds specificity or conveys process information alongside the CARC. A Group Code — CO, PR, OA, or PI — frames who is financially responsible. A billing analyst reads these three elements together: the group code sets the action category, the CARC names the reason, and the RARC fills in the exact gap. Skipping any one of them leads to the wrong next step. X12 and CMS publish updated lists three times per year (around March 1, July 1, and November 1), so code meanings do drift — always verify against the current X12 CARC list and the current X12 RARC list before finalizing 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
Claim Adjustment Reason Codes and Remittance Advice Remark Codes are HIPAA-mandated standard code sets. Payers must use them on all electronic remittance advice (ERA) — the 835 transaction — when adjusting or denying a claim. They are maintained by ASC X12 as part of the X12N health care implementation.
A CARC appears on every adjusted service line. There is no 835 without it. It answers the question: "Why is this charge being reduced?" A RARC is optional in the sense that not every line will carry one, but in practice it appears whenever the CARC alone is ambiguous. Two types of RARCs exist: supplemental RARCs give extra detail about the reason, and informational RARCs convey process facts — appeal rights, coordination of benefits routing, or record-keeping notices — that do not change the payment amount.
The authoritative list for both code sets is x12.org. CMS mirrors the lists and publishes change requests when codes are added, revised, or retired. The WPC site at rarc.wpc-edi.com handles change requests for RARCs specifically. Because updates publish three times per year, a code's meaning you confirmed six months ago may have been revised — teams that hard-code logic against CARC/RARC descriptions should build in a quarterly 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 determine the financial routing of the adjustment. Every CARC travels with exactly one group code. This matters more in practice than most billing training conveys, because the group code tells you whether to adjust off the balance, 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 remittance is structured around claim and service line segments. The adjustment reason information lives in the CAS (Claim Adjustment) segment. Each CAS segment carries:
- Group code (positions 1)
- CARC (positions 2)
- Dollar amount adjusted (positions 3)
- Optionally a second CARC and amount on the same segment
- RARCs in the MIA, MOA, or REF segments associated with that service line
A denial line, read in plain English, looks like this:
CO | 16 | $185.00 | N382
That means: the payer is reducing the charge by $185 as a contractual adjustment (CO), because the claim lacks required information (CARC 16), specifically because the ordering provider name is missing or incomplete (RARC N382).
Reading only the CARC without the RARC — which is what most printed EOBs show — tells you "something is missing" but not what. The RARC is where the actionable answer lives. If your ERA workflow or work queue shows the RARC alongside the CARC, your staff can resolve CO-16 denials in minutes instead of hours.
A second common pattern is a line with two CARCs on the same CAS segment:
CO | 45 | $62.00 | PI | 2 | $18.00
That reads: $62 written off against the contracted rate (CO-45), and $18 applied to the patient's coinsurance (PI-2). Two adjustments, one service line. Both need to be posted correctly for the claim balance to clear.
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Common CARC reference table
The codes below are verified against the ASC X12 CARC list as of June 2026. X12 updates this list quarterly — always confirm before building automation rules against specific code numbers.
| 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. Because RARC descriptions can be revised quarterly, confirm any code before embedding it in workflow 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
Effective denial triage uses CARC, group code, and RARC together to route work without reviewing every claim manually. Billing companies that run high-volume queues across many practices typically sort denials into four buckets:
- Write-off: CO group codes where the amount matches the contracted rate (CO-45, CO-24) or where the service is genuinely excluded (CO-96, CO-204) and no appeal path exists. These close immediately after the adjustment is posted correctly.
- Correct and resubmit: Codes signaling a fixable error — CO-16 paired with a specific RARC, CO-4 (modifier mismatch), CO-109 (wrong payer). Staff make the correction and push the claim back through the clearinghouse.
- Appeal: Codes where the payer's determination is contestable — CO-50 (medical necessity), CO-27 (post-termination where eligibility was actually active), CO-29 (timely filing with proof). These require documentation packets and formal appeal letters.
- Patient responsibility routing: PR-1 (deductible) and PR-2 (coinsurance) move to the patient statement queue. PR-96 requires verifying whether an ABN was signed before billing the patient.
The highest-leverage triage improvement most billing companies make is training staff to look at the group code before the CARC. A CO code means "investigate before touching the patient balance." A PR code means "bill the patient now, no investigation needed for the financial category." This single habit prevents the most common over-billing and under-collection errors.
One more triage signal that RARC carries: the presence of MA01 on any line means the payer is acknowledging the provider's appeal rights. Tracking which lines carry MA01 — and which were appealed within the 120-day window — gives a billing company a clean view of unclaimed appeal opportunities 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 imported and stored against the claim. The denial queue surfaces both codes side by side — not buried in a raw remittance file — so the analyst reading the queue sees the plain-English translation of each code, not just the code number.
For CO-16, Medi displays the paired RARC translation on the same row, because CO-16 without the RARC is not actionable. For CO-45 lines that match the contracted fee schedule, Medi pre-classifies them as contractual write-offs so they do not inflate the denial queue. For PR-1 and PR-2, the line routes to the patient statement workflow rather than the denial queue.
Medi is built for billing companies managing multiple practices. CARC and RARC breakdowns are visible at both the practice level and rolled up across your full client portfolio — so patterns like a spike in CO-197 at one practice, or a payer-specific CO-29 problem that is appearing across three clients, surface in the same view.
This is honest context: Medi translates and surfaces codes. It does not adjudicate whether the payer applied the code correctly — that determination requires a biller who knows the contract, the clinical documentation, and the payer's adjudication logic. What Medi does is eliminate the queue management and data assembly work so that judgment is the only remaining input.
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 perform clinical coding, generate diagnoses, produce prior authorization requests, or write clinical documentation. If your billing company's primary bottleneck is on the coding side — assigning procedure or diagnosis codes to encounters — a different tool addresses that problem.
Medi also does not replace the billers who read denials and decide what to do. The CARC and RARC translation Medi provides reduces the information-gathering step, but the judgment call — whether to correct, appeal, or write off — belongs to the person who understands the contract and the clinical record.
If your practice count is below five and you primarily need help with the clearinghouse connection and basic claim status, a simpler clearing-integrated billing platform may be sufficient. Medi's design is optimized for billing companies where the operational complexity of managing many practices simultaneously 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. It names the primary reason for the payment reduction or denial. A RARC (Remittance Advice Remark Code) is supplemental — it adds specificity to a CARC or conveys informational process facts. You cannot receive a RARC without a CARC on that line, but you can receive a CARC without a RARC. In practice, the RARC is where the actionable answer lives on vague CARCs like CO-16. Both code sets are maintained by ASC X12 and updated three times per year.
What does CO vs PR mean on an ERA?
CO (Contractual Obligation) means the provider has agreed, through a contract with the payer, to accept a reduced amount — 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. This distinction is the single most important group code read in denial triage. Treating a CO line as patient-billable is a balance billing violation. Treating a PR line as a write-off 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 scenario is OA-23, which appears on secondary payer 835s to report the impact of primary payer adjudication — it is not a denial, it is a math result. OA also appears in global surgery package adjustments and in some coordination-of-benefits situations where the liability distribution does not follow the standard CO/PR split.
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" regardless of whether the payer is Medicare, Medicaid, or a commercial plan. What differs by payer is which CARCs they use, how they pair them with RARCs, and what the adjudication rule behind the code is (for example, a 90-day timely filing window at one commercial payer versus 180 days at another). Because X12 updates the list three times per year, a code's definition can also change across update cycles — 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 prevents the payer from adjudicating it at all. No appeal rights exist for MA130 lines. The correct action is to identify every error on the claim, correct them, and submit a brand-new claim. This is distinct from an appealable denial, which carries CARC codes like CO-50 or CO-197 and typically includes MA01 to notify you of appeal rights. Teams that file formal appeals on MA130 lines are spending time on a path that will not result in payment.
How often do CARC and RARC codes change?
X12 publishes updates to both code sets three times per year, with effective dates around March 1, July 1, and November 1. CMS issues a corresponding Change Request each cycle that instructs Medicare contractors to update their systems. Codes can be added, have their descriptions revised, or be retired. The official source for current definitions is always x12.org/codes/claim-adjustment-reason-codes for CARCs and x12.org/codes/remittance-advice-remark-codes for RARCs. Any reference page — including this one — should be treated as a snapshot, not 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