How to Read a Claim Denial: CARCs, RARCs and Group Codes Explained

Every denied or reduced claim comes with an explanation. The catch is that it is written in codes. Once you know how those codes fit together, you can tell in a few seconds whether a denial needs a corrected claim, an appeal, a patient bill or a contractual write-off.

The three parts of a denial

On an electronic remittance advice (ERA, the 835 transaction) or a paper explanation of benefits (EOB), each adjustment is explained by up to three pieces of information:

• A group code says who is financially responsible for the adjusted amount.
• A Claim Adjustment Reason Code (CARC) says why the claim or service line was paid differently than billed.
• A Remittance Advice Remark Code (RARC) is optional. When it is there, it narrows down the reason.

CARCs are maintained through X12, and RARCs are maintained by CMS. Both code lists are published by X12 (opens in a new tab) and updated several times a year.

Group codes: who owes the amount

Group code	Meaning	What it usually means for you
CO	Contractual Obligation	The provider is responsible. The amount generally cannot be billed to the patient.
PR	Patient Responsibility	The amount is the patient’s share, such as deductible, coinsurance or copay.
OA	Other Adjustment	Neither of the above applies. Read the CARC carefully.
PI	Payer Initiated	A payer adjustment not based on the contract or the patient’s share.

Common CARCs and what usually fixes them

Code	What it means (summary)	Typical fix
16	Claim lacks information or has a billing error	Read the RARC to find what is missing, correct it and resubmit
4	Procedure code inconsistent with the modifier, or modifier missing	Review modifier use and resubmit a corrected claim
11	Diagnosis inconsistent with the procedure	Check code linkage and documentation; correct if supported
18	Exact duplicate claim or service	Check the status of the original claim instead of resubmitting
22	May be covered by another payer (coordination of benefits)	Update primary/secondary coverage and bill the right payer
27	Service after coverage terminated	Verify eligibility; bill other coverage or the patient
29	Timely filing limit expired	Send proof of timely filing if you have it; otherwise review for write-off
45	Charge exceeds the fee schedule or maximum allowable	Usually a contractual adjustment rather than a denial. Check it against the contract.
50	Not deemed medically necessary	Review documentation and coverage policy; appeal with records if supported
97	Included in the payment for another service	Check bundling edits; use a modifier only if the service was truly distinct
197	Precertification or authorization absent	Request retro-authorization if allowed, appeal, and fix the authorization process

Deductible amounts show up as PR-1. That is a patient balance, not a denial: see our PR-1 deductible guide.

Code descriptions are paraphrased. Always check the current official wording on the X12 code lists, because descriptions are revised over time.

Correct, appeal or write off?

Send a corrected claim when…

the denial came from an error on your side, such as a wrong member ID, a missing modifier or a coding mistake, and the claim is still inside the payer’s corrected-claim deadline.

Appeal when…

the claim was correct, the service was covered and documented, and you believe the payer’s decision is wrong. Medical necessity and authorization denials often fall into this group. Appeals need the right documentation and must be filed within the payer’s deadline. Medicare, for example, generally allows 120 days to request a redetermination.

Review for write-off when…

the amount is a true contractual adjustment, or the claim can no longer be corrected or appealed. Write-offs should be a documented decision, not a default.

Preventing the same denials next month

Working individual denials recovers revenue; tracking them by cause prevents the next batch. Group denials by reason and by where they started:

• CARCs 22, 27 and 16 (missing subscriber data) usually trace back to registration and eligibility at the front desk.
• CARC 197 points to the authorization step in scheduling and referrals.
• CARCs 4, 11 and 97 are coding problems, often about modifiers.
• CARC 50 is often a documentation issue. Something the payer needs is missing from the note.
• CARC 29 means a claim went out, or was followed up, too late.

Frequently asked questions

Is a rejection the same as a denial?

No. A rejected claim failed an initial check and never entered the payer’s processing system, so it is corrected and resubmitted. A denied claim was processed, and the payer decided not to pay all or part of it.

Is CO-45 a denial?

Usually not. CO-45 typically reflects the difference between your charge and the contracted allowed amount, which is written off as a contractual adjustment. It is still worth checking that the allowed amount matches your contract.