Code guide

CARC and RARC Codes: What Every Remittance Code Means and What to Do

CARC and RARC codes are the standard codes a payer uses to explain why it changed or denied a payment. This guide lists 33 common codes, in plain words, with the fix for each. It is written for therapists, psychiatrists and the staff who post their payments.

Get a Free Quote Schedule a Consultation

What are CARC and RARC codes?

CARC and RARC codes are the two code sets a payer uses on a remittance to explain a payment change. A claim adjustment reason code (CARC) says why an amount changed. A remittance advice remark code (RARC) adds detail when the CARC alone is not enough. Both travel on the electronic remittance advice (ERA), the X12 835 message described in our ERA and EOB guide.

CMS lists three code sets on a remittance: group codes, CARCs and RARCs ( CMS, checked 10/10/26). X12 publishes the full lists: claim adjustment reason codes and remittance advice remark codes. The lists change, so look up a code you do not know. You can also read the terms in the denials and appeals glossary section.

Group codes: who owes the money

Every adjustment starts with a group code, ahead of the CARC and RARC codes. Read it first.

Claim adjustment group codes
Group code	What it means	What it means for you
CO	Contractual obligation	The provider owes the adjustment. Do not bill the patient.
PR	Patient responsibility	The patient may owe this amount. Deductible, coinsurance and copay land here.
OA	Other adjustment	Neither of the above. Read the reason code.
PI	Payer-initiated reduction	The payer reduced the amount on its own decision.

Source: X12 claim adjustment group codes, checked 10/9/26. CMS says Medicare may bill the patient only when PR applies. A code is written as group code and reason code together, such as CO-45 or PR-1.

23 common CARCs for mental health practices

Descriptions of these CARC and RARC codes are paraphrased from the X12 list, checked 10/10/26. The last column is operational guidance. Payer rules vary, so confirm with the payer.

Common claim adjustment reason codes
CARC	What X12 says	What to do
1	Deductible amount.	Bill the patient the deductible. Compare it with the benefits you verified.
2	Coinsurance amount.	Bill the patient the coinsurance after checking the allowed amount.
3	Co-payment amount.	Bill the copay if it was not collected at the visit.
4	The procedure code is inconsistent with the modifier used.	Check the modifier against the payer policy, correct the claim and resubmit.
5	The procedure code or type of bill is inconsistent with the place of service.	Match the place of service (office, telehealth, home) to the code and payer rules, then resubmit.
16	Claim or service lacks information or has submission or billing errors.	Find the missing item (a remark code should come with it), correct it and send a new claim. Do not appeal.
18	Exact duplicate claim or service.	Look up the first claim before you resubmit anything. The original may already be paid or pending.
22	This care may be covered by another payer per coordination of benefits.	Verify other coverage, update the primary and secondary order, and bill the right payer.
24	Charges are covered under a capitation agreement or managed care plan.	Check whether the plan carves behavioral health out to another entity, then bill that entity.
27	Expenses incurred after coverage terminated.	Recheck eligibility for the date of service and ask the patient about other coverage.
29	The time limit for filing has expired.	Look for proof of timely filing (an acceptance report). Without it the claim is usually lost. See timely filing in the claims processing glossary.
45	Charge exceeds the fee schedule, maximum allowable or contracted or legislated fee arrangement.	Write off the difference only if it matches your contract or fee schedule.
50	Non-covered services because this is not deemed a medical necessity by the payer.	Review the note, diagnosis and any authorization. If they support the service, appeal with documentation.
96	Non-covered charges.	Read the remark code for the reason, then check the plan benefits before you bill the patient.
97	Benefit is included in the payment or allowance for another service already adjudicated.	Look for bundling. Check modifiers and add-on code rules. Correct the claim only if the coding supports it.
109	Claim or service not covered by this payer or contractor.	Wrong payer. Verify coverage and bill the correct payer.
119	Benefit maximum for this time period or occurrence has been reached.	Check visit limits. If a limit looks stricter than medical benefits, ask the plan about parity.
151	Payment adjusted because the payer deems the information submitted does not support this many or this frequency of services.	Check frequency limits. If the notes support the visits, appeal with records.
167	This diagnosis is not covered.	Check the diagnosis codes and pointers. Fix a coding error, or appeal if the diagnosis is correct and the plan should cover it.
197	Precertification, authorization or notification absent.	Confirm whether the service needed authorization. Some payers allow a retro request, many do not. Ask the payer.
204	This service, equipment or drug is not covered under the patient's current benefit plan.	Verify benefits for the date of service. Check the plan documents before billing the patient.
242	Services not provided by network or primary care providers.	Check your network status with this plan. If it is a credentialing gap, start there.
252	An attachment or other documentation is required to adjudicate this claim or service.	Send the requested documentation through the payer's channel.

10 common RARCs and what they add

These CARC and RARC codes travel as a pair. Read them together.

Common remittance advice remark codes
RARC	What X12 says	What to do
MA130	The claim has incomplete or invalid information and is unprocessable, so no appeal rights apply.	Correct it and send a new, complete claim.
M76	Missing, incomplete or invalid diagnosis or condition.	Fix the diagnosis code and resubmit.
M51	Missing, incomplete or invalid procedure code(s).	Fix the CPT or HCPCS code and resubmit.
M80	Not covered when performed during the same session or date as a previously processed service for the patient.	Check same-day services and whether a modifier is allowed.
N4	Prior insurance carrier's EOB is missing, incomplete or invalid.	Attach the primary payer's remittance to the secondary claim.
MA01	Alert: the provider may appeal within 120 days of receiving the notice. A different individual who did not process the original claim must review it. This is a Medicare alert.	Calendar the date and prepare the appeal.
N54	Claim information is inconsistent with the pre-certified or authorized services.	Match the claim to the authorization on file.
N56	The procedure code billed is not correct or valid for the service or date of service billed.	Confirm the code was valid on the date of service.
N93	Each place of service needs its own claim.	Split the services into separate claims by place of service.
N130	Consult the patient's plan benefit documents or guidelines for restrictions on this service.	Check benefits and plan limits.

Descriptions paraphrased from the X12 RARC list, checked 10/10/26.

How do you fix a CO-16 denial?

A CO-16 denial means the claim lacked information or had a submission or billing error. To fix it, find the remark code that came with it, correct the missing or invalid item and send a new, complete claim. CO-16 is a correction, not an appeal. If the remark code is MA130, no appeal rights apply, so a corrected claim is the only route.

Open the ERA line and read the group code and the CARC and RARC codes together.
Match the RARC to the item on the claim: diagnosis (M76), procedure code (M51), prior payer EOB (N4) or another item.
Correct the claim in your billing system.
Resubmit before the payer's filing deadline. Keep the acceptance report.

For true denials that you can appeal, see Claim Denials and Appeals. A sample worked remittance is in the ERA guide.

Medicare, Medicaid and private plans

Keep these separate. The CARC and RARC codes are shared, but the rules around them are not.

Medicare

CMS describes group codes, CARCs and RARCs on its remittance advice page. Medicare may bill the patient only for PR amounts. Medicare also sends a Medicare Summary Notice to the patient.

Medicaid

Each state Medicaid program and each managed care plan sets its own remittance and appeal rules. Check the state Medicaid provider site. This guide does not describe any one state.

Private payers

Each payer sets its own policies, edits and appeal windows. Read your contract and the payer manual. See Private Insurances and the payment and reimbursement terms.

What to do Monday morning

Sort the ERA lines by group code. Handle CO lines first, then PR.
For each CO line that is not CO-45, read the CARC and RARC pair.
Fix and resubmit anything that is a correction (CO-16, M51, M76, N4).
Appeal what the notes support (CO-50, CO-151, CO-197).
Log the payer and the CARC and RARC codes so patterns show up. The claims processing glossary explains the terms.

MCM South works denials every week for psychotherapists and psychiatrists. See our billing services, the practices we serve and the CMS-1500 guide for the claim side. Browse the full CPT & E/M code guide or the Billing Terms Glossary.

Frequently asked questions

What is the difference between a CARC and a RARC?

A CARC (claim adjustment reason code) says why a payment amount changed. A RARC (remittance advice remark code) adds detail the CARC does not give. A group code before the CARC says who owes the amount.

What does CO-45 mean?

CO-45 means the charge exceeds the fee schedule, maximum allowable amount or contracted fee arrangement. The CO group code puts the difference on the provider as a write-off. It is not billable to the patient.

What does PR-1 mean?

PR-1 is the deductible amount. The PR group code means the patient may owe it. When the deductible is not met, the whole allowed amount can land in PR-1 and the plan pays $0.00.

Can I appeal a CO-16 denial with MA130?

No. MA130 means the claim has incomplete or invalid information and cannot be processed, so no appeal rights apply. Correct the claim and send a new, complete one.

Want someone to work your CARC and RARC codes every week?

Get a free, no-pressure consultation with a specialist who only works mental and behavioral health billing.