How to Read CARC and RARC Codes on a Remittance

Here is how to read CARC and RARC codes on a remittance: find the group code first, then the reason code, then the remark code. Together they show who owes the money and why the payer adjusted the claim. Claim Adjustment Reason Codes (CARCs) and Remittance Advice Remark Codes (RARCs) come from standard code lists, and our CARC and RARC code reference covers the common ones in detail.

How to read CARC and RARC codes: what does each part tell you?

A group code says who is responsible for an adjustment. A CARC (Claim Adjustment Reason Code) says why the amount changed. A RARC (Remittance Advice Remark Code) adds detail or sends a message about how the payer processed the remittance. Read them in that order.

The standards group ASC X12 publishes the lists. Per X12’s group code list (checked 10/23/26), the main group codes are:

• CO (Contractual Obligation): the adjustment reflects a contract obligation. Check your payer agreement before billing anyone for it.
• PR (Patient Responsibility): the amount is the patient’s responsibility.
• PI (Payor Initiated Reduction): the payer reduced the amount.
• OA (Other Adjustment): a catch-all for adjustments that fit nowhere else.

X12’s RARC list (checked 10/23/26) explains that most RARCs are supplemental, meaning they explain an adjustment already described by a CARC. A smaller set are informational alerts about remittance processing that never attach to one adjustment. Some CARCs require a remark code to go with them.

Which CARCs show up most, and what do they mean?

The list holds hundreds of codes, but a handful are worth knowing first. This table paraphrases the X12 CARC list (checked 10/23/26). The last column is our suggested first move, not a payer rule.

CARC	Plain meaning	First move
1, 2, 3	Amount applied to deductible, coinsurance or copay	Post as patient responsibility; confirm it matches the benefits
16	Claim or service lacks information, or has a billing error (a remark code must come with it)	Read the RARC, fix the data, resubmit
18	Exact duplicate claim or service	Check whether the first claim was paid
29	Filing deadline passed	Pull proof of timely filing, if you have it
45	Charge exceeds the fee schedule or contracted amount	Compare to your contract; usually a write-off
50	Service not considered medically necessary	Review the note; consider an appeal
197	Precertification, authorization or notification missing	Look for an authorization on file
252	Attachment or other documentation needed (a remark code must come with it)	Send the requested records

RARCs work the same way. For example, X12 describes MA130 as incomplete or invalid claim information with no appeal rights, where the sender submits a new claim. It describes M76 as a missing, incomplete or invalid diagnosis, and N54 as claim information that does not match the pre-certified services.

Do private, Medicare and Medicaid remittances use the same codes?

They draw on the same standard lists, but each payer decides which codes to send and how to word its own messages. Read each payer’s guidance for its remittances rather than assuming one payer’s habits apply to another.

Private payers

Each insurer chooses which codes and extra text to send. Check the payer’s portal or its guide for electronic remittances, and keep your Explanation of Benefits (EOB) next to the electronic version when they differ.

Medicare

A Centers for Medicare & Medicaid Services (CMS) transmittal (checked 10/23/26) tells Medicare contractors to update their CARC and RARC lists from the lists X12 publishes. So the X12 lists are your reference for Medicare remittances.

Medicaid

State Medicaid agencies and managed care plans each publish their own remittance guidance. Check the one for your state and plan, and never assume a neighboring state works the same way.

What do you do Monday morning when a CARC or RARC appears?

Knowing how to read CARC and RARC codes comes down to three moves: read the group code, look up both codes, then decide whether the amount is the patient’s, a write-off, or something you can fix and resubmit. Act quickly, because every payer has a filing limit.

1. Read the group code. CO, PR, PI or OA tells you who owes the amount.
2. Look up the codes. Search the CARC and RARC on the X12 lists above.
3. Sort the claim. Patient balance, contractual write-off, or fixable? Our electronic remittance advice guide shows how to read each line.
4. Fix what you can. Send a corrected claim, add records, get an authorization (see missing prior authorization denials), or write an appeal letter. Check your Timely Filing limit first.
5. Log it. Note the code, payer and fix so you can see patterns. Our denials and appeals hub has more.

Prescribers should read each line. A visit with an E/M code and an add-on psychotherapy code can carry different adjustments on each line, so one line may pay while the other does not.

You get these codes faster with electronic remittances. See ERA enrollment for therapists for how to set that up.

How MCM South helps

MCM South is a medical billing service for psychotherapists and psychiatrists in solo and medium-size mental health practices. We read the remittances, work denials and bill out-of-network claims for clients, so you do not have to learn how to read CARC and RARC codes line by line yourself. See our billing services for what that covers. If you want a second pair of eyes, we can show you how to read CARC and RARC codes on your own remittances. Knowing how to read CARC and RARC codes also helps you spot a wrong payment fast, and the first thing to check is always the group code.

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Where MCM South works

MCM South works only in mental and behavioral health. We serve psychotherapists and psychiatrists in solo and medium-size practices across ten currently served states: Georgia, Massachusetts, Connecticut, Texas, Florida, New York, Colorado, Tennessee, North Carolina and Illinois. Need a payer contact? Use our insurance companies contact directory.