CARC Codes Guide — Understanding Claim Adjustment Reason Codes
CARC (Claim Adjustment Reason Code) codes are the standardized codes payers use to explain why a claim was adjusted or denied. This guide covers all four CARC groups — CO, PR, OA, and PI — with explanations, examples, and resolution steps.
Quick Answer
CARC (Claim Adjustment Reason Code) codes are grouped into four categories: CO (Contractual Obligation — payer-side adjustments), PR (Patient Responsibility — patient owes the balance), OA (Other Adjustments — informational), and PI (Payer Initiated). Understanding which group a code belongs to tells you who is financially responsible and what action to take.
Key Takeaways
CO codes are contractual — write off, do not bill the patient.
PR codes are patient responsibility — bill the patient.
OA codes are informational or administrative.
PI codes are payer-initiated adjustments.
The most common CARC is CO-45 (charge exceeds fee schedule).
Step-by-Step
Identify the CARC group
Look at the first two letters: CO, PR, OA, or PI. This tells you who is responsible for the adjustment.
Read the specific code
The number after the group identifies the specific reason (e.g., CO-45 = contractual adjustment, CO-50 = medical necessity).
Check the accompanying RARC
The RARC provides additional detail about the specific issue.
Take action based on the group
CO = write off; PR = bill patient; OA/PI = investigate and determine if appeal is warranted.
Common Mistakes
Billing the patient for a CO code — contractual adjustments are not patient-billable.
Not reading the RARC code — missing critical detail.
Treating all denials the same — the resolution action depends on the group.
Confusing CO-45 (write-off) with an actual denial — CO-45 is an adjustment, not a denial.
FAQ
CARC Categories
The 4 CARC Code Groups
CO — Contractual Obligation
The payer adjusts the claim per the provider's contract. This amount is written off — the provider cannot bill the patient.
PR — Patient Responsibility
The patient owes this amount. Includes deductible, copay, coinsurance, and non-covered services billed to the patient.
OA — Other Adjustment
Informational or administrative adjustments that don't fit CO or PR. Often used for coordination of benefits.
PI — Payer Initiated
The payer initiates the adjustment — often for audit findings, overpayment recovery, or administrative decisions.
Most Common Codes
Top 10 Most Common CARC Codes
| Code | Group | Description | Action |
|---|---|---|---|
| CO-45 | CO | Charge exceeds fee schedule/contract | Write off — contractual; no action needed |
| CO-50 | CO | Non-covered services — not medically necessary | Appeal with medical necessity documentation |
| CO-97 | CO | Service included in another service | Check NCCI edits; remove bundled code |
| CO-16 | CO | Claim/service lacks information for adjudication | Add missing modifier/info; resubmit |
| CO-197 | CO | Precertification/authorization absent | Obtain retro auth or appeal |
| CO-29 | CO | Timely filing deadline exceeded | Appeal with proof of timely submission |
| CO-151 | CO | Frequency limit exceeded | Appeal with medical necessity for additional |
| CO-4 | CO | Procedure code inconsistent with modifier | Correct modifier; resubmit |
| CO-18 | CO | Duplicate claim/service | Verify claim wasn't already submitted |
| CO-22 | CO | Care covered by capitation agreement | No payment due — capitated service |
Frequently Asked Questions
CARC Codes FAQ
What is a CARC code?
A CARC (Claim Adjustment Reason Code) is a standardized code used by health insurance payers on remittance advice (ERA/EOB) to explain why a claim was adjusted, reduced, or denied. CARC codes are maintained by the Washington Publishing Company (WPC) and are grouped into four categories: CO (Contractual Obligation), PR (Patient Responsibility), OA (Other Adjustment), and PI (Payer Initiated). Every claim adjustment includes at least one CARC code identifying the reason for the adjustment.
What is the difference between CO and PR?
CO means Contractual Obligation — the adjustment is required by the provider's contract with the payer. The provider must write off this amount and cannot bill the patient. PR means Patient Responsibility — the patient owes this amount (deductible, copay, coinsurance, or non-covered service that the patient is responsible for paying). The key difference: CO amounts are provider write-offs; PR amounts are patient liability. Confusing the two is a common billing error that can result in incorrectly billing patients for contractual adjustments.
What are the most common CARC codes?
The most common CARC codes are: CO-45 (charge exceeds fee schedule — contractual write-off), CO-50 (non-covered service/not medically necessary), CO-97 (service bundled/included in another service), CO-16 (claim lacks information for adjudication), CO-197 (precertification/authorization absent), CO-29 (timely filing deadline exceeded), CO-151 (frequency limit exceeded), CO-4 (procedure code inconsistent with modifier), CO-18 (duplicate claim), and CO-22 (care covered by capitation agreement). CO-45 is the most common overall — it appears on almost every claim where there's a contractual adjustment.
What is the difference between CARC and RARC codes?
RARC (Remittance Advice Remark Code) provides supplemental explanation beyond the CARC code. While the CARC tells you what happened (e.g., CO-16 = claim lacks information), the RARC often tells you specifically what's missing (e.g., N56 = procedure code billed is not correct for date of service). Many denials carry both a CARC and one or more RARC codes. Reading both together gives you the complete picture of why the claim was denied and what needs to be corrected.
How do I look up a CARC code?
You look up CARC codes on the remittance advice (ERA/EOB) that the payer sends after processing the claim. The CARC code appears in the adjustment segment of the 835 electronic file or in the remark section of the paper EOB. Each claim line can have one or more CARC codes. You can also search our Denial Code Library at /denial-code-hub to look up any CARC code with its full description, common causes, and resolution steps.