10 Commonly Encountered Medical Claim Denial and Adjustment Codes

Recurring claim denials and payment adjustments can delay reimbursement and reveal problems in registration, eligibility verification , authorization, coding, documentation, or claim follow-up.. Understanding the full remittance helps billing teams resolve individual claims and identify where those problems originate.

This guide explains 10 frequently encountered Claim Adjustment Reason Codes (CARCs), what they mean, what to review next, and how practices can reduce recurrence.

It is easy to refer to every adjustment as a “CO denial,” but that is not technically accurate.

According to the official X12 Claim Adjustment Reason Code list, CARCs explain why a claim or service line was paid differently from the amount billed. A separate Claim Adjustment Group Code categorizes the adjustment and helps communicate responsibility.

Common group codes include:

• CO — Contractual Obligation
• PR — Patient Responsibility
• OA — Other Adjustment
• PI — Payer-Initiated Reduction

A Remittance Advice Remark Code (RARC) can provide additional information about an adjustment. Some CARCs specifically require an accompanying remark code.

That means billing staff should interpret:

Group Code + CARC + RARC + payer message + claim details

rather than acting on the CARC alone.

These terms should not be used interchangeably.

A rejection commonly occurs before full claim adjudication because the transaction contains an error that prevents processing. A denial generally occurs after adjudication when the payer determines that the claim or service is not payable as submitted.

A payment adjustment is broader. CARCs can explain reductions, contractual adjustments, patient responsibility, duplicate services, noncovered services, and other differences between the billed and adjudicated amounts. Not every CARC represents a denial.

Consider this educational example, not an actual payer determination:

In this example, the provider should not assume that the entire $140 difference belongs to the patient.

CARC 4 means the procedure code is inconsistent with the modifier reported. It does not, by itself, mean a required modifier was omitted. Other CARC/RARC combinations or payer messages may indicate missing-modifier situations.

Compare the procedure, modifier, documentation, coding rules, and payer policy.

Correct an actual coding error when supported, or follow the payer’s review or appeal process if the original coding was appropriate.

Use coding edits and current payer rules. CMS also recommends using current National Correct Coding Initiative guidance when applicable.

CARC 11 indicates that the diagnosis is inconsistent with the reported procedure.

This can involve incorrect diagnosis selection or linkage, but a denial should never lead staff to substitute a different diagnosis simply to obtain payment.

Compare the submitted diagnosis and procedure with the medical record and applicable coverage policy.

Correct a genuine coding error or appeal when the submitted codes and documentation support the service.

Improve diagnosis-to-procedure review and documentation accuracy.

Primary owner: Coding/clinical team

CARC 16 indicates that the claim lacks required information or contains a submission or billing error.

Importantly, the X12 CARC definition states that CARC 16 should not be used for missing claim attachments or other documentation. It also requires an applicable remark code that identifies what is missing or incorrect.

Read the associated RARC instead of guessing at the missing information.

Correct the specific submission problem and follow the payer’s corrected-claim procedure.

Strengthen claim edits for demographics, provider data, identifiers, coding, and required fields.

Primary owner: Billing

CARC 18 means exact duplicate claim/service. X12 specifies that it should be used with Group Code OA, except where state workers’ compensation regulations require CO.

This is why referring to it universally as “CO-18” is inaccurate.

Find the original claim and confirm its status, dates, procedures, units, and payer control number.

If it is truly duplicated, void or close the duplicate according to workflow. If the payer incorrectly identified it as a duplicate, follow the payer’s reconsideration or dispute process.

Require claim-status review before resubmission.

Primary owner: Billing

CARC 22 indicates that the care may be covered by another payer under coordination-of-benefits rules.

Confirm primary and secondary payer order and the patient’s current insurance information.

Update COB information or submit the claim to the correct payer as applicable.

Verify other active coverage during registration and eligibility verification periodically thereafter.

Primary owner: Registration/eligibility

CARC 27 indicates that expenses occurred after coverage ended.

An outdated insurance card, employer coverage change, or failure to verify coverage for the service date can lead to this adjustment.

Verify effective and termination dates for the actual date of service.

Correct insurance information and bill the appropriate payer when coverage exists, or follow applicable patient-liability rules.

Verify eligibility close to the date of service.

Primary owner: Registration/eligibility

CARC 29 means the filing time limit has expired.

Before writing off the claim, determine whether the payer actually received an earlier submission.

Look for clearinghouse acceptance reports, payer acknowledgments, claim-status records, and proof of original submission.

If evidence supports timely filing, follow the payer’s reconsideration or dispute procedure. Review any applicable filing exception before adjusting the balance.

For Medicare fee-for-service, claims generally must be submitted within one calendar year from the date of service. Other payer deadlines differ.

Track rejected, unsubmitted, A/R aging, corrected, and secondary claims against payer-specific deadlines.

Primary owner: Billing

CARC 50 indicates that the payer considers the service noncovered because it was not deemed medically necessary.

This is not always a preventable staff error. Medical-necessity adjustments can arise from documentation problems, coding errors, payer medical review, changing coverage policies, or legitimate disagreement over whether coverage criteria were met.

Review the medical record, codes, RARCs, payer policy effective on the date of service, and any applicable coverage criteria.

Correct a genuine billing error, provide requested information through the proper channel, or appeal when the clinical documentation supports coverage.

Improve documentation and pre-service medical necessity review where applicable, while recognizing that some medical-necessity determinations cannot be prevented.

Primary owner: Clinical/coding

CARC 97 means the benefit for the service is included in the payment or allowance for another service already adjudicated.

It should not automatically be treated as an NCCI denial.

Possible causes include:

• NCCI edits
• Global surgery payment
• Inclusive or incidental services
• Add-on code requirements
• Payer-specific bundling
• Facility or prospective-payment packaging
• Services included in another allowance

Determine what other adjudicated service the payer considers inclusive and review the applicable payment and coding policy.

Accept the adjustment when correct, correct an actual coding error, or challenge the determination when documentation and policy support separate payment.

For Medicare claims, CMS states that NCCI PTP and MUE files are updated at least quarterly, so billing teams should work from current edit files.

Primary owner: Coding/billing

CARC 197 means required precertification, authorization, notification, or pretreatment approval was absent.

Do not group every authorization problem under CARC 197. X12 separately identifies:

• CARC 197: Authorization or precertification absent
• CARC 198: Authorized amount, period, or service limit exceeded
• CARC 210: Authorization was not received in a timely manner

Review the authorization record, approved service, dates, units, payer requirements, and information submitted on the claim.

Correct authorization data when entered incorrectly, request payer review where permitted, or examine an applicable exception or appeal route.

Track authorization number, approved service, dates, units or visits, status, and expiration before treatment .

Primary owner: Authorization team

Use the same decision process instead of automatically rebilling every claim:

1. Determine whether the issue is a rejection, denial, or payment adjustment.
2. Identify whether it applies to the claim or one service line.
3. Review the group code, CARC, RARC, and payer message.
4. Compare the remittance with the original claim and medical record.
5. Verify the payer policy and contract applicable to the date of service.
6. Choose the correct route: corrected claim, reopening, appeal, documentation response, COB update, other-payer billing, contractual adjustment, or follow-up.
7. Record the root cause and responsible department.
8. Track the outcome and preventive action.

For Original Medicare, CMS distinguishes certain minor-error correction processes from formal appeals. You generally must request a first-level Medicare redetermination within 120 days of receiving the initial determination. CMS explains the redetermination process and deadline here.

Commercial and Medicaid requirements vary.

When an appeal is appropriate, do not send only the claim and hope the payer finds what it needs.

Depending on the issue, the appeal file may include the original claim, remittance, medical records, authorization evidence, eligibility response, referral, payer policy effective on the service date, proof of timely filing, clearinghouse and payer acknowledgments, and a clinical or coding explanation.

Also record the appeal deadline, submission method, confirmation number, and follow-up date.

A CARC alone does not establish that you should bill the patient for a balance.

A CO adjustment normally should not automatically become patient responsibility, and you should check even a PR adjustment against the patient’s benefits, payer contract, notices, and applicable legal requirements before billing.

For Medicare, certain expected medical-necessity or coverage denials may require an appropriate Advance Beneficiary Notice of Noncoverage (ABN) before the service if liability is to be transferred to the beneficiary. CMS provides current requirements through its Beneficiary Notices Initiative.

HFMA’s standardized denial-metrics guidance supports consistent measurement for revenue cycle benchmarking and process improvement.

The objective is not simply to work denials faster. It is to determine why they happened and reduce recurrence.

Counting worked claims is not enough. Revenue cycle leaders should measure:

• Initial denial rate by claim volume
• Initial denial rate by dollars
• Denial write-offs
• Time from denial to appeal
• Time from denial to resolution
• Appeal overturn rate
• Preventable denial rate
• Recurrence after corrective action
• Denials by payer, provider, location, CARC, and root cause

Denial prevention belongs across the revenue cycle. Registration owns demographics, eligibility, and COB accuracy. Scheduling and authorization teams manage referrals and approvals. Clinical staff supports complete documentation. Coding teams ensure accurate codes and modifiers. Billing teams manage claim edits, acknowledgments, corrections, and follow-up. Revenue cycle leaders monitor trends and corrective actions.

At Revix MD, we help healthcare practices identify denial patterns, resolve outstanding claims, and strengthen the registration, authorization, coding, and follow-up workflows that contribute to preventable denials.

Disclaimer: This article is for general educational purposes and is not legal, coding, reimbursement, or payer-specific advice. Requirements vary by payer, contract, plan, service, jurisdiction, and date. Always verify current payer policies and official coding guidance before taking action.