Claim adjustment codes: CO, PR, CARCs and RARCs

Read the combination, not just the number

For a claim or service adjustment, read three pieces together: the adjustment group, the claim adjustment reason code (CARC), and any remittance advice remark code (RARC). The group identifies a responsibility category; the reason describes the adjustment; a remark can add detail or other processing information.

CO describes contractual responsibility, while PR identifies patient responsibility. A reason number by itself does not tell you who may be billed. CMS explains this distinction in its remittance advice overview.

A few common examples and the next check

• PR with reason 1: the payer reports a deductible amount. Check prior receipts and the account's remaining balance before posting another patient balance.
• PR with reason 2: the payer reports coinsurance. Check the allowed amount and benefit calculation rather than interpreting it as a claim denial.
• CO with reason 45: the charge exceeds the applicable fee arrangement or allowance. Compare the allowed amount with the relevant contract or fee schedule. Read the code's full usage restrictions before applying it.
• Reason 16: information is missing or a submission/billing error is reported. Read the required accompanying remark to identify the specific issue. The code's usage notes distinguish this from requests for attachments or other documentation.

These are selected paraphrases, not a replacement for the current CARC list and its usage notes. Check active/deactivated status and payer instructions. A payer's adjustment does not by itself settle every patient-billing restriction or appeal question.

Turn a code into a useful follow-up

1. Record the claim and service reference, adjustment amount, group, reason and related remark.
2. Determine whether the adjustment is at the claim or service level. Do not mix a provider-level PLB item into the same explanation.
3. Compare the explanation with the submitted claim, benefits information or applicable payment arrangement.
4. Choose the payer's correct follow-up route: correction, supporting information, payment inquiry or appeal. Keep the payer's deadlines and reference numbers with the work item.

Do not resubmit a claim just because a reason number looks unfamiliar. First establish what the payer actually requested and whether another posting or follow-up already exists.

Where to check the official descriptions

Washington Publishing Company's reference page directs readers to X12. Use the current X12 group, reason and remark references for complete wording. Some RARCs are informational alerts rather than explanations of a specific adjustment.

For the surrounding file structure, see the 835 segment guide.