CARC Code
Definition
A CARC code (Claim Adjustment Reason Code) is a standardized code that payers use to explain why a claim was adjusted or denied. CARC codes are maintained by the X12 standards organization and are used on every remittance advice (RA) and electronic remittance advice (ERA/835). There are over 300 CARC codes grouped by prefix: CO (Contractual Obligation), PR (Patient Responsibility), OA (Other Adjustment), and PI (Payer Initiated).
Why CARC Codes Matter
The CARC code is the first piece of information a biller reads when a claim is denied. It tells you what went wrong and who is responsible. CO codes mean the payer is responsible (contractual issue). PR codes mean the patient is responsible (deductible, copay). Understanding CARC codes is essential for efficient denial management — billers who can read and act on CARC codes resolve denials 40% faster than those who rely on phone calls to payer support. See the CARC denial code reference.
How CARC Codes Work
The payer includes one or more CARC codes on the remittance advice for each claim line. Each CARC is paired with a RARC (Remittance Advice Remark Code) that provides additional detail. Example: CO-16 (claim differs from payer records) paired with N2 (missing modifier) tells you the payer rejected the claim because a modifier was missing. The CARC identifies the category; the RARC identifies the specific issue.
Related Terms
Remark code (RARC) — additional detail paired with CARC codes. Remittance advice — the document containing CARC codes. Claim denial — the outcome explained by CARC codes. Claim adjustment — a payment modification explained by CARC codes.
Common Questions
Where do I find CARC codes on a remittance?
On paper remittance: look in the "Reason Codes" or "Adjustment Codes" column next to each claim line. On electronic remittance (835): CARC codes appear in the CAS (Claim Adjustment Segment). Your practice management system should display them in the payment posting screen.
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This glossary is for informational purposes. Consult official billing guidelines and payer policies for definitive definitions. Last updated: 2026-04-06.