Claim Adjustment Reason Code (CARC)

How it works

CARCs appear on electronic remittances (835) and paper explanations of benefits. Each is paired with a group code — CO (contractual obligation), PR (patient responsibility), OA (other adjustment) or PI (payer-initiated reduction) — that says who is responsible for the adjusted amount. The code list is maintained nationally and updated several times a year.

Why it matters

CARCs are how a practice learns why it was not paid. Grouping denials by CARC and payer shows which problems are most common and where they start. The group code also decides whether a balance can be billed to the patient: CO amounts cannot, PR amounts can.

Example

“CO 45” means the charge exceeded the contracted fee — a normal contractual adjustment. “PR 2” means the remaining amount is the patient’s coinsurance. “CO 97” means the service was bundled into another. See the denial codes guide.