Reading a remittance
How denial codes are structured
Each adjustment on an electronic remittance advice (835) or paper explanation of benefits is described by up to three pieces of information:
- Group code — who is responsible for the adjusted amount.
- Claim adjustment reason code (CARC) — why the amount was not paid.
- Remittance advice remark code (RARC) — extra detail, often naming the exact data element or policy involved.
Read them together. “CO 16” alone says information is missing; the remark code beside it says which information.
Group codes
| Group | Meaning | Can the patient be billed? |
|---|---|---|
| CO — Contractual obligation | The adjustment results from the provider’s contract or payer rules | No — the provider absorbs it |
| PR — Patient responsibility | The amount is owed by the patient (deductible, coinsurance, copay or non-covered service the patient agreed to) | Yes |
| OA — Other adjustment | An adjustment that fits neither group, often related to other payers | Depends on the reason |
| PI — Payer-initiated reduction | A reduction the payer believes the patient is not responsible for, outside the contract | No |
Code reference
Common denial codes and how to fix them
| Code | What it means | Usual fix |
|---|---|---|
| CO 4 | The procedure code is inconsistent with the modifier used, or a required modifier is missing | Check the modifier against the documentation and payer policy; send a corrected claim |
| CO 11 | The diagnosis is inconsistent with the procedure | Review diagnosis coding and linkage to each line; correct if the record supports it |
| CO 16 | The claim lacks information or has submission or billing errors | Read the remark code, supply the missing or corrected data and resubmit |
| CO 18 | Exact duplicate claim or service | Check the status of the original; do not resubmit while it is still processing — use a corrected claim if something changed |
| CO 22 | This care may be covered by another payer under coordination of benefits | Confirm primary and secondary coverage with the patient, bill the primary payer first, then send the secondary with the primary remittance |
| CO 27 | Expenses incurred after coverage ended | Verify eligibility for the date of service and find current coverage; otherwise bill the patient as appropriate |
| CO 29 | The time limit for filing has expired | Appeal only with proof of timely submission (acceptance reports, earlier remittances); otherwise adjust |
| CO 31 | The patient cannot be identified as the payer’s insured | Check the member ID, name and date of birth against the card and eligibility response; correct and resubmit |
| CO 45 | The charge exceeds the fee schedule or maximum allowable amount | Usually a normal contractual adjustment, not a denial — but check the allowed amount against your contract |
| CO 50 | Not deemed a medical necessity by the payer | Compare the documentation with the payer’s coverage policy; appeal with records if it is met |
| CO 96 | Non-covered charge(s) | Read the remark code; check the patient’s benefits and whether a waiver or advance notice was obtained |
| CO 97 | The service is included in the payment for another service already adjudicated | Check bundling edits; if the service was separate and distinct, correct with a supported modifier, otherwise adjust |
| CO 109 | Claim not covered by this payer — send to the correct payer | Identify the correct payer (for example a carve-out or Medicare Advantage plan) and submit there |
| CO 197 | Precertification, authorization or notification was absent | Find any authorization on file; request a retroactive one if the payer allows, or appeal with the clinical reason |
Patient responsibility codes are not denials. PR 1 (deductible), PR 2 (coinsurance) and PR 3 (copay) show amounts the patient owes. They should be posted and billed to the patient — or to a secondary plan — not appealed.
Remark codes add the detail
Remark codes begin with M, MA or N. For example, M51 points to a missing, incomplete or invalid procedure code, and N290 to a missing or invalid rendering provider identifier. Because the same CARC can be used for many different problems, the remark code is often what tells you how to fix the claim. Both code lists are maintained by X12 and updated several times a year, so always check the current wording.
Next steps
Correct, reopen or appeal?
- Correct and resubmitWhen the claim had wrong or missing data, send a corrected claim with the right frequency code, or a new claim if it was rejected and never processed.
- Request a reopening or reprocessingWhen the payer made a clear error, or a minor clerical mistake needs fixing, many payers will reprocess without a formal appeal.
- AppealWhen the payer’s decision is wrong and the records support payment, file an appeal before the deadline, citing the payer’s policy and attaching the documentation.
- AdjustWhen the denial is correct and cannot be billed to the patient, write it off with a recorded reason — and fix the cause.
Fixing denials one at a time is necessary; preventing them is better. Our guide to reducing claim denials covers where each category starts, and our A/R management service works open denials in deadline order.