What is a denial code?

When a payer says no, it says no in a code. That code is the reason, and reading it is most of the work.

The formal name is a claim adjustment reason code, or CARC. It comes in two parts: a group and a number.

The group says whose problem this is:

• CO is a contractual obligation. It is between you and the payer, and it is never billed to the patient.
• PR is patient responsibility. That money belongs to the patient.
• OA is other adjustment, most often the effect of a prior payer in a two-insurance situation.

The number says what the reason is. CO-16 is missing information. CO-197 is a missing prior authorization. CO-45 is the ordinary contractual write-off.

Sometimes a second code rides along, called a RARC, a remittance advice remark code. Where the CARC says “missing information,” the RARC names the exact field that was missing. When a denial is vague, the RARC is usually where the answer is.

You do not have to memorize any of this. Ask the assistant what a code means on the claim in front of you and it reads it back in plain English. See Which denial codes will I meet most?.