Every provider dealing with insurance claims has come across those mysterious codes on an Explanation of Benefits (EOB) or Electronic Remittance Advice (ERA)—but many don’t realize how important they really are for streamlining billing and getting paid faster.​

CARC and RARC codes are simple yet powerful tools: they break down exactly why a claim was denied, reduced, or paid a certain way. 

When you understand these codes, you unlock the story behind every claim decision—making it easier to fix errors, resubmit claims, and keep your revenue cycle running smoothly.​

Whether you’re a solo therapist or part of a busy group, knowing your CARC and RARC codes can help you spot problems sooner and get your payments on time. Mastering these codes is the key to less billing stress and more predictable reimbursements. 

In this article, we’ll break down what CARC and RARC codes are, why they’re important for understanding claim denials and payments, and how mastering these codes can help you speed up your medical billing and get paid faster.

What Are CARC Codes?

CARC stands for Claim Adjustment Reason Codes. These codes tell you why a claim or a specific service line was adjusted—whether it was denied, reduced, or not paid at all. For example, CARC 45 means “Charge exceeds fee schedule or maximum allowable amount,” explaining why payment was lowered or denied. 

These codes are standardized by the X12 standards group and the Centers for Medicare & Medicaid Services (CMS), so you get consistent reasons across many payers.

Claim adjustment reason codes are required when the total paid amount differs from what was originally billed, helping providers clearly understand payment decisions. This system helps reduce confusion and speeds up the correction process. 

Knowing CARC codes can save you time and money by pinpointing exactly what needs fixing for prompt resubmission.

What Are RARC Codes?

RARC stands for Remittance Advice Remark Codes. These codes provide additional details that help explain the adjustments or denials indicated by CARC codes. While CARCs give you the general reason why a claim was adjusted, RARCs add extra context or instructions that can guide your next steps.

For example, a RARC code like N290 means “Missing required documentation,” which tells you exactly what information you need to submit to resolve the issue. RARCs only appear alongside CARCs when payers believe you need more specific information to fix or understand the claim issue.​

Key Differences Between CARC and RARC Codes

Why CARC and RARC Codes Matter in Medical Billing

CARC and RARC codes play a crucial role in the healthcare revenue cycle by providing clear, standardized explanations for why claims are adjusted or denied. 

Without these codes, providers would face guesswork, delays, and confusion when payment doesn’t match their expectations.​

These codes help providers quickly identify the reason behind a denial or adjustment—whether it’s missing documentation, contractual restrictions, patient responsibility, or duplicate billing. 

With this information, billing professionals can take corrective action, resubmit claims faster, and reduce revenue loss caused by delayed payments or rejected claims.​Moreover, CARC and RARC codes support compliance with healthcare regulations by ensuring transparent communication between payers and providers. 

Many electronic billing systems use these codes to automate tracking and generate reports on denial patterns, helping practices improve submission accuracy and workflows over time.​

Mastering these codes is more than a technical detail—it’s a strategic advantage that improves cash flow, reduces administrative burden, and strengthens your practice’s financial health.

Common CARC and RARC Codes You Should Know

While there are hundreds of CARC and RARC codes, some show up more often in medical billing and are essential to understand:

Common CARC Codes:

• CO-16: Claim/service lacks information or has a billing error. You’ll need to verify and resubmit the corrected claim.
• CO-29: Timely filing limit expired. The claim was filed after the insurer’s deadline, which may require an appeal with proof.
• PR-204: The service isn’t covered under the patient’s current benefit plan, meaning it’s usually the patient’s responsibility.
• CO-45: Charge exceeds the allowed fee schedule or maximum allowable amount per contract—providers may need to adjust billing.
• CO-97: The service’s payment is included in another service; commonly seen with bundled or global period procedures.

Common RARC Codes:

• N290: Missing or invalid documentation required for claim processing.
• M51: Procedure code is missing, incomplete, or invalid—additional details are needed to process the claim.
• N522: Duplicate claim submission detected, indicating the same service was billed twice.
• N345: Incorrect claim format or form submitted.

Learning to interpret these common codes helps you identify and address claim issues faster, ultimately reducing denials and speeding reimbursement. For the full list and official descriptions, you can refer to the CMS Claim Adjustment Reason Codes and X12 Remittance Advice Remark Codes

How to Handle CARC and RARC Code Denials

When you receive a denial supported by CARC and RARC codes, the first step is to decode their meaning using resources like the official CMS lookup tool. These codes tell you exactly why your claim was denied or adjusted and what information is missing or incorrect.​

Once you understand the issue, take prompt corrective action. This may mean adding missing documentation, correcting billing errors, or resubmitting the claim with updated information. Keeping a denial management log can help spot recurring problems and improve future claim submissions.​

Remember, responding quickly and accurately to CARC and RARC codes can dramatically reduce payment delays and improve your practice’s cash flow. Many billing software tools can also automate code interpretation and flag claims needing attention, helping streamline the process.

How MedAce Healthcare Helps Providers with Denials

At MedAce Healthcare, we know how frustrating claim denials can be — especially when they happen because of confusing CARC or RARC codes. 

Each code tells a story, but if you don’t know what it means or how to fix it, you can end up losing time and revenue. That’s where we step in.

Our team reviews every denial carefully, decodes the CARC and RARC messages, and figures out exactly what went wrong — whether it’s a missing document, incorrect modifier, or payer rule update. We then correct the issue and resubmit the claim quickly to help you get paid faster.

Here’s how we make the process easier:

• We interpret denial codes accurately — so you know the exact reason behind each adjustment.

• We fix claim issues quickly — correcting errors before resubmission to prevent repeated denials.

• We track patterns — helping your practice avoid the same issues in the future.

• We communicate with payers directly — saving your team hours of back-and-forth.

At MedAce Healthcare, our goal is simple: to help you recover every dollar you’ve earned while keeping your billing process stress-free.