Remittance Advice

Remittance Advice Codes: What Are They and Where to Find What They Mean

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Claim or Service Line Level Adjustments: Using Group Codes, Claim Adjustment Reason Codes and Remittance Advice Remark Codes

Group Codes

Group Codes assign financial responsibility for the unpaid portion of the claim balance

  • CO - This group code shall be used when a contractual agreement between the payer and payee, or a regulatory requirement, resulted in an adjustment. Generally, these adjustments are considered a write off for the provider and are not billed to the patient.
  • OA - This group code shall be used when no other group code applies to the adjustment.
  • PR - This group code shall be used when the adjustment represents an amount that may be billed to the patient or insured. This group code would typically be used for deductible and copay adjustments.

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Claim Adjustment Reason Codes and Remittance Advice Remark Codes

The Health Insurance Portability and Accountability Act of 1996 instructs health plans to conduct standard electronic transactions adopted under HIPAA using valid standard codes.

CARCs and RARCs provide either supplemental explanation for a monetary adjustment or policy information that generally applies to the monetary adjustment. Medicare policy states that CARCs and RARCs are required in the remittance advice and coordination of benefits transactions.

CMS publishes Change Request/MLN Matters® articles to provide code update notification that indicates when updates to the CARC and RARC lists are made available at the official ASC X12 website.

CARC and RARC codes are updated based on the code update schedule that results in publication three times per year; on/around:

  • March 1
  • July 1
  • November 1

For a listing of all CARCs/RARCs/PLB codes and their descriptions, refer to the WPC/X12 Standards.

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Claim Adjustment Reason Codes

CARCs are used on the Medicare electronic and paper remittance advice, and COB claim transaction. CARCs supply financial information about claim decisions to explain the reasons for any financial adjustments, such as denials, reductions or increases in payment.

CARCs communicate adjustments the MAC made and offer explanation when the MAC pays a particular claim or service line differently than what was on the original claim. If there is no adjustment to a claim or service line, then there is no need to use a CARC.

CARCs may be used at the service or claim level, as appropriate. CARCs are located in the ADJ REASON CODES field on the ERA and the RC field on the SPR. Current ASC X12 835 structures only allow one reason code to explain any one specific adjustment amount. 

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Remittance Advice Remark Codes

RARCs are used in a remittance advice to further explain an adjustment or relay informational messages that cannot be expressed with a CARC. RARCs further explain an adjustment or relay informational messages that CARCs cannot express.

Additionally, there are some informational RARCs, starting with the word "Alert" that MACs use to give general adjudication information. These RARCs are not always associated with a CARC when there is no adjustment.

Remark codes at the service line level must be reported in the ASC X12 835 LQ segment.

Remark codes that apply to an entire claim must be reported in either an ASC X12 835 MIA (inpatient) or MOA (non-inpatient) segment, as applicable. Although the IG allows up to five remark codes to be reported in the MOA/MIA segment and up to 99 remark codes in the LQ segment, system limitation may restrict how many codes MACs can actually report.

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Provider Level Balance Reason Codes

At the provider level, adjustments usually do not relate to any specific claim or service-line in the RA. PLB reason codes describe the reason for an adjustment (increase or decrease) that the MAC made at the provider level, instead of a specific claim or service line. The PLB segment is not always associated with a specific claim in the 835 (Health Care Claim Payment/Advice), but must be used to balance the transaction.

Some examples of provider level adjustment include:

  • an increase in payment for interest due as result of the late payment of a claim by Medicare;
  • a deduction from payment as result of a prior overpayment;
  • an increase in payment for any provider incentive plan;
  • forwarding balances for future overpayment recovery;
  • refund acknowledgement;
  • pass-through and settlement payments.

Every provider level adjustment must be reported in the provider level adjustment section of the remittance advice. Inpatient RAs do not report service line adjustment data; only summary claim level adjustment information is reported.

Adjustment codes may be located in the following data segments:

  • PLB03-1
  • PLB05-1
  • PLB07-1
  • PLB09-1
  • PLB11-1
  • PLB13-1

Additional information on the PLB code set is available in Change Request 7068, and MLN Matters® MM7068: Instructions for PLB code reporting on Remittance Advice, a Crosswalk between the HIGLAS PLB codes and ASC X12 Transaction 835 PLB codes, and RAC Recoupment Reporting on Remittance Advice for Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) claims - refer to Table 1 for the PLB codes

For the listing of all PLB Codes and their descriptions, refer to the WPC/X12 Standards Provider Adjustment Reason Codes list.

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