Understanding and Resolving Claim Remit Codes

What Are CARCs and RARCs?

CARCs and RARCs are standardized codes used in healthcare claim remittance advice. They provide detailed reasons for payment adjustments or denials, helping healthcare providers and billers understand how payers process their claims.

CARCs (Claim Adjustment Reason Codes)

• CARCs provide the main category or reason for adjustment
• These codes highlight issues like insufficient information, coordination of benefits, or billing errors.
• They are typically numeric (e.g., 16: “Claim/service lacks information needed for adjudication”).

RARCs (Remittance Advice Remark Codes)

• RARCs provide additional details or context about a claim adjustment.
• They complement CARCs by offering a more specific explanation.
• RARCs are alphanumeric (e.g., N30: “Patient out-of-pocket exceeded”).
• Always appear in conjunction with CARCs, never independently

Understanding the interplay between these two types of codes is key to resolving claim issues efficiently.

“CARCs and RARCs provide critical insights into claim adjustments and denials, helping healthcare providers identify issues like missing information, duplicate claims, and authorization errors, ensuring smoother reimbursement processes.”

Most Common Remit Codes: A Breakdown

Here are some frequently encountered CARCs and RARCs, along with practical examples of their implications:

1. CARC Code 16: Missing Information

• Description: “Claim/service lacks information needed for adjudication.”
• Example: Missing patient demographics or incomplete diagnosis codes.
• Resolution: Review and update any incomplete or incorrect claim fields and resubmit.

2. CARC Code 45: Charges Exceed Fee Schedule

• Description: “Charge exceeds fee schedule/maximum allowable.”
• Example: Individual counseling on risk factor reduction (99401) is billed at $100, which exceeds the provider-contracted rate of $43.50..
• Resolution: No action required. Payers will always adjust the submitted claim charge in line with the provider’s contracted or out-of-network service rates.

3. RARC Code N95: Service Not Covered

• Description: “Service not covered by the payer for the patient’s condition.”
• Example: Pharmacist inadvertently bills for psychological counseling services (e.g. 90832) instead of a preventative care service (99401) which is included under their payer-specific contract .
• Resolution: Update CPT code to that which is included under the contract and state the scope of practice (e.g. 99401) representing the service delivered to your patient.

4. CARC Code 18: Duplicate Claim

• Description: “Duplicate claim/service.”
• Example: Resubmission of a claim already processed.
• Resolution: Cross-check internal records and verify whether the original claim was already processed.

5. RARC Code M15: Authorization/Referral Required

• Description: “Missing or invalid authorization/referral.”
• Example: Procedure performed without the required pre-authorization.
• Resolution: Contact the payer to secure retroactive authorization or educate staff on prior authorization requirements.

The Role of Effective Revenue Cycle Management

Efficient revenue cycle management (RCM) plays a pivotal role in addressing CARCs and RARCs. Providers must ensure their RCM workflows are optimized to minimize errors and expedite resolution.

Credentialing and Enrollment

Up-to-date provider credentials ensure timely reimbursements. Errors in credentialing can trigger both CARCs and RARCs indicating the service is not allowable for any number of reasons..

Eligibility Verification

Proactively verifying patient insurance coverage prevents issues related to ineligible services. Real-time systems can flag discrepancies before claim submission.

Accurate Medical Coding

Coding errors are a leading cause of claim denials. Ensuring accurate coding of CPT/HCPCS, ICD-10, Place of Service, and modifiers reduces the risk of denied or paid $0 claims with CARCs indicating “Missing or Invalid Codes.”

Claims Reconciliation and Denial Management

Regular reconciliation ensures claims match the payer’s payment and explanation of benefits (EOB). An effective denial management strategy allows providers to address issues quickly and resubmit claims.

Audit Support

Audits often involve reviewing denied claims. Providers need robust documentation and systems to defend claims against payer audits effectively.

Tips and Tricks for Resolving Claim Remit Codes

1. Build a Systematic Review Process

Establish a checklist for identifying common errors before claims are submitted. Common checks include verifying patient eligibility, confirming coverage, and ensuring the accuracy of diagnosis and procedure codes.

2. Leverage Technology for Real-Time Alerts

Using advanced tools like real-time eligibility verification can prevent errors related to patient insurance coverage. DocStation’s Eligibility Verification System can flag potential issues before claims are submitted.

3. Maintain a Comprehensive Payer Reference Guide

Each payer may have unique coding and processing rules. Keeping an updated reference guide for frequently used codes and payer-specific requirements can save time during claims follow-up.

4. Automate Where Possible

Manual claim management can lead to missed details. Automated systems like DocStation’s Revenue Cycle Management solution can detect errors in coding or billing, reducing the likelihood of denials.

5. Train Your Staff

Billing staff should stay attuned to updated payer policies and guidance related to CARCs, and RARCs. Regular training, research, and professional engagement activities ensure staff are equipped with the tools to manage and resolve claim issues effectively.

6. Utilize Claim Management Dashboards

Claim tracking tools consolidate data to a centralized platform to view denials, adjustments, and remittance codes. Centralized tools facilitate quick analysis, grouping claims by similar resolution pathways, and global insights fostering quality improvement. DocStation’s Claims Reconciliation System enables users to quickly identify problem areas and take corrective action.

7. Appeal When Necessary

Not all claim denials are final. Create templates for common appeal scenarios and ensure all necessary documentation is included. DocStation’s Support Team can assist in audit support services like preparing and submitting effective appeals.

Turning Challenges Into Opportunities

Navigating the complexities of CARCs and RARCs can feel overwhelming, but with the right knowledge, tools, and processes in place, pharmacies can leverage these insights into quality improvement opportunities.

Next Steps for Providers

• Conduct a review of your current RCM processes to identify areas for improvement.
• Train your team to recognize and resolve common remit codes efficiently.
• Partner with a trusted solution provider to enhance claim management and compliance.