What are CARC and RARC Codes?

CARC (Claim Adjustment Reason Code):

These are standard codes used by payers. They explain why a claim was paid differently than you billed. This includes partial payments, reductions, or full denials. (Source)

For example: “CO-45: Charge exceeds fee schedule/maximum allowable or contracted/legislated fee arrangement.”

They’re required on electronic remittance advice (ERA) and Explanation of Benefits (EOBs). (Source)

RARC (Remittance Advice Remark Code):

This is a secondary layer of explanation. Once you have the CARC telling you why, a RARC can provide additional detail or instructions related to that adjustment or denial code. (Source)

RARCs can also be “informational alerts” (not tied to a specific adjustment) or “supplemental” (tied to a CARC code). (Source)

Key Differences (and what they mean for your behavioral health practice)

Here’s a quick list to clarify:

CARC is the baseline: every adjusted/denied claim line should have one. Without a CARC code, you don’t know the foundational reason for the adjustment.
RARCs are optional, but very helpful when present. They add context — e.g., “missing documentation,” “see policy,” or “Alert: balance-billing under No Surprises Act.” (Source)
CARCs are more generic and standard across payers — e.g., CO, PR, OA, PI group codes + numeric component.
RARCs are more detailed and situational. They often tell you what to do next.
In practice, when you see a denial or adjustment on your remittance advice, first read the CARC. This helps you understand “why.” Next, look for any attached RARC(s) to find out “what now.”
For behavioral health providers: Because you often handle services that require documentation of medical necessity, pre-authorization, diagnosis codes, etc., these codes can help you quickly spot what was missing or how to resubmit correctly.

Other helpful acronyms to know

CO = Contractual Obligation (a group code for CARCs) — e.g., CO-45 or CO-50.
PR = Patient Responsibility (another CARC group code) — parts of the bill that the patient is liable for (copay, deductible, etc.).
OA = Other Adjustment — used when the adjustment isn’t covered by standard categories.
PI = Payer‐Initiated Reduction — reductions initiated by payer for various reasons.
COB = Coordination of Benefits — not a CARC/RARC code but important when you have multiple insurances, which is common in behavioral health. You might see CARC 22 (“Coordination of benefits”) when another payer should be billed.
ERA = Electronic Remittance Advice — the electronic version of your EOB/RA where these codes appear.

Practical Tips: What providers (especially in mental/behavioral health) need to know

Below is a list of behavioral healthcare billing tips for navigating CARC and RARC codes, claim denials, and general mental health revenue cycle:

Always check the remittance advice line item carefully.

Find the CARC first (what broad reason).
Then look for any RARC(s) next to or following the CARC (what specific detail).
For example: CARC CO-16 (“Claim/service lacks information or has submission/billing error(s)”) might pair with RARC M51 (“Missing/incomplete/invalid procedure code(s)”) or N350 (“Missing/incomplete/invalid description of service”).
In a behavioral health setting: maybe the claim lacked the correct modifier, or documentation wasn’t submitted, or the place of service was wrong — RARC will often clue you in.

Use the codes to direct your next step.

If CARC CO-45 (charge exceeds fee schedule) → check your contracted rate with payer, adjust billing / write-off as appropriate. (Source)
If CARC PR-? (patient responsibility) → make sure patient has been billed and your front desk understands copays/deductibles.
If CARC 16 + RARC M51 or similar → go back to your billing/coding team: fix procedure code/modifier, attach required documents, resubmit. (Source)
If RARC starts with “Alert:” → this might not mean you can resubmit, but is more informational (for example referencing the No Surprises Act).

Flag the codes that often hit behavioral/mental health.

“Missing/incomplete/invalid place of service” — many behavioral health services require specific place-of-service codes (e.g., office vs outpatient vs telehealth).
“Services not medically necessary” (CARC CO-50) — especially if documentation is weak.
“Coordination of benefits” (CARC CO-22) — verify primary vs secondary payers.
“Not covered” or “Bundle” (CARC CO-97) — sometimes your service is considered incidental to another, or payer bundles differently.

Create a quick reference matrix for your behavioral health billing team.

List your top 5-10 most frequent CARCs in your practice and common RARCs that accompany them. (Source)
Train staff to respond: e.g., “If we see RARC N350, immediately check description and missing field.”
Since behavioral health practices may have unique modifiers (e.g., telehealth modifiers, CPT codes for psychotherapy, etc.), tailor.

Resubmission vs write-off decisions.

If the issue is fixable (missing authorizations, wrong code, missing documentation) → resubmit.
If it’s contractual (charge exceeds fee schedule) → you may need to write off or negotiate.
If it’s patient responsibility (PR group) → coordinate with patient for payment.
Use the codes to help you decide which path.

Why this matters for mental & behavioral health providers

Cash flow matters. Denials or adjustments slow payment and increase administrative burden. Understanding CARC/RARC speeds resolution.
Documentation is king in your world. Whether it’s medical necessity, telehealth modifiers, substance use treatment, therapy codes — if documentation or coding fails, you’ll likely hit a denial/adjustment.
Insurance complexity is growing. Patients often have dual coverage, behavioral health carve-outs, or specialized benefits. Codes like COB or bundled service denials can derail claims if overlooked.
Regulatory environment shifts. For instance, the No Surprises Act has introduced newer RARCs pointing to cost-sharing rules. Staying up to date = fewer surprise denials.

In summary

If you remember just three things:

CARC = Why the payment was different.
RARC = Additional detail about what exactly went wrong or what to do.
Use both together to triage your response: fix/correct vs. bill patient vs. write off/adjust.

And for your mental & behavioral health practice, building familiarity with these codes means fewer “mystery denials,” faster resolution, better cash flow, and more time to focus on your clients rather than the back-office drama.

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