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CARC and RARC codes are the standard explanations printed on a payer’s remittance advice when a claim or service line is paid differently than it was billed. A claim adjustment reason code (CARC) says why an amount was adjusted; a remittance advice remark code (RARC) adds detail or processing information. Both come from X12 code lists, and a group code in front of the CARC says who is responsible for the adjusted amount.
Short answer
Read a remittance in this order: the two-letter group code, then the CARC, then any RARC. The group code assigns responsibility, the CARC gives the reason, and the RARC explains further or flags how the remittance was processed. X12, the standards body that publishes the lists, describes CARCs as codes that “describe why a claim or service line was paid differently than it was billed” (X12, checked 2026-10-30).
What CARC and RARC codes mean
Claim adjustment reason codes (CARCs)
A CARC is a numeric code with a fixed description. X12 gives this example: if a health plan sends PR32, the “PR” is the claim adjustment group code and 32 is the CARC, described as “Our records indicate the patient is not an eligible dependent.” X12 uses another example of the same shape, CO286. Each code on the X12 list shows its own start date and a “Last Modified” date.
Remittance advice remark codes (RARCs)
X12 states that RARCs “provide additional explanation for an adjustment already described by a Claim Adjustment Reason Code (CARC) or to convey information about remittance processing.” There are two types:
- Supplemental RARCs are the majority, and explain an adjustment a CARC already describes. X12 notes they are generally just called RARCs.
- Informational RARCs are prefaced with “Alert:” and are often called Alerts. X12 says they convey information about remittance processing and are never related to a specific adjustment or CARC. One example on the X12 list is M4, “Alert: This is the last monthly installment payment for this durable medical equipment.”
Group codes: who the adjustment is assigned to
X12 lists five claim adjustment group codes and says they “are internal to the X12 standard” and “generally assign responsibility for the adjustment amounts.” The format is always two alphabetic characters.
| Group code | X12 definition | Note from X12 |
|---|---|---|
| CO | Contractual Obligation | |
| CR | Corrections and Reversal | Not to be used with 005010 and up |
| OA | Other Adjustment | |
| PI | Payer Initiated Reductions | |
| PR | Patient Responsibility |
The X12 list carries all five group codes, including CR, OA and PI, and marks CR as unusable with the 005010 version of the standard and later.
Reading a remittance, in order
- Group code. Note whether the adjustment is assigned as CO, CR, OA, PI or PR, using the X12 definitions above.
- CARC. Look the number up in the current X12 claim adjustment reason code list. The wording on the list, not a vendor summary, is the definition.
- RARC, if present. A supplemental RARC elaborates on the CARC. An “Alert:” RARC is about remittance processing and does not belong to a particular adjustment.
This is a reading aid, not billing or coding advice. Each payer’s own instructions govern how a specific claim is handled.
How the code lists are updated
The lists change, so a saved copy goes stale. X12 handles changes through a Code Maintenance Request process and shows a “Last Modified” date for each code. For Medicare, CMS Transmittal 10472 (Pub. 100-04, Change Request 11943, dated November 20, 2020) states that CMS instructs contractors to update on a schedule that results in publication three times per year, around March 1, July 1 and November 1, and that the lists are obtained from the official X12 website (CMS, checked 2026-10-30). The transmittal also says deactivated codes must not be reported on or after the posted deactivation date, while still being allowed in derivative messages. That schedule is stated as of the 2020 transmittal; check the X12 list itself for the code you are reading.
Where it matters for suppliers and labs
Under HIPAA, health plans are instructed to use valid standard codes in standard electronic transactions. The same CMS transmittal states Medicare policy that CARCs and RARCs, as appropriate, “are required in the remittance advice and coordination of benefits transactions.” For a supplier or clinical laboratory that bills Medicare, the codes on a remittance are therefore the payer’s formal explanation of an adjustment. Suppliers working with modifiers will meet them in that context; see HCPCS modifiers GX, GY, GZ versus GA, and for supplier enrollment background, DMEPOS accreditation. Remittance data also contains patient-level information, so handling falls under HIPAA rules.
Common misunderstandings
- “A CARC is a denial.” X12 defines it as a reason a claim or line was paid differently than billed, which is broader than a denial.
- “The group code is part of the CARC number.” It is a separate two-letter code that assigns responsibility; PR32 is group code PR plus CARC 32.
- “Every RARC explains an adjustment.” Alerts are never related to a specific adjustment.
- “A code list I saved last year is still right.” Codes are added, modified and deactivated several times a year.
FAQ
What are RARC codes?
Remittance advice remark codes are X12-published codes that give additional explanation for an adjustment already described by a CARC, or convey information about remittance processing.
What are claim adjustment reason codes?
They are X12-published codes describing why a claim or service line was paid differently than it was billed. A group code (CO, CR, OA, PI or PR) accompanies the reason code to assign responsibility.
What is Medicare remittance advice?
It is the payment explanation sent to the provider or supplier. Per CMS Transmittal 10472, Medicare policy requires CARCs and RARCs, as appropriate, in the remittance advice and coordination of benefits transactions.
How often do CARC and RARC codes change?
X12 shows per-code modification dates and states no fixed schedule on its code page; CMS’s 2020 transmittal describes Medicare updates around March 1, July 1 and November 1.
Sources
- X12, Claim Adjustment Reason Codes, checked 2026-10-30.
- X12, Remittance Advice Remark Codes, checked 2026-10-30.
- CMS Transmittal 10472, Pub. 100-04, CR 11943 (November 20, 2020), checked 2026-10-30.
