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Medical Coding News Archives

Update to Claim Adjustment Reason and Remittance Advice Remark Codes

January 19, 2012:

Nichole VanHorn, Clinical/Technical Editor

The Washington Publishing Company (WPC) has once again released its claim adjustment reason codes (CARC) and remittance advice remark codes (RARC) update effective March 1, 2012. Code set changes generally include new, modified, and deactivated codes.

Claim Adjustment Reason Codes
CARCs provide the financial information about claim processing decisions, such as an adjustment or why a claim or line item was paid differently from the way it was billed. When no adjustment is made to the claim or line item, no CARC is used. CARCs were designed to replace proprietary coding systems used by each payer prior to the Health Insurance Portability and Accountability Act (HIPAA) and to alleviate the burden on providers of interpreting different systems.

The following new CARCs were approved by the code committee in October and must be implemented, if appropriate, by April 2, 2012.

Code Current Narrative Effective Date per WPC Posting
238 Claim spans eligible and ineligible periods of coverage; this is the reduction for the ineligible period (use Group Code PR). 3/1/2012
239 Claim spans eligible and ineligible periods of coverage. Rebill separate claims (use Group Code OA). 3/1/2012

Modified Codes—CARC:
Code Current Narrative Effective Date per WPC Posting
18 Exact duplicate claim/service (Use with Group Code OA). 1/1/2013

Deactivated Codes—CARC:
Code Current Narrative Effective Date per WPC Posting
141 Claim spans eligible and ineligible periods of coverage. 7/1/2012

Remittance Advice Remark Codes
RARCs are used in conjunction with CARCs to provide additional detail on an adjustment. Some of these code types start with descriptors such as “ALERT” and are used to provide general claim processing information for things such as appeal rights. This type of RARC can be used without an associated CARC or when no adjustment has been made. CMS maintains the remittance advice remark codes, but any other health care payer may use them when appropriate.

Additions, modifications, and deactivations to the RARC code list resulting from non-Medicare requests may or may not affect Medicare. When remark and reason code changes impact Medicare, they have usually been requested by the Centers for Medicare and Medicaid Services (CMS) in conjunction with a policy change. If an entity other than CMS modifies a code currently used by CMS, contractors must use the modified code. Contractors are required to discontinue the use of deactivated codes on or before the effective date whether the deactivation was requested by Medicare or another entity.

For the March 2012 update there were no new, modified, or deactivated RARC codes.

The Health Insurance Portability and Accountability Act of 1996 (HIPAA) legislation implemented the use of national standards for electronic transactions. All health plans and providers, including Medicare, are required to use these standardized code sets for reporting data elements on a claim form. Per Medicare policy CARCs are required on the remittance advice and coordination of benefits transactions. Medicare policy also states that appropriate RARCs that provide either supplemental explanation of a monetary adjustment or policy information that generally applies to the monetary adjustment are required in the remittance advice transaction.

HIPAA code sets used to describe a general administrative situation rather than a medical condition or service are referred to as nonmedical code sets. Examples of general, nonmedical code sets include state abbreviations, ZIP codes, area codes, and race and ethnicity codes. Other types of nonmedical code sets are more comprehensive, such as those that describe provider areas of specialization, payment policies, claims status, and why claims were denied or adjusted.

CARCs and RARCs are updated three times each year. A list of the latest codes is available here.


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