CARC / RARC / CAGC Explained
How to read the adjustment codes on an 835 / ERA: the group code (CAGC) that decides who is responsible, the CARC that says why a line was reduced, and the RARC that adds supplemental detail. This page explains how the three work together; the official, current code lists are maintained externally and are linked below.
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Data statusReference Only
- Status
- Reference Only
- Data year / effective
- X12 external code lists (CARC / RARC / CAGC)
- Last reviewed
- June 2026
- Last updated
- June 2026
- Formula notes
- The group code (CAGC) drives the financial treatment and patient-billing rule; the CARC explains the reason; the RARC adds supplemental detail. Posting and GL buckets are suggestions, not a coverage or appeal determination.
- Known exclusions
- Curated post-acute seed set — NOT the complete official code library
- Official CARC/RARC text is copyrighted by X12 and revised three times a year
- Patient-billing outcomes also depend on ABN / advance-notice rules
- Payer contracts and state Medicaid rules override these defaults
Reference guidance only. Verify the exact code wording and the latest list at x12.org, and confirm write-off / posting decisions against your organization's policy.
The three pieces of an adjustment
Each adjusted service line on a remittance carries a group code, one or more reason codes, and sometimes remark codes:
- Group code (CAGC) — the financial bucket, and who can be billed:
- PR (Patient Responsibility) — the only group you may bill to the patient: deductible, coinsurance, copay, non-covered.
- CO (Contractual Obligation) — a write-off you agreed to in the contract; never billed to the patient.
- OA (Other Adjustment) — used when neither PR nor CO fits, often to move balances in coordination of benefits.
- PI (Payer Initiated Reduction) — the payer’s own reduction, not the patient’s responsibility.
- CARC (Claim Adjustment Reason Code) — a numeric code that states why the line was reduced or denied (for example, a cost-share amount, a duplicate, a timely-filing problem, or a coordination-of-benefits situation).
- RARC (Remittance Advice Remark Code) — an alphanumeric code (often starting with M or N) that adds supplemental explanation to a CARC.
How to read a line
An adjustment is reported as group + reason + amount, with any remark codes attached. Worked through in plain English:
- A PR group with a cost-share reason → the patient owes that amount; post it to patient responsibility.
- A CO group → a contractual write-off; post it to the contractual-allowance bucket, not to the patient.
- A coordination-of-benefits reason → route the balance to the next payer rather than the patient — see the Coordination of Benefits workflow.
- A timely-filing or missing-information reason → a follow-up / appeal candidate — see the Denial Management & Appeals workflow.
Official sources: the X12 External Code Lists (CARC and Claim Adjustment Group Codes) and the CMS-maintained RARC list (published via the Washington Publishing Company). 835 / ERA Decoder → · PLB Explainer → · Payment posting → GL
