Mastering CARCs - Key Strategies for Effective Problem Solving

January 21 ,2025

Mastering CARCs - Key Strategies for Effective Problem Solving

This enhanced guide ensures that providers not only understand the causes of denials but are also equipped with actionable steps to address and prevent them effectively.

Denials can have a profound impact on the financial health of any healthcare organization. Claim Adjustment Reason Codes (CARCs) provide vital insights into why a claim was adjusted or denied. However, understanding and addressing these codes requires careful attention to detail and a robust denial management strategy.

In this guide, we explore the most common CARCs, their probable causes, detailed resolution strategies, and effective prevention tips to help healthcare providers and revenue cycle professionals minimize denials and maximize reimbursements.

CARC 18: Exact Duplicate Claim or Service

This code is used when a claim is identified as an exact duplicate of one already submitted. It is generally accompanied by Group Code OA (Other Adjustment), except in cases where specific state regulations apply.

Probable Causes:

A corrected claim was submitted without the payer recognizing the changes.
Payer failed to identify distinct modifiers differentiating services.
Duplicate submission of claims due to internal errors or clearinghouse issues.
Resubmitted claims without necessary corrections or changes.
Incorrect claim indicators on corrected claims.
Charge-entry errors leading to duplicate claims.

Resolution Strategies:

Identify the source of the duplication: If due to payer error, request claim reprocessing.

Correct batch submissions: Delete one batch and reprocess the other.

Correct indicators for corrected claims: For Medicare claims, ensure the original ICN and claim codes are included.

Rectify charge-entry errors: Adjust incorrect entries and resubmit.

Prevention Tips:

Conduct audits before claim submission to verify unique claim identifiers.
Train teams to handle corrections accurately, particularly for Medicare claims.
Implement robust charge-entry validation protocols to detect duplicate charges.

CARC 97: Bundling and Mutually Exclusive Denials

The benefit for this service is included in the payment/allowance for another service/procedure that has already been adjudicated. Denial occurs when the services provided are deemed part of another service and are therefore not separately payable.

Probable Causes:

Services bundled under National Correct Coding Initiative (NCCI) guidelines.
Procedures billed together are inherently inclusive.
Services performed during the global period of another procedure.

Resolution Strategies:

Append appropriate modifiers (e.g., 25, 59, 24, 79) to distinguish separately billable services.
Adjust the charge or remove inappropriate codes following payer policies.
Review the global surgical package guidelines for compliance.

Prevention Tips:

Regularly review and update coding processes in alignment with NCCI edits.
Utilize automated systems or software to flag potential bundling issues before submission.
Train staff on identifying and appropriately billing unbundled services.

CARC 16: Claim or Service Lacks Information or Has Errors

Indicates missing or invalid information in the claim, requiring at least one accompanying Remittance Advice Remark Code (RARC) to provide further detail.

Common Remark Codes and Causes:

N4: Missing prior insurance carrier Explanation of Benefits (EOB).

N489: Missing authorization or referral information.

M47: Missing or invalid payer control number.

Resolution Strategies:

Provide the required primary EOB details through the clearinghouse or resubmission portal.
Resubmit claims with the correct authorization or referral forms.
Add the original ICN for corrected claims or adjust resubmission codes as needed.

Prevention Tips:

Establish a checklist for claims submission, ensuring all required fields are completed.
Train staff on payer-specific requirements for claims documentation.
Use claim management software to validate completeness before submission.

CARC 23: Impact of Prior Payer Adjudication

Indicates that the claim was adjusted based on prior payer decisions.

Probable Causes:

Incorrect primary, secondary, or tertiary payer designation.
Missing coordination of benefits (COB) information.

Resolution Strategies:

Confirm the primary payer through eligibility verification.
Correct payer sequencing errors and resubmit the claim.
Reach out to patients to update COB details if outdated.

Prevention Tips:

Verify insurance coverage and COB status during registration and at each visit.
Automate insurance verification processes to minimize human errors.
Establish protocols for timely payer updates based on patient information.

CARC 22, 24, 109: Other Payer Involvement

Used when coverage or payment responsibility is impacted by another payer.

Breakdown:

CARC 22: COB indicates another payer should be billed first.

CARC 24: Services covered under capitation or managed care plans.

CARC 109: Claim sent to an incorrect payer or contractor.

Resolution Strategies:

Validate patient COB status with payers.
Resubmit claims to the correct payer based on eligibility checks.
Engage with patients to update payer information.

Prevention Tips:

Maintain a database of payer requirements and COB rules.
Conduct regular training sessions on COB processes for front-office and billing teams.

CARC 39, 197, 296, 302: Authorization Denials

Denials occur when required authorization or precertification is missing, invalid, or expired.

Probable Causes:

Authorization not obtained or submitted correctly.
Authorization details (codes, dates) do not match the claim.
Payer miscommunication or mishandling of information.

Resolution Strategies:

Contact the payer for clarification and retro authorization guidelines.
Submit corrected claims with accurate authorization details.
Document all interactions and confirmations for future reference.

Prevention Tips:

Obtain authorizations before rendering services.
Create a dedicated team for authorization verification and tracking.
Use software to integrate and cross-check authorization details with claims.

CARC 50: Medical Necessity Denials

Denial due to the service not meeting the payer’s definition of medical necessity.

Probable Causes:

Diagnosis code does not match Local Coverage Determinations (LCDs).
Service does not align with payer-specific clinical guidelines.

Resolution Strategies:

Reference the payer’s LCDs or clinical guidelines for the denied procedure.
Submit a corrected claim with an appropriate diagnosis code or required documentation.

Prevention Tips:

Develop LCD-based coding guides for common procedures.
Use automated claim edits to flag mismatches before submission.
Provide ongoing education for providers and coders on payer-specific guidelines.

CARC 29: Timely Filing Limits

Denials due to claims being submitted after the payer’s filing deadline.

Probable Causes:

Missed submission deadlines due to process delays.
Corrected claims or appeals processed as initial claims.

Resolution Strategies:

Submit proof of timely filing, such as acceptance reports or timestamps.
Appeal denials with supporting documentation showing submission compliance.

Prevention Tips:

Maintain an up-to-date list of payer-specific filing deadlines.
Build workflows prioritizing claims approaching filing limits.

CARC 236, 4: Modifier Misuse

Denials result from incorrect, missing, or incompatible modifiers.

Resolution Strategies:

Review the procedure and documentation to determine the appropriate modifier.
Educate coders on the correct usage of modifiers in conjunction with payer guidelines.

Prevention Tips:

Conduct regular audits of modifier usage.
Leverage technology to flag incompatible modifier-procedure combinations.

Additional CARCs to Consider

CARC 45: Charge Exceeds Contracted Fee Schedule

This code indicates that the charge for a service or procedure exceeds the maximum allowable fee agreed upon between the healthcare provider and the payer.

Probable Causes:

Fee schedule discrepancies: Incorrect or outdated fee schedules used for billing.
Contractual agreement issues: Changes in contracted rates not communicated or updated.
Service billed at non-contracted rates: Mistaken billing at rates higher than those agreed upon.

Resolution Strategies:

Review fee schedules: Ensure billing reflects current contracted rates.
Appeal with supporting documentation: Provide evidence of contracted rates and services rendered.
Negotiate with payer: Discuss discrepancies and negotiate for fair reimbursement.

Prevention Tips:

Regularly update fee schedules: Stay informed about changes in payer agreements.
Verify rates: Cross-check billed amounts against contracted rates before submission.
Monitor fee schedule changes: Implement processes to track and communicate updates internally.

CARC 96: Non-covered Charges Based on Plan Exclusions

Denial occurs when services provided are explicitly excluded from coverage under the patient’s insurance plan.

Probable Causes:

Plan exclusion criteria: Services not covered due to specific plan limitations or exclusions.
Provider unawareness: Lack of knowledge regarding plan exclusions or changes in coverage.
Incorrect billing codes: Services billed using codes that do not meet coverage criteria.

Resolution Strategies:

Review plan documents: Verify coverage exclusions for services provided.
Educate billing staff: Ensure understanding of plan exclusions and coverage limitations.
Appeal with medical necessity: Provide documentation supporting the medical necessity of the service.

Prevention Tips:

Educate patients: Inform patients about plan exclusions during registration or appointment scheduling.
Verify coverage: Confirm coverage details and exclusions before providing services.
Stay updated: Regularly review and communicate changes in coverage and exclusions with billing and clinical teams.

Additional Best Practices for Denial Prevention

Leverage Automation: Use AI-driven tools to identify claim errors and omissions before submission.

Monitor Metrics: Regularly track denial trends and address recurring issues promptly.

Educate Providers: Train clinical staff on payer guidelines to ensure accurate coding and documentation.

In Conclusion

Navigating the complexities of claim adjustment reason codes (CARCs) is a critical aspect of effective denial management. By understanding the underlying causes of denials, implementing targeted resolution strategies, and developing proactive prevention techniques, healthcare providers can significantly reduce claim denials and optimize revenue cycle efficiency. However, given the constant changes in payer policies, the intricacies of medical coding, and the time-intensive nature of denial resolution, managing this process internally can be a challenging and resource-heavy endeavor.

This is where partnering with an experienced medical billing and revenue cycle management company like Bristol Healthcare Services can make all the difference. Our specialized denial management services are designed to identify root causes, resolve denials quickly, and prevent future occurrences. With over two decades of experience, certified billing and coding experts, and cutting-edge technology, we offer tailored solutions that streamline your revenue cycle, improve claim acceptance rates, and maximize reimbursements.

By Outsourcing, You Gain Access To

Advanced analytics: Detailed insights to identify trends and target recurring denial issues.
Specialty-specific expertise: Customized strategies for your practice’s unique needs.
Compliance assurance: Up-to-date knowledge of payer guidelines and regulations.
Scalable solutions: Flexible resources to match your practice’s growth and operational demands.

Let us handle your denials so you can focus on what matters most—providing exceptional care to your patients. With Bristol Healthcare Services by your side, you can achieve sustainable financial health, greater operational efficiency, and peace of mind knowing that your revenue cycle is in expert hands.