How to Read an ERA: Denial Reason and Remark Codes Explained

An electronic remittance advice (ERA) tells you how a payer handled each claim line: what was allowed, what was paid, what the patient owes and why anything was adjusted. Reading it correctly is the first step in fixing denials.

The three parts of an adjustment

Each adjustment on an ERA combines three things:

• Group code - who is responsible for the amount.
• Claim Adjustment Reason Code (CARC) - why the amount was adjusted.
• Remittance Advice Remark Code (RARC) - extra detail about the reason, when the payer adds one.

Group codes

• CO (Contractual Obligation) - the provider is responsible; usually cannot be billed to the patient.
• PR (Patient Responsibility) - the patient owes it, such as a deductible, copay or coinsurance.
• OA (Other Adjustment) - an adjustment that does not fit the other groups.
• PI (Payer Initiated) - an adjustment the payer made that is not the patient's responsibility.

Common reason codes

• CARC 1, 2 and 3 - deductible, coinsurance and copay amounts, normally billed to the patient.
• CARC 16 - the claim is missing information or has errors; the remark code says what to fix.
• CARC 18 - duplicate claim or service.
• CARC 27 - expenses incurred after coverage ended; check eligibility.
• CARC 29 - the time limit for filing has expired.
• CARC 45 - the charge exceeds the fee schedule or contracted amount; usually a contractual write-off.
• CARC 50 - the payer does not consider the service medically necessary.
• CARC 97 - the service is included in another service already paid (bundling).
• CARC 197 - prior authorization or pre-certification was missing.

What to do next

1. Separate expected adjustments (contractual write-offs, patient responsibility) from true denials.
2. For each denial, read the remark code and fix the root cause: eligibility, authorization, coding or documentation.
3. Correct and resubmit, or appeal with supporting records, before the payer's deadline.
4. Track denials by reason code each month so repeat problems are fixed at the source.

Need help with denials? See our denial management service or ask for a denial review.