Section title: Requests for Interpretation
Incorrect CARC/RARC Denials (835)

We are looking for direction to provide to our vendor that assigning default CARC code that does not reflect the most accurate reason for the denial is considered non-compliant.  Our Vendor is stating that using CARC 204 as a default is not a compliance issue.  We are disputing that sending an incorrect CARC code it considered to be non-compliant.

The CAQH Core Payment & Remittance (835) Infrastructure Rule does have a paragraph that addresses using usage of the operating rules for "accurate and efficient processing of claim payments".  We have directed the vendor to this document.  Is there any additional direction you can supply that assigning an incorrect CARC/RARC code is non-compliant?


For example, our vendor is using CARC 204 as a default for different claim scenario's.  One scenario is when a provider is non-par provider and is rejected for additional Information.  This scenario falls under CAQH Core's business scenario 1.  Core does not allow the liability to be assigned to the member (PR), but it does allow group code PI, Payer Initiated Reductions.  The vendor is assigning CARC PR204 and RARC N706 versus Group Code PI with CARC 226 & RARC N706 when the provider is non-par.  This is causing an invalid CAQH Code combination and sending a mixed message to the provider.

• CARC 204, This service/equipment/drug is not covered under the patient's current benefit plan

• RARC N706, Missing documentation

RFI Response

It is not within X12’s purview to comment on the usage of a Claim Adjustment Reason Code.  We also cannot comment on a payer’s policy or procedure for denying claims and the usage of adjustment codes.

RFI Recommendation

If there is a situation that is in non-compliance with the non-Privacy/Security provisions of Health Insurance Portability and Accountability Act (HIPAA) or Affordable Care Act (ACA) a complaint can be filed on the CMS ASETT webpage