Top 10 Claim Adjustment Reason Codes and Strategies to Avoid Them

Top CARC Codes and Proven Strategies for Claim Accuracy

The financial stability of a healthcare organization hinges on one critical factor - getting paid accurately and on time. Yet, denials continue to challenge even the most efficient practices.

According to the American Hospital Association:

• 78% of healthcare organizations report worsening experiences with commercial payers

• 84% face increasing administrative burdens to meet insurer requirements

• 95% confirm that staff time spent on prior authorizations has significantly risen

These are not just operational inefficiencies - they directly impact your revenue cycle, staffing, and patient experience.

Why Understanding Denials Is More Than a Billing Issue

A denied claim is more than a delay; it’s a breakdown in process. Every denial means:

• Lost revenue if not followed up correctly

• Increased workload for staff to investigate and appeal

• Patient dissatisfaction if financial responsibility shifts unexpectedly

• Delays in cash flow, affecting day-to-day operations

By understanding Claim Adjustment Reason Codes (CARC) and applying targeted strategies, organizations can reduce denial rates, improve claim accuracy, and safeguard their bottom line.

What Are CARC Codes

CARC codes are standard identifiers issued by payers to explain why a claim has been denied, reduced, or adjusted. They help uncover the root cause of payment issues and guide providers in correcting and preventing similar errors.

According to the American Medical Association (AMA), 8 - 10% of healthcare claims are denied, and a large portion of these can be traced to common CARC codes - errors that are often avoidable with the right systems and strategy.

Top 10 CARC Codes - and How to Avoid Them

Below are ten of the most frequently encountered CARC codes, along with actionable strategies your team can use to prevent them:

1. Missing/Incorrect Modifier (Denial Code 4)

A modifier indicates how a service was performed or altered. Missing or incorrect modifiers result in claim denials and delayed payments, especially for bundled services or same-day procedures.

Strategy:

• Stay updated on payer-specific modifier requirements

• Use coding software with validation rules to flag missing/invalid modifiers

• Train coders regularly on modifier usage and payer policies

2. Missing or Incomplete Information (Denial Code 15)

Claims are submitted with missing or incomplete information. This oversight can lead to claims being rejected, delaying reimbursements and potentially disrupting your revenue cycle. Addressing these gaps efficiently minimizes processing delays and repeated denials.

Strategy:

• Train your team to thoroughly review payer-specific requirements to ensure all required information is included in claims.
• Utilize advanced RCM systems to flag incomplete or missing data prior to claim submission.
• Implement regular quality checks and audits of your claims process to ensure accurate and complete documentation.

3. Age Conflict (Denial Code 6)

This occurs when a procedure code doesn't match the patient's age, such as a pediatric code used for an adult.

Strategy:

• Validate patient demographics at registration and prior to service

• Use software that flags age-inappropriate procedures

• Train front-desk teams to catch demographic mismatches early

4. Expenses Incurred After Coverage Terminated (Denial Code 27)

Billing for services rendered after a patient’s insurance has lapsed leads to immediate denial.

Strategy:

• Verify coverage before every visit or procedure

• Use real-time eligibility checks through your RCM software

• Implement a workflow to update insurance info during scheduling

5. Diagnosis/Procedure Mismatch (Denial Code 11)

This happens when the diagnosis code does not support the medical necessity of the procedure performed.

Strategy:

• Use ICD-CPT crosswalk tools to verify alignment

• Educate billers on clinical documentation improvement (CDI)

• Perform post-bill audits to catch recurring mismatches

6. Claim/Service Lacks Information (Denial Code 16)

Generic denials like this mean some element of the claim—CPT code, diagnosis, provider ID—is missing or inaccurate.

Strategy:

• Automate claim integrity checks before transmission

• Create a pre-submission checklist for billers and coders

• Enable real-time error alerts in your RCM platform

7. Coordination of Benefits (COB) Issue (Denial Code 22)

If multiple insurances are not listed or prioritized correctly, the claim is denied.

Strategy:

• Ask patients to verify all active insurance policies

• Automate COB rules and sequence validation in your system

• Re-train front-office staff on COB best practices

8. Charge Exceeds Maximum Allowable (Denial Code 45)

The billed amount exceeds what the payer allows, often leading to partial reimbursement or full denial.

Strategy:

• Cross-check services with the payer’s fee schedule before billing

• Inform patients about potential out-of-pocket costs upfront

• Offer pre-service financial counseling to manage expectations

9. Deductible Not Met (Denial Code 97)

Payers deny or reduce payment because the patient hasn’t met their annual deductible.

Strategy:

• Verify deductible balances before the visit

• Inform patients of their financial responsibility clearly and early

• Implement point-of-service collections for smoother cash flow

10. Adjustment Due to Overpayment (Denial Code 197)

The payer reduces current payments to compensate for a previous overpayment.

Strategy:

• Reconcile payments regularly to catch overpayment trends

• Contact payers proactively to resolve discrepancies

• Inform patients of adjustments if their balances are affected

Denial Management Is a Strategic Necessity

According to the Journal of Health Information Management, healthcare organizations that implement automated denial management and training programs can see up to 20% fewer denials.

Proven Strategies That Drive Down Denials:

Automate Early Validation
Implement smart RCM platforms that flag missing demographics, incorrect codes, or expired insurance before the claim is sent.

Educate Continuously
Billing and front-office teams must stay updated with ever-changing payer policies. Invest in ongoing, structured training.

Use Denial Analytics
Track CARC trends by payer, department, and procedure to identify systemic gaps in your processes.

Streamline Eligibility & Authorization Workflows
Make pre-checks and pre-authorizations part of your standard operating procedure.

Maintain Transparent Payer Communication
Proactively resolve issues through timely follow-ups and clear documentation.

How Revesolv Helps You Stay Ahead

At Revesolv, we understand that managing revenue cycle complexities can be overwhelming and time-consuming for healthcare providers. That’s why we offer expert strategic support, guiding you through every challenge related to claim denials, eligibility checks, and reimbursement processes.

Our team works behind the scenes to handle these critical but intricate tasks efficiently, so your staff can dedicate their full attention and energy to what truly matters - caring for your patients. By partnering with Revesolv, healthcare organizations can reduce administrative burdens, improve cash flow, and enhance overall operational efficiency without diverting focus from patient care.

Our goal is to help you minimize preventable denials, accelerate payment cycles, and strengthen your financial health -building a resilient revenue cycle that supports sustainable growth.

With Revesolv’s strategic guidance and industry expertise, you gain a trusted ally who navigates the complexities of revenue management alongside you, turning potential revenue disruptions into opportunities for success.