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Correct Entry of EOBs for Commercial Claims

PCG has found that there has been increase of rejections from Medicaid for A7:521-Invalid Claim Adjustment Reason Code (CARC). It has been determined that this is occurring due to incorrectly entered commercial EOBs that are either missing a group code or have an incorrect CARC posted. Medicaid will not be able to correctly process claims if there is not a complete and valid denial posted.

When entering EOBs that have denials, a group code and a CARC must be used. Some commercial policies use internal codes on their remittances. When searching in the EOB entry screen, these codes will not populate. The internal codes are codes used only by that specific payer and are not valid denial codes that can be posted. Providers can search for the correct code by typing in the denial verbiage in the field for picking a denial. Providers must choose an option that has both a group code and a CARC.

Group Code- Set of two alpha characters that assign responsibility of the denial.

CO- (Contractual Obligations) is used when a contractual agreement between the payer and payee or a regulatory requirement requires an adjustment. Generally, these adjustments are considered a write-off for the provider.

PR- (Patient Responsibility) is used for deductible and copay adjustments when the adjustments represent an amount that should be billed to the patient or insured.

OA- (Other Adjustments) is used when no other group code applies to the adjustment.

PI- (Payer Initiated Reductions) is used by payers when it is believed the adjustment is not the responsibility of the patient but there is no supporting contract between the provider and payer.

CR- (Corrections and Reversals) is used for correcting a prior claim when there is a change to a previously adjudicated claim.

CARC- explanation of why a claim or service like was paid differently than it was billed (why the claim was not paid or not paid in full)

A listing of valid CARCs and their explanations can be found here:



Claim is not paid as the provider is out of network with the payer would be posted as PR-242.

Group code is PR for Patient Responsibility as there is no contract and the patient is seeing an out of network provider.

CARC is 242 indicating that the provider is out of network.


Article ID: 469, Created On: 8/30/2022, Modified: 8/30/2022

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