Guides Fixing lost revenue

Denial codes explained: CO-16, CO-97, CO-197, PR-204 and more

By Marlow’s billing manager, 20+ years in medical billing, former billing manager at Mount Sinai South Nassau, Oceanside · Updated November 9, 2026 · 9 min read

The short answer

Every denial on a remittance has two parts: a group code that says who owes the money and a reason code that says why. Read both, then pick the right fix: a corrected claim, a reconsideration or an appeal.

A denial code on your remittance has two parts. The letters (CO, PR, OA or PI) are the group code: they say who is responsible for the amount. The number is the claim adjustment reason code (CARC): it says why the payer adjusted the line. Read the group code first, because it tells you whether you can bill the patient. Read the reason code second, because it tells you what to fix. Then check the remark code (RARC), which often names the exact field or document the payer wants.

This guide covers the group codes, 22 reason codes you will meet often, and which fix fits which code. It is a reference: for how to stop denials before they happen, see the 10 common claim denials.

Who maintains these codes

The reason and remark code lists are maintained under X12, the body that owns the 835 electronic remittance standard. A code can’t be added, and its wording can’t be changed, without the maintenance committee’s approval. CMS notes that the CARC list is updated three times a year (Medicare Claims Processing Manual, ch. 22, §60.2). The meanings below are paraphrased from the X12 CARC list and X12 RARC list as of November 2026. Always check the current list before you act on a code you don’t see often.

The four group codes

X12 lists four current group codes (X12 group codes, as of November 2026). An older fifth code, CR (corrections and reversals), is not on the current list.

Group code	Name	What it means for you
CO	Contractual obligation	The adjustment comes from your contract or a regulation. You generally can’t bill the patient for it.
PR	Patient responsibility	The amount may be billed to the patient or the insured. Deductibles, coinsurance and copays use it.
OA	Other adjustment	Used when no other group fits, for example a duplicate claim or the effect of a prior payer’s payment.
PI	Payer initiated reduction	The payer made the reduction on its own initiative. Read the remark code and the payer’s manual for the reason. Medicare does not use it.

CMS’s description is the cleanest plain-language version: CO adjustments “are considered a write off for the provider and are not billed to the patient”, and PR amounts may be billed to the patient (ch. 22, §60.1). Medicare’s own 835 companion guide says Medicare contractors use only CO, OA and PR (CMS 835 companion guide).

A practical point: the same reason code can arrive with different group codes. CO-204 and PR-204 carry the same reason but put the money on different people. Always read the pair.

22 codes worth knowing

The group code shown is an example of how the code often arrives. Read the one on your own remittance.

Code	What it says (paraphrased)	Typical cause	What to check
PR-1, PR-2, PR-3	Deductible, coinsurance, copay	The plan applied the patient’s cost sharing	Nothing is wrong. Bill the patient per your policy and the contract.
CO-4	Procedure code doesn’t fit the modifier used	Missing, wrong or extra modifier	The payer’s modifier policy and what the note documents
CO-11	Diagnosis doesn’t fit the procedure	Diagnosis pointer or code mismatch	Diagnosis pointers on the claim and the payer’s coverage policy
CO-16	Claim lacks information or has a billing error	A missing or invalid field	The remark code: it must name what is missing
OA-18	Exact duplicate claim or service	The same claim sent twice, or a corrected claim sent as new	Whether the first claim is still in process
CO-22	Another payer may be primary	Coordination of benefits not updated	Ask the patient about other coverage; update the payer’s COB record
CO-27	Service after coverage ended	Stale insurance on file	Eligibility on the date of service
CO-29	Filing time limit has passed	Claim filed late	Your proof of timely filing, and the contract’s limit
CO-31	Payer can’t identify the patient as its member	Wrong member ID, name or date of birth	Demographics against the insurance card
CO-45	Charge is above the fee schedule or contracted rate	Normal contractual write-off	That the allowed amount matches your contract
CO-50	Payer says it isn’t medically necessary	Coverage policy not met	The payer’s policy criteria and what the note documents
CO-96	Non-covered charge	Service excluded from the plan	The remark code, which should say why
CO-97	Paid as part of another service already processed	Bundling edit	The bundling rule (see below)
CO-109	Not covered by this payer; send it to the right one	Wrong payer or plan on the claim	The patient’s current plan, including managed care
CO-119	Benefit maximum reached for the period	Visit or dollar limit used up	The plan’s limits and whether a new period has started
CO-151	Information doesn’t support this many services or this frequency	Frequency or unit limit	Units billed and the payer’s frequency policy
CO-167	Diagnosis is not covered	Diagnosis outside the coverage policy	The policy’s covered diagnosis list
CO-197	Precertification or authorization absent	No auth, or auth not linked to the claim	Auth number, dates, codes and units on file
PR-204	Service not covered under the patient’s current benefit plan	Plan exclusion	Whether the patient was told in advance and what your contract allows
CO-236	Procedure or modifier combination not compatible under NCCI	Same-day procedure pair edit	The NCCI edit and its modifier indicator
CO-252	Attachment or other documentation required	Payer needs records to decide	The remark code and the payer’s attachment process
CO-253	Sequestration, a reduction in federal payment	Medicare’s 2% reduction	Nothing, if your contract passes it through

Two of these are not denials at all. CO-45 is the normal contractual write-off on almost every paid line, and CO-253 is Medicare’s sequestration cut. Medicare applies a 2% reduction to the final payment, after the allowed amount, deductible and coinsurance are worked out (First Coast Service Options, a Medicare contractor, as of July 2026). Medicare Advantage plans may pass it through if the contract says so. If CO-45 is larger than it should be, you may have an underpayment: see how to find underpaid claims.

The four codes in the title

CO-16

CO-16 means the claim is missing information or has a submission error. X12 requires at least one remark code with it, so the answer to “what’s missing” is on the remittance. Common pairings include M51 (procedure code missing or invalid), M76 (diagnosis missing or invalid) and N290 (rendering provider identifier missing or invalid). Fix the field and send a corrected claim. Medicare adds remark MA130 when a claim is unprocessable: that remark says there are no appeal rights and you must submit a new claim with the correct information.

CO-97

CO-97 means the payer treated this service as included in the payment for another service on the same claim or an earlier one. For Medicare and Medicaid, the bundling rules are the National Correct Coding Initiative (NCCI) procedure-to-procedure edits, published by CMS each quarter (CMS NCCI edits). Commercial payers usually publish their own bundling policies.

The tempting fix is to add a modifier and resend. The NCCI manual says a modifier may be used only if the clinical circumstances justify it, and must never be added just to get past an edit. The medical record must meet the criteria for the modifier (NCCI Policy Manual for Medicare, 2026, ch. 1). So the check is: does the edit allow a modifier at all, and does the note show a separate session, site or encounter? If the answer to either is no, the denial stands.

CO-197

CO-197 means the payer has no record of a required precertification, authorization or notification. Check three things before you call: was an auth obtained, does it cover these exact codes, units and dates, and is the auth number on the claim. If the auth exists and was simply missing from the claim, a corrected claim usually solves it. If no auth was obtained, ask the payer whether it accepts a retroactive request, and get the answer in writing. Remark N54 means the claim doesn’t match what was authorized.

PR-204

PR-204 means the service isn’t covered under the patient’s current plan. The PR group puts the amount on the patient, but whether you can collect it depends on your contract and on whether the patient was told in advance. Check your participation agreement and the payer’s rules on billing members before you send a bill. If the plan was wrong (for example, the patient changed plans), the real fix is updated insurance and a claim to the right payer.

Reading a reason code with its remark code

A reason code tells you the category. The remark code tells you the detail. X12 requires a remark code with several broad reason codes, including 16, 96, 226, 227, 234, 251 and 252. Read them as a pair:

CO-16 with N290: the rendering provider’s NPI is missing or invalid. Fix the provider loop.
CO-96 with N130: the plan’s benefit documents limit this service. Check the member’s plan.
CO-22 with MA04: the secondary payer needs the primary payer’s payment information. Attach the primary remittance.
CO-97 with M80: not covered on the same date as a service already processed. Check the bundling rule.

Correct, resubmit, reconsider or appeal

Sending the wrong request wastes weeks. The three paths are different.

Situation	What to send	Example rule
Claim was rejected or unprocessable (never adjudicated)	A new, corrected claim	Medicare remark MA130: no appeal rights, submit a new claim
You made an error on a processed claim	A corrected or replacement claim, following the payer’s corrected-claim rules	UnitedHealthcare: corrected claims replace the original submission
Payer made a clerical or pricing error	A reconsideration or reopening request	Medicare must treat clerical errors as reopenings, not appeals (42 CFR 405.980(a)(3))
You disagree with a coverage or medical necessity decision	A formal appeal with records	Medicare redetermination: within 120 days of receiving the notice (42 CFR 405.942)

Commercial payers set their own steps. UnitedHealthcare, for example, requires a claim reconsideration first and allows an appeal only after that, with 12 months to complete both steps unless the participation agreement says otherwise (UnitedHealthcare appeals page, as of July 2026). Look up each payer’s provider manual for its own names, forms and deadlines, and keep the deadline next to each open denial.

In New York, a claim denied only because it was filed late can sometimes be reconsidered. Under Insurance Law §3224-a(h), a participating provider can ask for reconsideration if an unusual occurrence caused the delay and the practice has a pattern of filing on time. The insurer may reduce payment by up to 25%. The law applies to insurers and HMOs regulated by New York. If the card shows a self-funded employer plan, ask the plan which rules it follows.

What to do with this list

Pull 12 months of remittances (835 files) from your clearinghouse or payer portals.
Total the denied dollars by reason code, not by count. A few codes usually carry most of the money.
For your top three codes, find the step in your workflow that causes them. The claim denials guide maps each code to a front-desk or billing step.
Set a deadline for every open denial from the payer’s own appeal or reconsideration limit.

Marlow’s free audit does step 2 for you from your 835s and returns your denials ranked by dollars.

Sources

General information, not advice on a specific claim, contract or legal question. Rules and rates change; check the linked sources for the current version.