Medicare billing is governed by one of the most complex rule sets in US healthcare. But the denials that come back — frustrating as they are — tend to cluster around a predictable set of CARC codes. Learn to recognize and resolve these patterns, and your Medicare denial rate will drop significantly.
CARC 4: Timely Filing (Medicare Style)
Medicare has a 12-month timely filing requirement from the date of service for original claims. This is one of the strictest windows in the industry — most commercial payers allow 90–180 days.
CARC 4 from Medicare means the claim arrived after that 12-month window. Appeals are allowed only with documented evidence of a provider error or system issue — missing the window due to administrative oversight is typically not grounds for an exception.
Fix: Establish a hard rule: Medicare claims must be submitted within 30 days of the date of service. This gives you an 11-month buffer for any re-submissions needed after initial denials.
CARC 5: The Service Dates Don't Support Eligibility
CARC 5 — "The procedure code/bill type is inconsistent with the place of service" — often appears when billing a service in a setting that Medicare's payment policy doesn't support for that code.
Common examples: billing a consult code (which Medicare eliminated in 2010), billing a facility code in a non-facility setting, or billing a procedure that's only covered in the hospital outpatient setting when rendered in the office.
Fix: Review the place of service (POS) code and confirm the CPT is payable in that setting via the Medicare Physician Fee Schedule lookup on CMS.gov.
CARC 96: Non-Covered Charge
CARC 96 from Medicare means the service is simply excluded from Medicare coverage. Common Medicare non-covered services include:
- Routine dental care (examinations, cleanings, fillings, extractions)
- Routine vision and hearing exams
- Cosmetic procedures
- Acupuncture (with narrow exceptions for chronic low back pain)
- Custodial care
Fix: Do not appeal — there is no clinical argument for a non-covered service. Ensure patients receive an Advance Beneficiary Notice of Noncoverage (ABN) before rendering non-covered services so they understand their financial responsibility upfront.
CARC 97: Bundling Under Medicare
Medicare's Correct Coding Initiative (CCI) edits govern which codes can be billed together. CARC 97 from Medicare almost always means a bundling violation — you've billed two codes that the CCI considers mutually exclusive or component/comprehensive pairs.
Fix: Look up the denied code pair in the CCI edit lookup tool on CMS.gov. If the codes are paired with a modifier indicator of "1" (modifier allowed), add modifier 59, XE, XS, XP, or XU as appropriate to indicate distinct services. If the indicator is "0" (modifier not allowed), the services truly cannot be billed separately.
CARC 50: Medical Necessity — Medicare's LCD/NCD Framework
Medical necessity denials (CARC 50) are governed by Medicare's Local Coverage Determinations (LCDs) and National Coverage Determinations (NCDs). Unlike commercial payers, Medicare publishes all of its coverage criteria publicly on the CMS LCD database.
Common triggers:
- Diagnosis code doesn't match an approved indication in the LCD
- Service frequency exceeds covered limits (e.g., more physical therapy visits than the plan allows)
- Missing documentation of prior conservative treatment
Fix: Look up the specific LCD for the denied service. Confirm the ICD-10 code you billed is in the LCD's covered diagnosis list. If it is, appeal with the clinical documentation. If it isn't, determine whether a more specific diagnosis code is appropriate — and if so, submit a corrected claim.
CARC 167: This (these) diagnosis(es) is (are) not covered
CARC 167 is closely related to CARC 50 but is specifically about the diagnosis code — the procedure might be covered, but not for the diagnosis you billed.
This is common when the ICD-10 code is too nonspecific (e.g., Z11.3 - Encounter for screening for infections with a predominantly sexual mode of transmission) or when the diagnosis doesn't support the medical necessity of the service.
Fix: Review the patient's chart. Is there a more specific ICD-10 code that accurately reflects the clinical picture and is in the LCD's covered diagnosis list? If so, submit a corrected claim. If the condition genuinely isn't covered by Medicare for this service, the patient must be billed with an appropriate ABN in place.
CARC 197: Missing Authorization
CARC 197 — Precertification/authorization absent or exceeded — is becoming more common as Medicare Advantage plans (not Original Medicare) expand prior authorization requirements.
Fix: Check whether the plan is Medicare Advantage (MA) or Original Medicare. Original Medicare does not require prior authorizations for most services. If the denial is from an MA plan, obtain the auth retroactively if the plan allows it, or appeal demonstrating that authorization wasn't required per the plan's then-current policy.
Proactive Strategies for Medicare Billing
Use the Medicare Fee Schedule lookup on every code. Before billing, verify the code is covered, the correct POS, and any documentation requirements. CMS updates the fee schedule annually.
Batch-check CCI edits before submission. Most clearinghouses and PM systems flag CCI violations. Enable these checks and resolve them before claims leave your office.
Know your MACs. Medicare is administered by regional Medicare Administrative Contractors (MACs). Your MAC publishes LCDs specific to your jurisdiction — and may have additional documentation requirements beyond the national policy.
Track your Medicare-specific denial rate separately. Medicare and Medicare Advantage denial patterns differ significantly. Combining them masks problems. Run a separate denial analysis for each payer type monthly.
Consistent Medicare billing requires ongoing education — coverage policies change with every fiscal year. The Arceum code library keeps CARC and RARC codes current and flags when specific codes have different behaviors for Medicare vs. commercial payers.