Why CARC 45 and RARC 96 Are the Most Misread Codes on a Behavioral Health ERA

Every week we pull Electronic Remittance Advice files for behavioral health practices across the country, and the pattern we see at roughly 50 BH practices right now is the same: CARC 45 (Charge exceeds fee schedule/maximum allowable) paired with RARC 96 (Non-covered charge(s)) is being posted, written off, and forgotten. Staff assume these are clean contractual adjustments. In the majority of cases they are not, and that assumption is quietly costing mid-size outpatient practices between $18,000 and $65,000 in recoverable revenue annually.

This post breaks down exactly what CARC 45 and RARC 96 mean in a behavioral health context, when the write-off is legitimate, and when it is a payer error or a coding problem that you can and should appeal. If you manage revenue cycle for an outpatient mental health, ABA, or SUD program, you need a defined workflow for these two codes before the next ERA drops.

CARC 45 Explained: Contractual Adjustment or Payer Error?

CARC 45 means the payer has reduced payment because your charge exceeds the contracted fee schedule or maximum allowable amount. On its face that sounds final. In behavioral health, it frequently is not.

The problem we see most often involves CPT codes that carry multiple fee schedule values depending on the Place of Service (POS) code submitted. Psychotherapy CPTs 90832, 90834, and 90837 reimburse differently at POS 02 (Telehealth, patient home), POS 10 (Telehealth, patient in non-originating site), POS 11 (Office), and POS 53 (Urgent Care). When a practice submits POS 11 for a telehealth session conducted after the payer updated its telehealth fee schedule to a lower POS 02 rate, the CARC 45 triggers automatically. The charge did not actually exceed anything; the payer applied the wrong fee schedule tier.

We have traced this specific scenario across commercial payers including BCBS plans and United Behavioral Health affiliates in 2025-2026 contract cycles, where telehealth parity language in plan documents still guarantees in-person rate equivalence for certain mental health services under the Mental Health Parity and Addiction Equity Act. If your contract or your state’s parity law requires the payer to reimburse at the in-person rate, a CARC 45 triggered by a lower telehealth tier is not a valid write-off. It is an underpayment. For a deeper explanation of how parity law applies to these situations, see our breakdown of MHPAEA parity appeals and how behavioral health practices are leaving money on the table.

RARC 96 Explained: The Non-Covered Charge Trap

RARC 96 is a remark code appended to CARC 45 to clarify that the payer is calling the service non-covered. This combination, often written as CO-45/N96 or CO-45/M96 depending on the payer’s ERA format, is the one we see written off most aggressively and investigated least.

In ABA billing specifically, RARC 96 appears frequently on CPT 97153 (Adaptive Behavior Treatment by Protocol) and 97155 (Adaptive Behavior Treatment with Protocol Modification) when authorization units are exhausted mid-claim or when the rendering provider’s NPI is not credentialed on the payer’s panel under the supervising BCBA’s group. These are fixable credentialing and authorization management problems, not permanent non-covered determinations.

In SUD settings, we see RARC 96 fire on HCPCS codes H0015 (Alcohol and/or drug services, intensive outpatient) and T1006 (Alcohol and/or drug services, residential) when the admitting diagnosis code does not map to the benefit category the payer recognizes. A diagnosis of F11.20 (Opioid use disorder, uncomplicated) submitted with H0015 should be covered under most commercial plans. If RARC 96 appears, the first question is whether the plan’s benefit structure was correctly identified at eligibility verification, not whether the service is genuinely excluded.

The Correct Internal Workflow After You See CO-45 and RARC 96 Together

We recommend a three-step triage before any write-off decision is made:

• Step 1 – Contract pull: Compare the payer’s ERA-adjudicated amount to the contracted rate in your current fee schedule attachment. For commercial payers, most behavioral health contracts are renegotiated on 12 to 24 month cycles. The payer’s system may be applying an expired rate.
• Step 2 – Eligibility and benefit verification cross-check: Pull the original eligibility response for that date of service. Confirm the specific CPT or HCPCS code was listed as covered under that subscriber’s plan, and confirm POS code alignment. A mismatch here is the most common recoverable root cause.
• Step 3 – Modifier audit: For psychotherapy services, confirm modifier 95 (Synchronous telemedicine) or modifier GT was appended correctly depending on the payer’s 2026 telehealth billing requirements. For ABA, verify modifier U1 or U2 is present when required by state Medicaid. Missing or incorrect modifiers trigger automatic CARC 45 adjudication even when the charge and service are valid.

If Steps 1 through 3 reveal a payer-side error or a correctable claim issue, you have a viable appeal path. Most commercial payers allow 180 days from the remittance date for a corrected claim or formal reconsideration. Medicaid timelines vary by state but typically run 90 to 120 days.

Dollar Impact by Practice Size: What You Are Actually Looking At

Based on the practices we work with, here is a realistic range of what improperly written-off CARC 45/RARC 96 denials represent annually:

• Solo or 2-provider outpatient practice (600-900 claims/month): Approximately $12,000 to $22,000 in recoverable underpayments per year when telehealth rate misapplication and credentialing-related RARC 96 denials are combined.
• Group practice, 6-15 clinicians (2,500-5,000 claims/month): Approximately $38,000 to $75,000 per year. At this volume, one billing coordinator cannot manually audit every ERA line. Automation rules or a dedicated denial analyst are necessary.
• ABA or SUD program with 25+ providers (8,000+ claims/month): Six-figure exposure is not uncommon. We have seen practices in this tier recover over $110,000 in a single 90-day audit cycle by isolating CO-45 write-offs and applying systematic appeals to H0015, 97153, and 97155 denials.

For SUD programs also running drug testing panels, revenue leakage from denial codes is compounded by chronic under-coding at the lab billing level. The same payers issuing CARC 45 on H0015 claims are also under-reimbursing on presumptive and definitive drug screen codes. We cover that issue in detail in our post on G0480 through G0483 drug screen coding and why most SUD practices are under-coding.

What Payers Are Counting On You to Miss

Payers process thousands of behavioral health claims daily. CO-45 with RARC 96 is a combination that looks resolved. The adjustment posts, the write-off reduces your AR, and your denial rate metric actually improves on paper because the claim is no longer open. That is the accounting illusion that makes this denial pair so dangerous. Your denial rate can look healthy while your net collection rate quietly deteriorates.

The practices that recover the most revenue from this code combination are those that track write-off volume by CARC code separately from denial volume, and that require a human review step before any CO-45 adjustment exceeding $75 per claim line is finalized. That threshold is low enough to catch most psychotherapy and ABA service underpayments and high enough to avoid burying staff in small-dollar review.

Take Action on Your Remittance Data Now

If you are not systematically auditing CARC 45 and RARC 96 combinations on your behavioral health ERAs, you are almost certainly writing off revenue you are contractually owed. At Revenant Care Group, we run a free 30-day denial audit for behavioral health, ABA, and SUD practices that gives you a line-by-line breakdown of write-off patterns, recoverable amounts by CPT and payer, and a prioritized appeals queue your team can work immediately. There is no obligation and no long-term commitment required to get started. Schedule your free denial audit here and let us show you exactly what your remittance data is hiding.