This rejection will only show up, only if, you are submitting a secondary electronic (EDI) claim to the payer. The payer is stating that the adjustment reason code that you entered and are sending on the claim is not valid (or they do not accept it).
What is the adjustment reason code?
When you receive an EOB (or ERA) from an insurance company and they make an adjustment on your charge (i.e. for contractual rates), then they will supply an adjustment reason code. The reason code tells you (and secondary) why primary insurance adjusted the claim.
When submitting electronically to secondary, all of the adjudication information, including adjustment reason codes must go in a section of the EDI claim reserved for Coordination of Benefits. This section is telling the secondary insurance how the primary insurance adjudicated your claim. The secondary insurance then uses this information to process your claim.
Standard Adjustment Reason Codes
A payer is not always required to send standard adjustment reason codes when they send you a paper EOB. However, when anything is submitted electronically, they must use Claim Adjustment Reason Codes (CARC) from ASC X12 External Code Soruce 139. This list is maintained by the Washington Publishing Company. For this reason, billers often make the mistake of putting invalid adjustment reason codes (reported on the paper EOB) in to their billing software causing rejections (when submitted electronically).
Choosing an Claim Adjustment Reason Code in Therabill
When entering your payments (if doing so manually) in Therabill using the Batch Insurance Payment with COB, make sure you choose the Reason (a.k.a Remark) code from the drop down list that appears when you begin typing the reason/remark code in to the box. The search results show a list of CARC codes from ASC X12 External Code Source 139.
The remark code on the paper EOB is not in the drop down menu when searching remark/reason codes.
When a payer sends you a paper EOB, they sometimes do not send back standard adjustment reason codes. When this happens, you must use your best judgement to translate the adjustment reason code to a standard CARC Code. You can view the current standard CARC code list here: Claim Adjustment Reason Codes.