To determine the meaning of any Medicare code, providers should use the National Correct Coding Initiative Policy Manual, state the Centers for Medicare and Medicaid Services. Also known simply as the Coding Policy Manual, it contains the reasons behind Medicare and Medicaid edits.
A denial code is known in the health insurance industry as a claims adjustment reason code, or CARC, says the Washington Publishing Company, a health care publisher. When Medicare denies a claim, the patient and provider receive documentation with a two-letter code that gives payer information. An example of such as code is PR, which means the patient is responsible for that specific cost. A number code that gives the reason why the patient is responsible, such as 32, states that a dependent is ineligible under the plan's definitions.
Another example is CO/PR B7, which states that a health care provider is either not certified or otherwise ineligible to receive Medicare payment for the specific procedure or service on the date billed, according to the FAQ page of First Coast Service Options. Denial code CO97 means that the service billed is part of another service that has already been valuated and either paid or denied.
The code N742, however, is not a CARC but a remittance advice remark code, or RARC, which provides further information about a CARC listed on the claim or about an alert, explains the Washington Publishing Company. An N742 code alerts the medical billing office that the codes used in its claims are out of date, due to a change slated for October 1, 2015.