CARC 97 Denial Appeal
Bundled into another service
The benefit for this service is included in the payment/allowance for another service/procedure that has already been adjudicated.
Why CARC 97 hits behavioral-health claims
Behavioral health's code structure depends on CPT add-on codes that must be billed alongside another same-day service: +90833/+90836/+90838 (psychotherapy in the same encounter as E/M, used by psychiatrists and psychiatric NPs) and +90785 (interactive complexity, common in child and adolescent work). Generic payer bundling edits routinely flag these legitimate, by-design pairings — denying the psychotherapy add-on as 'included in' the E/M, or 90785 as 'included in' the psychotherapy — and integrated practices billing medication management plus therapy on the same day are hit hardest.
The winning argument
The denied code is a CPT add-on code that is, by definition, reported together with — not bundled into — the same-day primary service. CMS's psychiatry billing guidance (Article A57480) expressly instructs that psychotherapy furnished with medical evaluation and management is reported as the E/M code plus a psychotherapy add-on code (90833, 90836, 90838), payable when the two services are significant and separately identifiable. Because add-on codes are valued only on intra-service time — pre- and post-service work is already captured in the primary code — paying both codes creates no duplicate payment, and denying the add-on as 'included in' the very code it is designed to accompany contradicts the CPT code structure itself.
- The medical record documents two significant and separately identifiable services, with psychotherapy time documented separately from E/M activities; under CMS guidance a separate diagnosis is not required to report E/M and psychotherapy on the same date of service.
- Medicare expressly pays for multiple mental health services for the same patient on the same day, excluding only inappropriate or duplicate services — a blanket same-day bundling denial conflicts with this standard.
- Add-on codes are valued solely on intra-service time precisely because pre- and post-service work is built into the primary code, so payment of the primary service does not compensate the add-on work.
- The official X12 usage note for CARC 97 directs payers to identify the underlying healthcare policy (835 REF segment); we are entitled to know the specific published code-pair edit or written payment policy relied on — NCCI procedure-to-procedure (PTP) edits are the national correct-coding standard, and if no published PTP edit applies to this pair, the payer should identify its policy basis.
Public sources you can cite
Every argument traces to a verified public source — no invented citations.
X12 — Claim Adjustment Reason Codes (official)
Supports: Official wording of CARC 97 and its usage note directing payers to the 835 Healthcare Policy Identification Segment (loop 2110 REF) identifying the policy behind the adjustment
CMS Medicare Coverage Database — Billing and Coding: Psychiatry and Psychology Services (A57480)
Supports: Psychotherapy with E/M is reported as the E/M code plus add-on 90833/90836/90838; both payable when significant and separately identifiable; no separate diagnosis required; 90785 is an add-on reported only in conjunction with other psychiatry codes
CMS MLN1986542 — Medicare & Mental Health Coverage (MLN Booklet)
Supports: Medicare pays for multiple mental health services for the same patient on the same day (by the same or different professionals), excluding only inappropriate or duplicate services
American Psychiatric Association — CPT Primer for Psychiatrists
Supports: 90833/90836/90838 are add-on codes designed for psychotherapy provided in the same encounter as E/M; 90785 may be used with any appropriate psychiatry code; add-on codes are valued only on intra-service time because pre/post work is in the primary code
CMS — National Correct Coding Initiative (NCCI) Edits
Supports: NCCI PTP edits are the national standard for code-pair bundling ('prevent improper payment when incorrect code combinations are reported'), grounding the request that the payer identify the specific published edit or policy behind a CARC 97 adjustment
Sample appeal letter body
Replace the {{placeholders}} with your own information before sending.
We are appealing the denial of CPT {{denied_cpt_code}} for {{patient_reference}}, date of service {{date_of_service}}, denied under CARC 97 (benefit included in the payment/allowance for another adjudicated service). CPT designates {{denied_cpt_code}} as an add-on code — a code that by definition is reported together with a same-day primary service, here {{primary_cpt_code}} — and CMS billing guidance for psychiatry and psychology services expressly instructs that psychotherapy furnished with medical evaluation and management is reported as the E/M code plus the psychotherapy add-on code (90833, 90836, 90838), payable when the two services are significant and separately identifiable; a separate diagnosis is not required. The record for this encounter documents both services distinctly: {{em_documentation_summary}}, and {{psychotherapy_minutes}} minutes of psychotherapy documented separately from E/M activities. Because add-on codes are valued on intra-service time only, with pre- and post-service work already captured in the primary code, paying both codes produces no duplicate payment. We request that the claim be reprocessed and the add-on code paid, and that, if the denial is maintained, the plan identify the specific published code-pair edit or written payment policy (for example, an NCCI procedure-to-procedure edit) on which this CARC 97 adjustment was based.You'll need to supply: patient_reference (member ID / claim # — fill locally), denied_cpt_code (the bundled-denied code, e.g., 90833, 90836, 90838, 90785), primary_cpt_code (the paid same-day primary service, e.g., the E/M code 99212-99215, or the psychotherapy code if 90785 was denied), date_of_service, em_documentation_summary (one line on the separately identifiable E/M or primary-service work, e.g., 'medication evaluation and dose adjustment documented under a distinct note section'), psychotherapy_minutes (psychotherapy time documented separately from E/M activities)
What this argument cannot ground
Honest gaps — no fabricated sources.
- CARC 97 is often a correct, contract-based bundling adjustment (group code CO means provider write-off, not patient-billable). The appeal is strongest when the denied code is a designated CPT add-on (90833/90836/90838, 90785) to a paid same-day primary service; truly inclusive services are not appealable.
- Some commercial payers require modifier 25 on the E/M, or run proprietary edit sets stricter than NCCI, even though CPT does not require a modifier for add-on pairs — check the payer's published payment policy first; a corrected claim with the required modifier is often faster than a formal appeal.
- 90785 cannot be reported with an E/M service alone (no psychotherapy on the claim) or with crisis codes 90839/90840 — confirm the pairing is valid before appealing, or the appeal will fail on coding grounds.
- The citations are Medicare-grounded (A57480, MLN1986542); commercial plans are not bound by them, though they evidence generally accepted correct-coding standards. A MHPAEA parity argument may exist where BH code pairs are bundled more aggressively than comparable med/surg pairs, but it is not grounded here and was deliberately left out of the letter.
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