CO-116: Advance Indemnification Notice Requirements Not Met

What Does CO-116 Mean?

With CO (Contractual Obligation), the CARC 116 adjustment for advance indemnification notice requirements not met is a contractual reduction. The provider absorbs this amount per the payer contract or regulatory payment methodology. The patient is not responsible for the adjusted amount. Review the remittance to confirm the adjustment is consistent with your contract terms.

CARC 116 indicates advance indemnification notice requirements not met. The payer determined that the service or a portion of it does not meet coverage criteria under the patient's current plan benefits or the applicable coverage rules.

Common scenarios that trigger this adjustment include: the provider did not issue an Advance Beneficiary Notice to the Medicare patient before providing a service that Medicare does not cover, making the provider liable; The ABN was issued but was not properly completed (missing patient signature, missing date, incomplete service description, or wrong form version); The ABN was given to the patient after the service was already provided, which does not meet the advance notice requirement. The group code paired with CARC 116 determines who bears the financial responsibility — CO places it on the provider as a contractual obligation, PR shifts it to the patient, OA indicates a coordination of benefits or other payer adjustment.

Common Causes

How to Resolve

1. Review the adjustment against contract terms Compare the CO-116 adjustment with your payer contract to confirm the reduction is consistent with agreed terms or regulatory methodology.
2. Verify the adjustment amount Confirm the dollar amount of the adjustment is calculated correctly based on the contracted rate and the service provided.
3. Appeal if the adjustment is incorrect Appeal with a copy of the signed ABN showing it was completed before the service was rendered. The ABN must be on the current CMS-approved form, include the specific service description, and be signed and dated by the patient. For Medicare, file the appeal within 120 days.
4. Process the contractual adjustment If the adjustment is correct per contract terms, process it accordingly in your billing system. This amount cannot be transferred to the patient.

Common RARC Pairings

The RARC code tells you exactly what triggered the CO-116:

How to Prevent CO-116

• Train all staff on ABN requirements, including when to issue, proper completion, and documentation
• Use the current CMS-approved ABN form version (CMS-R-131)
• Issue the ABN before the service is rendered — not during or after
• Ensure the ABN specifically identifies each service that may not be covered
• Maintain signed copies of all ABNs in the patient's record
• Implement automated alerts that flag services likely to be non-covered and require ABN documentation

Also Filed As

The same CARC 116 may appear with different Group Codes:

Related Denial Codes