CO-213: Non-Compliance with Physician Self-Referral Prohibition
A self-referral issue was identified. Appeal with documentation of a Stark Law exception if one applies.
What Does CO-213 Mean?
With CO (Contractual Obligation), the self-referral issue is treated as a contractual denial. Appeal with Stark Law exception documentation if the arrangement is compliant.
CARC 213 indicates that the payer determined the claim may involve a violation of the physician self-referral prohibition, commonly known as the Stark Law. This federal law prohibits physicians from referring Medicare and Medicaid patients for designated health services to entities with which they or their immediate family members have a financial relationship, unless a specific exception applies.
Designated health services under Stark include clinical laboratory services, radiology, physical therapy, DME, and several others. If a financial relationship exists between the referring physician and the service provider, and no exception applies, the claim cannot be paid.
Common Causes
| Cause | Frequency |
|---|---|
| Stark Law violation — physician self-referral to owned entity The referring physician has a financial relationship with the entity providing the designated health service, violating the Stark Law (42 U.S.C. § 1395nn) prohibition on physician self-referrals | Most Common |
| Referral to entity with financial interest without qualifying exception The physician referred the patient to an entity in which they have an ownership or investment interest without meeting one of the Stark Law exceptions | Common |
| Compensation arrangement triggering self-referral prohibition The referring physician has a compensation arrangement with the entity providing services that does not meet a Stark Law exception | Common |
| Payer-specific self-referral policy violation The referral pattern violates the payer's internal self-referral restrictions, which may be stricter than federal Stark Law requirements | Occasional |
| Missing or inadequate Stark Law exception documentation The provider has a qualifying Stark Law exception but failed to document or report it properly | Occasional |
How to Resolve
- Identify the applicable exception Determine which Stark Law exception covers the financial relationship.
- Appeal with documentation Submit exception documentation including contracts, fair market value assessments, and compliance records.
- Consult legal counsel Seek legal advice for complex Stark Law compliance questions.
Appeal if the referral qualifies under a Stark Law exception. Include documentation of the specific exception (in-office ancillary services exception, group practice exception, fair market value exception, etc.), proof that all exception requirements are met, and relevant regulatory citations. If the payer policy is stricter than federal law, reference the specific contract terms.
Common RARC Pairings
The RARC code tells you exactly what triggered the CO-213:
| RARC | Description |
|---|---|
| N386 | This decision was based on a National Coverage Determination (NCD) or Local Coverage Determination (LCD). Review the applicable federal regulation or payer policy regarding physician self-referral → |
| N381 | Alert: Consult your contractual agreement for restrictions, billing, and payment information. Review your contract for specific self-referral restrictions and exception requirements → |
How to Prevent CO-213
- Maintain Stark Law compliance programs for all physician referral relationships
- Document all financial relationships and applicable exceptions
- Conduct regular audits of referral patterns for self-referral compliance
- Train physicians on Stark Law requirements and designated health services
General Prevention
- Implement a robust physician self-referral compliance program that screens all referrals against Stark Law requirements
- Maintain documentation of all qualifying Stark Law exceptions for physician referral arrangements
- Train physicians and staff on Stark Law prohibitions and the specific exceptions that apply to your practice
- Conduct regular internal audits of referral patterns to identify potential self-referral violations
- Ensure all financial arrangements with referring physicians meet Stark Law safe harbor provisions
- Consult with healthcare compliance counsel when establishing new referral relationships
Also Filed As
The same CARC 213 may appear with different Group Codes:
Related Denial Codes
Sources
- https://x12.org/codes/claim-adjustment-reason-codes
- https://portal.ct.gov/-/media/ohs/health-it-advisory-council/apcd-advisory-group/data-submission-guide-workgroup/meeting-materials/6-30-22/carc-codes_final.pdf
- https://www.aapc.com/resources/claim-adjustment-reason-codes
- Codes maintained by X12. Visit x12.org for official definitions.