CARC 225 Active

CO-225: Penalty or Interest Payment by Payer

TL;DR

A penalty or interest payment was applied contractually. Verify and record.

Action
Review & Decide
Who Pays
Provider
Appeal
No
Patient Impact
None
Disclaimer
This content is for informational purposes only and does not constitute professional billing advice. Always verify information against your payer contracts and current coding guidelines. Consult a certified billing specialist for specific claim issues.

What Does CO-225 Mean?

With CO (Contractual Obligation), the penalty or interest payment may be applied as a contractual adjustment. This is less common than OA for interest payments.

CARC 225 is a positive adjustment — it represents a penalty or interest payment from the payer to the provider. Many state laws and federal regulations require payers to process claims within specified timeframes (prompt payment laws), and when they fail to do so, they must pay interest or penalties to the provider.

This code typically appears alongside the original claim payment when the payer adds an interest amount for late processing. The provider should verify the penalty or interest amount matches the applicable prompt payment law requirements.

How to Resolve

  1. Verify the amount Confirm the interest calculation.
  2. Record the payment Apply to the correct account.
Do Not Appeal This Code

Penalty or Interest Payment by Payer recorded under CO is a contractual obligation — the provider absorbs this amount per the payer agreement. Without an error in how the contract was applied, appeals don't apply. Review the accompanying RARC codes for context and accept the adjustment when the contract terms were applied correctly.

How to Prevent CO-225

Also Filed As

The same CARC 225 may appear with different Group Codes:

OA-225 PR-225

Related Denial Codes

CO-3 — Co-payment Amount CO-85 — Patient Interest Adjustment CO-100 — Payment Made to Patient/Insured CO-101 — Predetermination: Anticipated Payment CO-105 — Tax Withholding Amount

Sources

  1. https://x12.org/codes/claim-adjustment-reason-codes
  2. 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
  3. https://www.aapc.com/resources/claim-adjustment-reason-codes
  4. Codes maintained by X12. Visit x12.org for official definitions.