CARC 294 Active

CO-294: Payment Made to Attorney

TL;DR

CO-294 means payment to the attorney is contractually required. Work with the attorney or file a lien to recover your portion from the legal settlement.

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-294 Mean?

When CARC 294 appears with CO, the payer is indicating the payment redirection to the attorney is a contractual obligation, possibly due to a court order or binding legal assignment. The provider's recovery options are limited to collecting from the attorney or through the legal process.

CARC 294 indicates that the payer processed the claim but directed payment to an attorney rather than the billing provider. This code appears in cases involving legal proceedings such as personal injury claims, workers' compensation disputes, or other litigation where an attorney has obtained a legal right to receive insurance payments on behalf of the patient.

In legal cases, attorneys may file a lien or obtain a payment assignment that directs insurance proceeds to their office. This is common in auto accident cases, slip-and-fall injuries, and medical malpractice situations where the attorney is managing the settlement funds. The payer honors these legal assignments and routes payment accordingly, which means the provider does not receive direct reimbursement through the normal claims payment process.

Providers who treat patients involved in litigation need to understand that CARC 294 is not a denial of coverage but rather a redirection of payment. The service was covered and processed, but the funds went to the attorney. Recovery requires coordination with the attorney's office to obtain the provider's share of the payment from the legal settlement or judgment funds.

How to Resolve

  1. Verify the legal basis Obtain documentation of the court order or payment assignment that directed funds to the attorney.
  2. File a provider lien If not already done, file a provider lien to ensure your payment is protected in any legal settlement.
Do Not Appeal This Code

Payment Made to Attorney 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-294

Also Filed As

The same CARC 294 may appear with different Group Codes:

OA-294 PR-294

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://www.mdclarity.com/denial-code/294
  2. https://resdac.org/sites/datadocumentation.resdac.org/files/Adjustment%20Reason%20Code%20Code%20Table%20(TAF%20Claims).txt
  3. https://x12.org/codes/claim-adjustment-reason-codes
  4. Codes maintained by X12. Visit x12.org for official definitions.