OA-P5: Reasonable and Customary Fee Adjustment (No Legislated Maximum)

What Does OA-P5 Mean?

OA-P5 is uncommon but may appear in coordination-of-benefits scenarios where the R&C adjustment is informational, indicating the balance should be evaluated by another payer before final disposition.

CARC P5 is a Property and Casualty-specific adjustment applied when the payer determines that the billed charges exceed what it considers reasonable and customary (R&C) for the service in the geographic area. The critical nuance with P5 is that no legislated fee arrangement sets a maximum — the payer is using its own internal R&C benchmarks rather than a mandated fee schedule.

This creates a gray area for providers. Unlike jurisdictions with published WC or P&C fee schedules where the maximum allowed amount is transparent, P5 adjustments are based on the payer's proprietary R&C methodology. The payer may use databases like FAIR Health, internal claims data, or regional benchmarking to set its thresholds. Because these methodologies vary by carrier, the same service can receive different P5 adjustments from different P&C payers.

P5 almost always appears with Group Code CO, meaning the difference between billed charges and the R&C rate is a contractual write-off. Providers cannot balance-bill the patient for the excess. The provider's leverage lies in understanding how the payer calculates R&C and whether the allowed amount is defensibly within market norms. If the payer's R&C rate is significantly below area peers, an appeal with supporting fee data has a reasonable chance of recovering some of the adjustment.

How to Resolve

Compare the payer's allowed amount against market R&C data and appeal if the reduction is unreasonably low.

1. Identify the secondary payer Determine if the patient has secondary coverage that should evaluate the R&C-adjusted balance.
2. Submit to the secondary payer File the claim with the secondary payer including the primary ERA showing the OA-P5 adjustment.
3. Process the final remittance Review the secondary payer's adjudication and post any remaining balance per the applicable group code.

How to Prevent OA-P5

• Collect all insurance coverage details during patient registration to ensure proper payer sequencing
• Verify P&C coverage status and coordination-of-benefits requirements before claim submission

Also Filed As

The same CARC P5 may appear with different Group Codes:

Related Denial Codes