Denial code · CARC 167
CARC 167 (CO-167): diagnosis not covered on behavioral-health claims
What CO-167 means, when it is a coding problem and when it is a plan exclusion, the parity questions it raises for mental-health and SUD diagnoses, and how to respond.
By the ClaimParrot editorial team · Who we are · Reviewed · 4 min read · 7 cited sources
Quick answer
CARC 167 means the plan treats the diagnosis on the claim as not covered, whatever the procedure. In behavioral health it most often hits Z-codes billed as the only diagnosis, diagnoses outside a coverage policy's list, and plan exclusions. Correct the claim if the treated condition was miscoded; if the exclusion itself is the problem, get the plan language and appeal.
| Item | Detail |
|---|---|
| Code | CARC 167 · Active on the X12 list; checked October 14, 2026 |
| Plain meaning | The plan excludes or does not cover the diagnosis on the claim, so services billed for it are refused whatever the procedure. |
| Group codes seen | CO (contractual obligation), PR (patient responsibility) |
| Common remark codes | N569, N130, N216 |
| Where it shows up in BH | Outpatient therapy, TMS, Residential mental health, ABA therapy |
| Usual next step | Correct if miscoded; otherwise appeal with plan language |
| Related codes | CARC 11, CARC 96, CARC 50 |
What does CARC 167 mean?
CARC 167 says the payer will not cover services for the diagnosis reported. It is broader than CARC 11, which is about a diagnosis-procedure pairing. The questions are whether the claim reported the condition actually treated, and if so, whether the plan may lawfully exclude it.
For group health plans, an exclusion that applies only to mental-health or substance-use benefits is a parity question. EBSA's September 2026 bulletin lists separate treatment limits, including blanket MH/SUD exclusions, among its enforcement priorities; the parity checker walks through the warning signs.
What do CO-167 and PR-167 mean for who pays?
CO-167 keeps the amount with the provider, usually because the contract bars billing members for services the plan refuses. PR-167 means the plan says the member owes it as non-covered: bill only if your contract and any required notice allow it, and tell the patient about appeal rights.
| Group + reason | What it signals | Who usually carries the balance |
|---|---|---|
| CO-167 | Diagnosis not covered; contract keeps it with the provider | Provider |
| PR-167 | Diagnosis not covered; plan assigns it to the member | Patient, within the contract and notice rules |
Which remark codes come with CARC 167?
Remark codes with 167 point to the policy or benefit rule behind the exclusion.
| Remark code | What it adds | What to check |
|---|---|---|
| N569 | Not covered when performed for the diagnosis reported. | The policy's covered diagnoses for the service |
| N130 | The plan's benefit documents limit this service; check them for the restriction that applied. | The exclusion or limit in the benefit documents |
| N216 | The plan does not cover this kind of service, or the member is not enrolled in the part of the benefit package that covers it. | Whether the member is enrolled in the benefit that covers behavioral health |
Where does CARC 167 show up in behavioral health?
Behavioral-health CO-167 denials cluster around diagnoses at the edge of a benefit: relational and psychosocial Z-codes, conditions a coverage policy does not list, and diagnoses named in exclusions. Miscoding causes some of them and real coverage limits cause the rest, and the two need different answers.
| Care setting | Typical trigger | Check first |
|---|---|---|
| Outpatient therapy | Relational or psychosocial Z-code billed as the only diagnosis | Whether a clinical diagnosis was documented and coded |
| TMS | Diagnosis outside the policy's covered list | The policy's supporting diagnoses |
| Residential mental health | Diagnosis named in a plan exclusion for a level of care | The exclusion text and whether a medical counterpart is limited too |
| ABA therapy | Plan limits the ABA benefit to specific diagnoses | The benefit definition and any state autism mandate |
Corrected claim, reconsideration or appeal: which fits CARC 167?
Start with coding. If the treated condition was documented but a Z-code or secondary diagnosis went first, correct the claim. If the plan truly excludes the diagnosis, get the exact plan provision, check whether the exclusion applies only to mental-health or SUD benefits, and appeal with the record and any parity argument.
- 01Check the record: was a covered clinical diagnosis documented but not coded first?
- 02Request the plan provision behind the denial; ERISA notices must cite the specific provisions they rely on.
- 03Appeal with the diagnosis, the treatment rationale and, where relevant, a request for the plan's parity analysis.
What evidence resolves a CARC 167?
Evidence has two layers: the diagnosis as documented by a qualified clinician, and the plan language behind the exclusion. When the exclusion touches only mental-health or SUD benefits, add the questions a parity review asks, such as whether comparable medical conditions face the same limit.
- The diagnostic evaluation supporting the coded diagnosis
- The plan provision or medical policy cited
- Claim lines showing diagnosis order and pointers
- A treatment plan tying the diagnosis to the service
- Parity questions or a comparative-analysis request, if relevant
How do Medicare, Medicaid and commercial plans differ on CARC 167?
Medicare ties covered diagnoses to national and local coverage policies; Medicaid programs define which conditions qualify for each behavioral-health service by state rule; employer plans write exclusions into the plan document, where federal parity rules apply to mental-health and substance-use benefits.
| Program | What differs |
|---|---|
| Medicare (Original) | Covered diagnoses come from NCDs and LCDs (remark codes N386, N115); billing articles list the ICD-10 codes that support each service. |
| Medicaid | State rules set which conditions qualify for each behavioral-health service; check the state or MCO manual. |
| Commercial and ERISA plans | Exclusions live in the plan document. The 2024 parity rule's new provisions are not being enforced, but the parity statute and the 2013 rule still apply. |
CO-167 on conjoint sessions coded with a Z-code
A fictional therapist billed six conjoint sessions with a relational-problem Z-code as the only diagnosis, and the plan returned all six as CO-167.
The record showed the identified patient had an adjustment disorder that was assessed and treated in those sessions. After the therapist confirmed the documentation for each date, the biller corrected the claims to list that diagnosis first.
Names, dates, payers and amounts are invented for illustration.
What a ClaimParrot packet does here
- When CARC 167 needs an appeal rather than a corrected claim, an appeal packet answers the payer's stated reason.
- A person checks every packet: $29, or $99 for level of care, and the first is free (pricing).
- No remittances, records or PHI are sent: just the reason and a de-identified summary (Trust & security).
Every draft is reviewed and approved by your team. ClaimParrot does not make medical-necessity determinations or give legal advice.
Frequently asked questions
Can a plan refuse to cover a mental-health diagnosis?
Plans can define covered conditions, but federal parity rules restrict limits that apply only to mental-health or SUD benefits in group health plans. Ask for the plan language and how comparable medical conditions are treated.
Is a Z-code enough to bill psychotherapy?
It depends on the plan, and some treat a Z-code alone as not covered, which produces CO-167. If the clinician assessed and documented a clinical diagnosis, code it first; never add one that is not documented.
How do we find out why the diagnosis is not covered?
Ask for the plan provision or medical policy behind the denial. ERISA denial notices must reference the specific plan provisions they rely on, so a notice without one is itself worth raising.
Is CARC 167 the same as CARC 96?
Close relatives. 96 is a general non-covered charge that needs a remark code; 167 pins the problem on the diagnosis. Both are answered from plan language more than from coding.
Primary sources and references
- Claim Adjustment Reason Codes (CARC) code list · X12 · checked
- Remittance Advice Remark Codes (RARC) code list · X12 · checked
- 29 CFR 2560.503-1: ERISA claims procedure · eCFR · checked
- 29 CFR 2590.712: mental health parity, including criteria disclosure in paragraph (d) · eCFR · checked
- Statement regarding enforcement of the 2024 MHPAEA final rule (May 2025) · U.S. Department of Labor, EBSA · checked
- Summary of EBSA Field Assistance Bulletin 2026-03 on parity enforcement priorities (September 2026) · Proskauer · checked
- LCD L37086, Transcranial Magnetic Stimulation (TMS) · CMS Medicare Coverage Database · checked
General information, not legal or medical advice. Payer rules change; confirm deadlines and requirements in the notice and the plan documents. Read our editorial policy.
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