CARC 197 — “This procedure/service is not paid separately” — is one of the most frequent denial codes we see in mental health billing. It does not always mean what practices think it means.
What CARC 197 actually means
When a payer sends CARC 197, they are saying that the procedure code you billed is not separately reimbursable. This can happen for three distinct reasons:
1. The service is bundled into another code
Some CPT codes are bundled into others. If you bill both 90837 and 90785 (interactive complexity) in the same session, some payers will deny 90785 with CARC 197 because they consider it bundled into 90837.
The nuance: Not all payers bundle these the same way. Some payers allow both codes to be billed together with a modifier. The bundling rules vary by payer and by plan.
2. The service is included in the E/M code
For practices that bill evaluation and management (E/M) codes alongside procedure codes, CARC 197 can indicate that the procedure was considered part of the E/M service.
3. The payer does not recognize the code
Some payers do not cover certain codes at all. If you bill a code that the patient’s plan does not cover, the denial may come back as CARC 197 rather than CARC 96 (service not covered) or CARG 16 (no benefit).
How we handle it
When we see CARC 197 on an ERA, we do not just appeal — we investigate:
- Check the payer’s bundling rules for the specific code combination
- Verify the patient’s plan to confirm whether the code is covered
- Review the session note to ensure the documentation supports separate billing
- Draft the appeal with the specific payer policy reference
The key insight: CARC 197 is not always final. If the service is legitimately separately payable and the documentation supports it, the appeal should succeed.
Last verified: August 2026. CARC codes and bundling rules vary by payer — always verify with the specific payer’s coding guidelines.
