CO-116 means Medicare found a problem with the Advance Beneficiary Notice (ABN) the patient signed. Because of that, the patient isn’t liable, and you are. An ABN is the CMS form a provider gives a Medicare patient before a service that Medicare may not pay. It lets the patient choose to get the service and pay if Medicare denies. When the notice is flawed, it loses that power. Typical problems are a missing reason, a vague item description, an old form version or a signature dated after the service. (Primary source: X12 Claim Adjustment Reason Codes)
In brief: CARC 116 reads “The advance indemnification notice signed by the patient did not comply with requirements.” Pull the actual signed ABN and check it against the CMS rules. If it was valid and the payer missed something, appeal with it. If it wasn’t, refund anything you collected and write off the line.
Part of our denial codes library. Written by Manikandan J, CPC, CRCR, who has trained front desk teams on ABN use for labs and clinics. Published 21 October 2026. Last updated: 21 October 2026. Code wording is quoted word for word from X12.
CARC 116: the X12 entry
| Field | X12 text |
|---|---|
| Code | 116 |
| Description | “The advance indemnification notice signed by the patient did not comply with requirements.” |
| Start | 01/01/1995 |
| Last modified | 09/30/2007 |
Source: X12 Claim Adjustment Reason Codes, checked 21 October 2026.
Example scenario (fictional names), part 1
CO-116 Denial Example: What Happened
Tess Morgan handles Medicare claims for Willow Park Family Practice. A patient asked for a screening PSA (G0103, Z12.5) only eight months after his last one. Willow Park expected Medicare to deny it for frequency. The front desk gave him an ABN, and the claim went out with the GA modifier.
The remit from the practice’s Medicare contractor showed CAS*CO*116 and remark LQ*HE*M39. Willow Park had already collected the fee at the visit. Now it couldn’t keep it, at least not yet.
What was wrong with an ABN the patient had signed? Keep reading, or jump to how the CO-116 denial was resolved.
What makes an ABN valid
CMS lays out ABN rules in the Medicare Claims Processing Manual, Chapter 30 and on its FFS ABN page. The checks most ABNs fail:
| Check | What reviewers look for |
|---|---|
| Current form | The CMS-R-131 version in effect on the date of service |
| Specific item | The exact test or service, such as a screening PSA, not just lab work |
| Reason | Why Medicare may not pay, such as frequency limits |
| Cost estimate | A good-faith estimate of the cost |
| Option chosen | The patient checked one option box |
| Signed before service | Signature and date before the service, not after |
| Not routine | Not given to every patient by habit |
A GA modifier tells Medicare a valid ABN is on file. A GZ modifier says you expect a denial but have no ABN.
Remark codes linked to CARC 116
| RARC | X12 wording |
|---|---|
| M39 | “Alert: The patient is not liable for payment of this service as the advance notice of non-coverage you provided the patient did not comply with program requirements.” |
| M27 | “Alert: The patient has been relieved of liability of payment of these items and services under the limitation of liability provision of the law.” |
M27’s full text continues; see the X12 RARC list.
What to do after a CO-116
- Pull the signed ABN. Use the original or a full scan, not a template.
- Check it against the list. Form version, item, reason, cost, option, signature date.
- Appeal if it was valid. Send a redetermination request with a clear copy of the signed ABN.
- Refund if it wasn’t. Return any money collected for that service to the patient.
- Write off the line. The CO group makes it the provider’s loss.
- Fix the process. Train staff and check ABNs before the patient leaves.
Example scenario (fictional names), part 2
How the CO-116 Denial Was Resolved
Tess pulled the scan. M39 said the notice failed program rules. The file held an unsigned copy, printed before the patient chose an option. The signed original was still in the front desk tray, dated the morning of the visit, with the PSA, the frequency reason and an estimate filled in.
Fix: Tess sent a redetermination request with the signed ABN and a short cover letter. She noted that the earlier scan was the wrong page.
Outcome: the contractor moved the amount to the patient, so the fee already paid stayed with the practice. Willow Park now scans the ABN only after the patient signs.
Names and details are illustrative; no real patient data.
Worked example (illustrative)
A podiatry office gives every routine foot care patient the same ABN with a vague may-not-be-covered line as the reason. A review finds the notices routine and too vague. The claims return with CARC 116 and M39. The office refunds what it collected, writes off the lines and rewrites its ABN process. Now each notice names the service and a real reason.
ABN mistakes that lead to CO-116
- “Lab tests” instead of the test name. Be specific.
- No reason, or a generic one. Name the actual rule, such as a frequency limit.
- An outdated form. Use the current CMS-R-131.
- Signed after the service. It must be signed before.
- Given to everyone. Routine ABNs are generally not valid.
Related codes
- CO-50: not deemed a medical necessity.
- CO-96: non-covered charges.
- CO-95: plan procedures not followed.
Key takeaways
CO-116 means the ABN failed Medicare’s rules, so the patient isn’t liable. Check the actual signed notice. Appeal with it if it was valid. Refund and write off if it wasn’t. Then fix the process so every ABN names the service, gives a real reason and is signed before care.
FAQ
What does CO-116 mean?
It means “The advance indemnification notice signed by the patient did not comply with requirements.” The ABN wasn’t valid.
Can I bill the patient after CO-116?
No. The patient isn’t liable. Refund anything you collected for that service.
What does M39 mean?
M39 says the patient isn’t liable because the advance notice didn’t meet program requirements.
Can I appeal a CO-116 denial?
Yes, if the ABN was valid. Send a redetermination request with a clear copy of the signed notice.
What is the GA modifier?
GA tells Medicare a valid ABN is on file for the service.
Can I give an ABN to every patient just in case?
No. Routine ABNs are generally not valid. Use them when you have a real reason to expect a denial.
Sources
How we checked: each code quote on this page was compared word for word with the X12 CARC and RARC lists on 21 October 2026.
- X12, Claim Adjustment Reason Codes (CARC 116, 50, 96). Accessed 21 Oct 2026.
- X12, Remittance Advice Remark Codes (M39, M27). Accessed 21 Oct 2026.
- CMS, FFS ABN. Accessed 21 Oct 2026.
- CMS, Medicare Claims Processing Manual, Chapter 30. Accessed 21 Oct 2026.
Last updated: 21 October 2026 ยท This page is educational and doesn’t replace CMS instructions.