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M12 Remark Code: Purchased Service Indicator Missing

M12 means the claim for a diagnostic test billed by a physician did not indicate whether any of the tests were purchased from an outside supplier. The payer needs that indicator to price the test correctly.

Quick facts

Code
M12 (RARC M12)
Status
Active In use since January 1, 1997.
Code set
Remittance Advice Remark Codes (RARC)
Group codes
  • CO (Contractual Obligation): The line is unpaid until the purchased-service indicator is supplied. It is not billable to the patient.
Official description
Diagnostic tests performed by a physician must indicate whether purchased services are included on the claim.
X12 Remittance Advice Remark Codes, retrieved September 25, 2026
Last verified
against the official X12 list.

What M12 means

Physicians sometimes bill for a diagnostic test where the technical work was bought from an outside supplier, a “purchased diagnostic test.” Medicare and many other payers price purchased tests differently, often limiting payment to what the billing provider paid. To apply those rules, the payer needs to know whether the claim includes any purchased services. M12 says that indicator was not provided.

It is a Medicare-rooted remark and generally travels with CARC 16 for missing information.

Common causes

  • Box 20 of the CMS-1500 (or its electronic equivalent) was left blank.
  • The practice management system does not populate the purchased-service field by default.
  • The indicator was set to Yes but the purchase price or supplier details were missing.
  • A clearinghouse edit stripped the field during conversion.

How to fix it

  1. Determine whether any test on the claim was purchased from an outside supplier.
  2. Complete the indicator: Yes with the purchase price and supplier information, or No.
  3. Resubmit following the payer’s instructions. Where the claim was returned as unprocessable, send a new claim; where it was processed, use resubmission code 7 in box 22.
  4. Confirm the supplier details (name, address, identifier) are included if the answer is Yes.

How to prevent it

Make the purchased-service indicator a required field on every diagnostic test claim in your billing system, even when the answer is No. Pre-submission checks with the Claims Validator catch blank required fields. For more on missing-data denials, see the CO-16 guide.

Codes that may appear with M12

  • CO-16 (Claim/service lacks information or has submission/billing error(s).): The claim lacks information needed for adjudication, here the purchased-service indicator.
  • CO-252 (An attachment/other documentation is required to adjudicate this claim/service.): Additional documentation or information is needed before the claim can be processed.
  • MA110 (Missing/incomplete/invalid information on whether the diagnostic test(s) were performed by an outside entity or if no purchased tests are included…): The indicator of whether tests were performed by an outside entity is missing or invalid.
  • M133 (Claim did not identify who performed the purchased diagnostic test or the amount you were charged for the test.): The claim did not identify who performed the purchased test or what you were charged.
  • MA111 (Missing/incomplete/invalid purchase price of the test(s) and/or the performing laboratory's name and address.): The purchase price or the performing laboratory's name and address is missing.

M12 FAQ

Where is the purchased-service indicator on a paper claim?

It goes in box 20 (Outside Lab) of the CMS-1500, marked Yes or No, with the purchase price when Yes. Electronic claims carry it in the purchased service segment.

What if none of the tests were purchased?

Mark the indicator No. Leaving it blank is what triggers M12.

Is M12 an appealable denial?

It is usually treated as an unprocessable claim. Submit a corrected or new claim with the indicator rather than an appeal.