PR 1 in Medical Billing: PR-1 Deductible, PR-2 Coinsurance and PR-3 Copay Explained

PR 1 in medical billing (written PR-1 on most remittances) is the deductible: group code PR, patient responsibility, with reason code 1, deductible amount. The patient owes that amount; the practice does not write it off. PR-2 is coinsurance and PR-3 is the copay.

These three codes show the patient’s share of the bill. Posting them to the right balance is the main step in producing an accurate patient statement.

Where you see it

Place	What you see
Medicare Standard Paper Remittance	PR-1 has its own DEDUCT column and PR-2 its own COINS column, so the GRP/RC-AMT column usually shows only CO codes; the claim-level PT RESP total adds them up
ERA (835)	a CAS segment on the service line: CAS PR 1 (amount), CAS PR 2 (amount), CAS PR 3 (amount)
Commercial payer remittance or EOP	an “adjustment” or “reason” column reading PR-1, PR-2 or PR-3, or a “patient responsibility” column with footnotes
The patient’s EOB or MSN	“deductible,” “coinsurance,” “copay,” or “maximum you may be billed,” without the codes
Secondary claim (837)	the same CAS PR segments copied from the primary remittance so the secondary payer can see what the patient was left owing

On the annotated remittance sample, callout 7 is the COINS column: 25.75 on the first line and 21.09 on the second, both PR-2, with DEDUCT 0.00 because this patient’s Part B deductible had already been met. PT RESP 46.84 is the two added together.

The three codes

Code	Official text	What it is	Original Medicare Part B	Commercial and Medicare Advantage
PR-1	Deductible Amount	what the patient pays each year before the plan pays anything	one annual Part B deductible, 283.00 for 2026 according to Medicare.gov; it is applied to the first claims of the year	plan deductibles vary widely and often reset on the plan year, not the calendar year
PR-2	Coinsurance Amount	a percentage of the allowed amount	20 percent of the allowed amount for most Part B services	varies by plan and by in-network versus out-of-network
PR-3	Co-payment Amount	a flat dollar amount per visit or service	uncommon in Original Medicare Part B	the office-visit or specialist copay; frequent in Medicare Advantage

Two things follow from the definitions. First, PR-1 and PR-2 are both calculated from the allowed amount, never from your charge, so a patient who owes “20 percent” owes 20 percent of what the payer allowed. Second, the deductible comes first: coinsurance is calculated on whatever allowed amount is left after the deductible is applied.

PR-96, PR-204 and the other PR codes

Deductible, coinsurance and copay are the routine PR codes. Two others appear often enough to learn:

Code	Official text	When you see it
PR-96	Non-covered charge(s)	a service the payer does not cover and holds the patient liable for. The code must come with a remark code explaining why. For Medicare it usually means an Advance Beneficiary Notice (ABN) was on file or the service is excluded by statute
PR-204	This service/equipment/drug is not covered under the patient’s current benefit plan	the commercial equivalent: the plan does not cover it, so the patient owes it

When PR is wrong, or right but not collectable

The group code is the payer’s statement of who is liable. It is usually correct, but there are cases where a PR should have been a CO, and cases where it is correctly PR yet you still may not bill the patient.

• Should have been CO. A Medicare denial for lack of medical necessity when no ABN was obtained is the provider’s liability, CO-50, not PR. If a payer sends PR for a service that your contract or the payer’s own rules make the provider’s responsibility, ask for reprocessing; billing the patient for it is a compliance problem, not a collection.
• Payer error on the deductible. PR-1 for a patient whose deductible was already met at another practice happens when claims are processed out of order. The payer will reprocess once the other claim posts. Hold the statement.
• Qualified Medicare Beneficiaries (QMB). Medicare’s remittance still shows PR-1 and PR-2, but federal law prohibits billing a QMB for Medicare deductibles, coinsurance or copays. The amount is billed to the state Medicaid program, usually by automatic crossover, and whatever Medicaid does not pay is written off.
• Patient has a secondary. PR amounts are correct, but they go to the Medigap, Medicaid or employer plan first. When Medicare’s remittance carries MA18 or MA07 the claim has already been forwarded; wait for the secondary’s remittance before any patient statement.

The general rule: a CO can never be billed to the patient, and a PR may be billed to the patient only after every other payer that could pay it has been billed.

Worked example

Illustrative figures for CPT 77427 (weekly radiation treatment management) in January, when the patient still has 50.00 of their Part B deductible to meet:

Step	Amount	Posting
Billed	420.00	charge
Allowed	180.00	fee schedule
CO-45 contractual adjustment	240.00	contractual write-off
PR-1 deductible	50.00	patient (or secondary) balance
Allowed remaining after deductible	130.00
PR-2 coinsurance (20 percent of 130.00)	26.00	patient (or secondary) balance
Medicare share (80 percent of 130.00)	104.00
CO-253 sequestration (2 percent of 104.00)	2.08	contractual write-off
Paid	101.92	payment

Check: 240.00 + 50.00 + 26.00 + 2.08 + 101.92 = 420.00. The patient’s share is 76.00. If the patient has a Medigap policy, the 76.00 goes to Medigap first; most Medigap plans pay the coinsurance, and whether they also pay the Part B deductible depends on the plan letter, so some of the 50.00 may come back to the patient.

What to do

• Post PR-1, PR-2 and PR-3 to the patient balance, or to the secondary if there is one. Never to the contractual adjustment account.
• Check eligibility before the first visit of the year. The Medicare eligibility response includes the Part B deductible remaining, so the front desk can tell the patient what to expect. Iridium Suite’s real-time eligibility check returns the remaining deductible along with coverage dates before the appointment.
• Hold statements when the remittance says the claim was forwarded. MA18 (supplemental insurer) and MA07 (Medicaid) mean a secondary remittance is coming.
• Confirm QMB status before billing any Medicare patient for cost sharing. It shows in the eligibility response and on the MAC portal.
• Question a PR that does not fit. PR-96 without an ABN on file, PR-1 after the deductible was met, PR for a service that needed an authorization you did not get: each is a phone call or a reprocessing request, not a patient statement.

Related terms

• GRP/RC-AMT: group codes, reason codes and amounts
• Allowed amount, billed amount and write-off
• Medicare crossover claims
• Sequestration on Medicare claims
• Coordination of benefits
• Understanding an EOB

Further reading: X12: Claim Adjustment Reason Codes; Medicare.gov: Medicare costs; CMS: Electronic Remittance Advice; CMS: Qualified Medicare Beneficiary program.