RARC N669: Payment Adjusted Per Medicare Fee Schedule

What Does RARC N669 Mean?

RARC N669 is an informational remark indicating that the payer adjusted the payment because the billed amount exceeded the allowable rate under the Medicare Physician Fee Schedule (MPFS). This is standard Medicare payment methodology, not a denial or an error. Medicare pays based on predetermined rates that account for the relative value of each service, geographic cost adjustments, and a conversion factor.

The MPFS rate for a given service is calculated using the Relative Value Units (RVUs) assigned to the procedure code, which include components for physician work, practice expense, and malpractice cost. These RVUs are multiplied by the Geographic Practice Cost Index (GPCI) for the provider's locality and then by the annual conversion factor. When a provider's billed charge exceeds this calculated amount, the payment is reduced to the fee schedule rate.

Seeing N669 on a remittance is routine for most Medicare claims because providers typically bill at their standard charge rates, which are often higher than the Medicare allowable. The difference between the billed amount and the Medicare-allowed amount is typically written off for participating providers.

What to Do

Compare the adjusted payment amount against the current MPFS rate for the billed procedure code and your geographic locality. You can look up rates using the CMS Physician Fee Schedule Look-Up Tool available on the CMS website. Verify that the correct procedure code, modifier, and place of service were used, as these all affect the fee schedule rate.

If the payment amount does not match the expected fee schedule rate, review the claim for errors that may have caused an incorrect rate to be applied — such as the wrong place of service code or a missing modifier. If you believe the reduction is incorrect after verifying, submit a redetermination request with documentation supporting the correct payment amount. For participating providers, the difference between the billed charge and the Medicare-allowed amount should be adjusted off and not billed to the patient.

Common Scenarios

• A provider bills their standard charge for an office visit, which is higher than the MPFS rate, and the payment is reduced to the allowable amount
• The fee schedule rate changed at the beginning of the year and the payment reflects the updated rate rather than the prior year's rate the provider expected
• A claim is paid at the facility rate instead of the non-facility rate because the place of service code indicates the service was performed in a hospital setting
• The geographic adjustment factor for the provider's locality results in a lower payment than the national average for the same procedure

Commonly Paired With

RARC N669 commonly appears alongside these CARC denial codes: