RARC N781: No Deductible Allowed for QMB Patient

What Does RARC N781 Mean?

RARC N781 is an informational remark indicating that the patient is enrolled in the Qualified Medicare Beneficiary (QMB) program and, under federal law, providers cannot bill QMB patients for Medicare deductibles, coinsurance, or copayments. The QMB program, administered by state Medicaid agencies, covers Medicare cost-sharing for low-income beneficiaries. Providers who participate in Medicare are required to accept the Medicare-allowed amount as payment in full for QMB patients and may not balance bill them for cost-sharing.

This protection applies regardless of whether the provider participates in Medicaid. Even non-participating Medicaid providers cannot collect Medicare cost-sharing amounts from QMB patients. Violations of this protection can result in sanctions. The prohibition covers Part A and Part B deductibles, coinsurance amounts, and any copayments that would normally be the patient's responsibility under Medicare.

N781 appears on the Medicare remittance to alert the provider that the patient's cost-sharing amount should not be collected from the patient. Instead, the provider may bill the applicable state Medicaid program for reimbursement of the deductible and coinsurance amounts, though Medicaid payment rates for these amounts may be less than the full Medicare cost-sharing amount.

What to Do

Do not bill the patient for any Medicare deductible, coinsurance, or copayment amounts. If any cost-sharing amounts have already been collected from this patient, issue a refund promptly. Check your patient accounts to identify any outstanding balances for this patient that include Medicare cost-sharing, and write them off or redirect them to Medicaid.

Submit the cost-sharing amounts (deductible and coinsurance) to the patient's state Medicaid program for reimbursement. Include the Medicare remittance advice with the Medicaid claim to document the amounts. Be aware that Medicaid reimbursement for these amounts varies by state and may be less than the full cost-sharing amount. Update the patient's record in your billing system to flag their QMB status so future claims are handled correctly from the outset.

Common Scenarios

• A provider sends a bill to a Medicare patient for their Part B coinsurance, not realizing the patient has QMB status and cost-sharing collection is prohibited
• The front desk collects a copayment from a QMB patient at check-in, and the payment needs to be refunded after N781 appears on the remittance
• A provider bills Medicaid for the Medicare deductible amount on a QMB patient's claim and receives partial reimbursement based on the state's Medicaid rate
• A patient's QMB eligibility was not identified during registration, and multiple claims have accumulated patient-responsibility balances that need to be adjusted

Commonly Paired With

RARC N781 commonly appears alongside these CARC denial codes: