New CMS Remittance Codes Will Change How Providers Identify No Surprises Act Claims

What changes on January 1, 2027?

For items and services furnished on or after January 1, 2027, plans and issuers must place an applicable Remittance Advice Remark Code, or RARC, on each relevant service line when sending remittance advice to an out-of-network provider or facility with no direct or indirect contract.

The required RARC descriptions become effective November 1, 2026. The codes communicate whether the plan considers the claim subject to federal No Surprises Act protections, state law, an All-Payer Model Agreement, or a completed payment path.

Which RARCs signal potential federal IDR eligibility?

N877 marks an initial payment under the No Surprises Act as potentially eligible for federal IDR after open negotiation, provided the claim also satisfies the remaining federal requirements.

N876 marks a covered item or service with no payment, serving as a notice of denial, as potentially eligible for federal IDR after open negotiation and satisfaction of the other requirements.

These codes create an important operational signal. They do not extend the statutory deadlines, and they do not eliminate the need for an independent eligibility review.

What do the other required RARCs mean?

• N871: The initial payment is based on a specified state law. The plan is indicating that federal IDR is unavailable.
• N944: The plan denied payment under a specified state law or All-Payer Model Agreement and is indicating that federal IDR is unavailable.
• N872: The remittance reflects a final payment based on a specified state law.
• N873: The remittance reflects a final payment based on an All-Payer Model Agreement.
• N874: The remittance reflects a final amount agreed to during open negotiation.
• N875: The remittance reflects the certified IDR entity-selected amount, reduced by the initial payment and applicable cost sharing. It does not create a new IDR opportunity.
• N943: The plan is indicating that the item or service is outside the No Surprises Act's surprise-billing protections.

CMS is allowing plans and issuers to choose the associated Claim Adjustment Reason Code, or CARC, while requiring the applicable RARC for the service line.

How must the codes appear on remittance advice?

On an electronic 835 remittance advice, the RARC must appear in the LQ Segment within Loop 2110 for every applicable line item. That placement matters because claim-level capture alone may miss differences among service lines.

On a paper remittance advice, the code must be clearly associated with the applicable line item and included within the remittance itself. CMS says the required RARC cannot be sent in a separate document or under separate cover.

Halkovich Law's commentary

Providers should treat these RARCs as operational evidence. Revenue-cycle systems can use them to route claims for federal IDR screening, open-negotiation review, and deadline tracking. Teams should preserve both the original 835 data and any human-readable remittance because the service-line code may later help explain what the plan communicated and when.

The payer's RARC is not the final word on federal IDR eligibility. CMS expressly states that certified IDR entities ultimately determine eligibility. The guidance also says a provider's disagreement with the code selected by the plan does not prevent the provider from initiating federal IDR after open negotiation.

That distinction is critical. A plan's coding position should prompt a legal and operational review; it should not automatically close a potentially valid recovery path. Providers still need to analyze the governing plan, applicable state law, service setting, notice history, payment or denial date, and federal deadlines.

What should providers do before January 1, 2027?

• Map N877 and N876 to an immediate federal IDR eligibility and deadline review.
• Route N871, N872, N943, and N944 for confirmation of the plan's state-law, All-Payer, or NSA classification.
• Preserve the complete 835, the paper remittance when used, and a readable service-line record.
• Test whether clearinghouses, billing vendors, and practice-management systems retain Loop 2110 data without flattening or discarding it.
• Train staff to distinguish an initial-payment code from codes showing an agreement, an IDR-selected amount, or another final payment path.
• Continue calculating deadlines from the actual payment or denial event instead of relying on the code alone.

What if the RARC is missing or appears incorrect?

CMS states that providers retain the right to initiate open negotiation within 30 business days after receiving the initial payment or notice of denial when a plan fails to comply with the RARC requirements. Providers can also report suspected violations through the No Surprises Help Desk or the CMS billing complaint process.

If a plan's failure prevented the provider from obtaining the information needed to act or from timely initiating federal IDR, CMS says the provider may request an extension by emailing FederalIDRQuestions@cms.hhs.gov. The availability of an extension is fact-specific, so records of the remittance, missing information, follow-up efforts, and affected deadlines should be preserved.

Frequently asked questions

Source and scope

This article summarizes CMS guidance dated July 17, 2026 and provides Halkovich Law's general provider-side commentary. The presence or absence of a particular RARC does not independently establish federal IDR eligibility, and this article does not provide advice for a specific claim.