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N355 Remark Code: Refund Exceptions and Appeal Rights

N355 is an alert about refunding the patient for a denied service. It explains the two legal exceptions to the refund requirement, how to request an appeal, and how requesting one quickly can delay the refund until the review is decided.

Quick facts

Code
N355 (RARC N355)
Status
Active In use since August 1, 2005; last modified April 1, 2007.
Code set
Remittance Advice Remark Codes (RARC)
Group codes
  • CO (Contractual Obligation): The service was denied and the provider is responsible. If you collected from the patient, you may have to refund it unless an exception applies or an appeal succeeds.
Official description
Alert: The law permits exceptions to the refund requirement in two cases: - If you did not know, and could not have reasonably been expected to know, that we would not pay for this service; or - If you notified the patient in writing before providing the service that you believed that we were likely to deny the service, and the patient signed a statement agreeing to pay for the service. If you come within either exception, or if you believe the carrier was wrong in its determination that we do not pay for this service, you should request appeal of this determination within 30 days of the date of this notice. Your request for review should include any additional information necessary to support your position. If you request an appeal within 30 days of receiving this notice, you may delay refunding the amount to the patient until you receive the results of the review. If the review decision is favorable to you, you do not need to make any refund. If, however, the review is unfavorable, the law specifies that you must make the refund within 15 days of receiving the unfavorable review decision. The law also permits you to request an appeal at any time within 120 days of the date you receive this notice. However, an appeal request that is received more than 30 days after the date of this notice, does not permit you to delay making the refund. Regardless of when a review is requested, the patient will be notified that you have requested one, and will receive a copy of the determination. The patient has received a separate notice of this denial decision. The notice advises that he/she may be entitled to a refund of any amounts paid, if you should have known that we would not pay and did not tell him/her. It also instructs the patient to contact our office if he/she does not hear anything about a refund within 30 days
X12 Remittance Advice Remark Codes, retrieved September 25, 2026
Last verified
against the official X12 list.

What N355 means

N355 is one of the longest remark codes. It comes with a denied service, typically when the payer found the service was not covered as billed and the provider may have collected money from the patient. It explains the refund rule and your options.

In short: you must refund what the patient paid unless you meet one of two exceptions, either you had no reason to know the service would be denied, or you gave the patient written notice in advance and the patient signed an agreement to pay. If you disagree with the denial, you can appeal. Appealing quickly lets you hold the refund until the review is decided; appealing later still allows a review but does not delay the refund.

What to do

  1. Check whether you collected anything from the patient for the denied service.
  2. Look for a signed advance notice in the patient’s record. If one exists and meets the payer’s requirements, keep it ready.
  3. Decide whether to appeal. If you do, gather documentation that supports coverage and file within the time frame stated in the notice.
  4. If no exception applies and you do not appeal, or the appeal is unfavorable, refund the patient within the time the notice sets.
  5. Keep a record of the refund, because the patient is told to contact the payer if no refund arrives.

Calendar the dates from the notice as soon as the remittance posts; the short windows are easy to miss.

Codes that may appear with N355

  • CO-50 (These are non-covered services because this is not deemed a 'medical necessity' by the payer.): The service was not deemed medically necessary, a common reason the refund requirement arises.
  • CO-151 (Payment adjusted because the payer deems the information submitted does not support this many/frequency of services.): The information did not support the frequency of services, another denial that can trigger a refund obligation.
  • M26 (The information furnished does not substantiate the need for this level of service.): Says the information does not support the level of service and explains refund obligations if you collected from the patient.
  • M27 (Alert: The patient has been relieved of liability of payment of these items and services under the limitation of liability provision of the law.): States the patient has been relieved of liability under the limitation of liability provision.
  • N210 (Alert: You may appeal this decision.): A simple alert that you may appeal the decision.

N355 FAQ

What are the two exceptions?

You didn't know and couldn't reasonably have known the service would not be paid, or you told the patient in writing beforehand that it was likely to be denied and the patient signed an agreement to pay.

Does the patient know about this?

Yes. The notice says the patient received a separate notice about the denial and a possible refund, and will be told if you request a review.

Where are the deadlines?

The remark's own text sets out the time limits for appealing and for making a refund. Read them from the remittance and track them from the date of the notice.