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N535 Remark Code: Payment Adjusted for Place of Service

N535 means payment was adjusted because of where the procedure was performed, based on the combination of procedure code and place of service submitted. Many payers pay different rates for the same service depending on the setting, such as a facility versus an office.

Quick facts

Code
N535 (RARC N535)
Status
Active In use since July 1, 2010.
Code set
Remittance Advice Remark Codes (RARC)
Group codes
  • CO (Contractual Obligation): The adjustment is a pricing difference under the payer's fee schedule or contract. It is generally not billable to the patient.
Official description
Payment is adjusted when procedure is performed in this place of service based on the submitted procedure code and place of service.
X12 Remittance Advice Remark Codes, retrieved September 25, 2026
Last verified
against the official X12 list.

What N535 means

The same procedure can carry different prices depending on the setting. A practitioner performing a service in a hospital outpatient department or surgery center usually receives a lower professional rate than when performing it in an office, because the facility is paid separately for space, staff, and supplies. N535 tells you the payer applied that kind of setting-based pricing to the procedure and place of service on your claim.

It is often paired with CARC 45, which carries the dollar difference.

When N535 deserves a closer look

  • The place of service is wrong. A default POS in the billing system does not reflect where the service happened, as with a clinic that sees patients at a hospital location.
  • Telehealth and home visits. Payers have specific POS codes and rules for these settings, and a mismatch can change pricing.
  • The rate does not match your contract. The payer may be using the wrong schedule for the setting.
  • Both a facility and a professional claim exist. Confirm they agree on where the service occurred.

What to do

  1. Verify the actual setting from the documentation and the facility’s records.
  2. Correct box 24B if it was wrong, and resubmit as a corrected claim (resubmission code 7).
  3. Compare the allowed amount with your contract’s rate for that setting.
  4. Dispute a payment below the contracted rate through the payer’s reconsideration process.
  5. Post the adjustment as contractual when the setting and rate are correct.

How to prevent it

Set place of service by location, not by provider, in your PM system, and review defaults whenever a provider starts seeing patients at a new site. An ERA Analyzer comparison of allowed amounts by place of service can reveal systematic pricing errors.

Codes that may appear with N535

  • CO-45 (Charge exceeds fee schedule/maximum allowable or contracted/legislated fee arrangement.): The charge exceeded the allowed amount for the procedure in that setting.
  • CO-5 (The procedure code/type of bill is inconsistent with the place of service.): The procedure code or type of bill is inconsistent with the place of service.
  • CO-58 (Treatment was deemed by the payer to have been rendered in an inappropriate or invalid place of service.): The payer deemed the place of service inappropriate or invalid for the treatment.
  • M77 (Missing/incomplete/invalid/inappropriate place of service.): The place of service is missing, incomplete, invalid, or inappropriate.
  • N428 (Not covered when performed in this place of service.): Not covered when performed in this place of service.
  • M97 (Not paid to practitioner when provided to patient in this place of service.): Not paid to the practitioner in this place of service; payment is included in the facility's reimbursement.

N535 FAQ

Why do payers pay differently by place of service?

When a service is done in a facility, the facility bills for its overhead separately, so professional payment is often lower than in an office. Fee schedules such as Medicare's have facility and non-facility rates for this reason.

Where is place of service on a CMS-1500?

Box 24B holds the place of service code for each line.

What if I billed the wrong place of service?

Correct box 24B and resubmit as a corrected claim with resubmission code 7 and the original claim number. Billing the setting where the patient actually was is required.