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N647 Remark Code: Payment Adjusted by DRG

N647 means the payer based its payment on a diagnosis-related group (DRG), a fixed amount for the patient's category of inpatient stay. Charges above that amount are adjusted off, and a DRG different from the one you expected can mean a lower payment.

Quick facts

Code
N647 (RARC N647)
Status
Active In use since July 15, 2013.
Code set
Remittance Advice Remark Codes (RARC)
Group codes
  • CO (Contractual Obligation): The difference between billed charges and the DRG payment is a contractual or program adjustment, not patient responsibility.
  • PR (Patient Responsibility): Inpatient deductible or coinsurance under the patient's plan is reported separately as PR.
Official description
Adjusted based on diagnosis-related group (DRG).
X12 Remittance Advice Remark Codes, retrieved September 25, 2026
Last verified
against the official X12 list.

What N647 means

Under DRG payment, an inpatient stay is grouped by principal diagnosis, secondary diagnoses, procedures, discharge status, and sometimes age, and each group carries a relative weight. The payer multiplies that weight by a base rate to get the payment, adjusting for things like transfers and outliers where its methodology allows. Medicare’s inpatient system works this way, and many Medicaid and commercial payers use DRGs too.

N647 tells the hospital that the allowed amount came from this grouping rather than from itemized charges or a per diem. It is primarily an explanation, typically sitting next to CARC 45.

When N647 needs attention

  • The payer’s DRG differs from yours. Compare the DRG reported on the remittance with the one your coders assigned. A lower-weighted group means less money.
  • A secondary diagnosis was dropped in the payer’s grouping or through a clinical validation review, removing a complication or comorbidity.
  • Discharge status changed the result. A transfer or post-acute discharge code can trigger a per diem reduction.
  • The base rate is wrong for your contract or the discharge date.

What to do

  1. Confirm the DRG the payer used and its weight.
  2. Review the coding against the medical record. If the hospital’s coding was wrong, submit a replacement claim following the payer’s institutional rules.
  3. If the payer regrouped incorrectly, request its rationale and file a DRG validation appeal with the relevant documentation.
  4. If the rate is wrong, contact the payer with the contract terms and request reprocessing.

How to prevent it

Strong clinical documentation and pre-bill coding review for high-weight DRGs reduce downgrades. Trend payer DRG changes by reason so you can see whether one payer or one diagnosis area drives most of them. For interpreting the codes involved, see CARC and RARC analysis.

Codes that may appear with N647

  • CO-45 (Charge exceeds fee schedule/maximum allowable or contracted/legislated fee arrangement.): Charges exceeded the DRG-based allowed amount.
  • CO-232 (Institutional Transfer Amount.): Institutional transfer amount, which explains a DRG payment reduced because the patient was transferred.
  • N208 (Missing/incomplete/invalid DRG code.): The DRG code on the claim was missing or invalid.
  • N605 (This fee was calculated based upon New York All Patients Refined Diagnosis Related Groups (APR-DRG), pursuant to Regulation 68.): A New York no-fault variant that prices on APR-DRGs under state regulation.
  • N648 (Adjusted based on Stop Loss.): A stop-loss provision that can override DRG pricing for very costly stays.
  • N639 (Reimbursement has been made according to the inpatient rehabilitation facilities fee schedule.): Pricing under an inpatient rehabilitation facility schedule instead of a DRG.

N647 FAQ

Can the payer assign a different DRG than the hospital?

Yes. Payers regroup claims using the diagnoses, procedures, discharge status, and other data on the bill, and may also change the DRG after a clinical validation or coding review.

How do I dispute a DRG change?

Request the payer's DRG and its rationale, compare it to the medical record and your coding, and file a DRG validation appeal or reconsideration within the payer's deadline if you disagree.

Does N647 apply to physician claims?

No. DRG payment applies to facility inpatient claims. Physicians are paid separately on their own fee schedules.