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N671 Remark Code: Jurisdiction Cost-to-Charge Ratio

N671 means the payment was calculated by applying a cost-to-charge ratio set by the jurisdiction, usually a state workers' compensation system, to the facility's billed charges. The result is treated as the allowed amount.

Quick facts

Code
N671 (RARC N671)
Status
Active In use since July 15, 2013.
Code set
Remittance Advice Remark Codes (RARC)
Group codes
  • CO (Contractual Obligation): Charges above the ratio-based amount are adjusted off under the state's rules. Workers' compensation systems generally prohibit billing the injured worker for the difference.
Official description
Payment based on a jurisdiction cost-charge ratio.
X12 Remittance Advice Remark Codes, retrieved September 25, 2026
Last verified
against the official X12 list.

What N671 means

A cost-to-charge ratio estimates how much a facility’s costs are compared with its charges. If a hospital’s ratio is, say, one-half, its costs are about half of what it bills. Some state workers’ compensation fee schedules, and occasionally other jurisdiction-regulated programs, pay facility claims by multiplying billed charges by a ratio the jurisdiction sets, sometimes with an added percentage.

N671 tells the facility this method set its payment. Because it starts from billed charges, the payment moves with your charges and depends heavily on the carrier using the correct ratio.

What to check

  • The ratio used matches the jurisdiction’s published value for your facility or facility category.
  • The effective period. Ratios are updated periodically; the one for the date of service or discharge should apply.
  • Eligible charges. Items the state pays another way, such as implants at invoice or specific services on a fixed fee, may be excluded from the ratio calculation.
  • Any added factor or cap the state rule includes.

What to do

  1. Pull the jurisdiction’s rule and published ratio for the service dates.
  2. Recalculate the payment from your eligible charges.
  3. Post the adjustment if it matches. Do not bill the injured worker for the difference.
  4. Request reconsideration from the carrier if the ratio, period, or eligible charges were wrong, including your calculation.
  5. Use the state dispute process if the carrier doesn’t correct it within the allowed time.

How to prevent it

Keep a table of current jurisdiction ratios for each state where you treat injured workers, and update it when the state publishes changes. Setting expected-payment rules in your billing system lets staff spot mispriced facility claims as soon as the remittance posts.

Codes that may appear with N671

  • CO-45 (Charge exceeds fee schedule/maximum allowable or contracted/legislated fee arrangement.): The charge exceeded the legislated fee arrangement, here calculated with a cost-to-charge ratio.
  • CO-162Deactivated (State-mandated Requirement for Property and Casualty, see Claim Payment Remarks Code for specific explanation.): A state-mandated requirement for property and casualty claims.
  • N673 (Reimbursement has been calculated based on an outpatient per diem or an outpatient factor and/or fee schedule amount.): An outpatient per diem, factor, or fee schedule amount, another facility pricing method.
  • N648 (Adjusted based on Stop Loss.): A stop-loss provision, which in some state hospital schedules also relies on charges.
  • N647 (Adjusted based on diagnosis-related group (DRG).): Payment based on a diagnosis-related group.

N671 FAQ

Where does the ratio come from?

The jurisdiction sets or publishes it, often based on the facility's cost reports or on statewide figures. Check the state agency's published ratios and the effective date.

Which charges does the ratio apply to?

That depends on the jurisdiction's rules. Some apply it to all charges, others only to services without a fixed fee, or exclude certain items.

Can I dispute the ratio?

The published ratio is set by the jurisdiction. You can dispute whether the carrier used the correct ratio, facility, and period, through the state's billing dispute process.