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N701 Remark Code: Value-Based Payment Modifier

N701 means the payment was adjusted under Medicare's Value-based Payment Modifier, which raised, lowered, or left unchanged physician fee schedule payments based on a group's or clinician's quality and cost performance in an earlier year.

Quick facts

Code
N701 (RARC N701)
Status
Active In use since March 1, 2014.
Code set
Remittance Advice Remark Codes (RARC)
Group codes
  • CO (Contractual Obligation): A downward adjustment is a program reduction absorbed by the provider. It isn't billed to the patient.
Official description
Payment adjusted based on the Value-based Payment Modifier.
X12 Remittance Advice Remark Codes, retrieved September 25, 2026
Last verified
against the official X12 list.

What N701 means

Medicare’s Value-based Payment Modifier tied physician fee schedule payments to how a practice performed on quality and cost. CMS evaluated each group, identified by its taxpayer identification number, and applied an adjustment in a later payment year. High-quality, low-cost groups could earn an upward adjustment; poor performers or non-reporters could receive a downward one.

N701 is the remark CMS used to show that adjustment on the claim line. Unlike most remark codes, it doesn’t describe a problem with the service. It reflects the practice’s program results.

Relationship to other programs

The modifier relied partly on quality reporting through PQRS, so a practice that didn’t report to PQRS could also face a Value-based Modifier reduction. Both programs, along with the EHR Incentive Program for clinicians, were replaced by the Merit-based Incentive Payment System (MIPS), and the last Value-based Modifier adjustments applied in the 2018 payment year.

What to do with N701 today

  • Historical claims: treat the adjustment as a final program result. Post it separately from contractual adjustments and denials.
  • Analytics: group it with other legacy Medicare program adjustments so it doesn’t inflate denial metrics.
  • Unexpected current use: if you see N701 on a recent claim, ask the payer what program it represents.

For current Medicare performance adjustments, look at MIPS feedback and remark N807.

Codes that may appear with N701

  • CO-237 (Legislated/Regulatory Penalty.): A legislated or regulatory penalty, used when the modifier reduced the payment.
  • CO-144 (Incentive adjustment, e.g. preferred product/service.): An incentive adjustment, relevant when the modifier increased the payment.
  • N699 (Payment adjusted based on the Physician Quality Reporting System (PQRS)): Adjustment under the Physician Quality Reporting System, whose data fed the modifier.
  • N700 (Payment adjusted based on the Electronic Health Records (EHR)): Adjustment under the EHR Incentive Program.
  • N807 (Payment adjustment based on the Merit-based Incentive Payment System (MIPS).): Adjustment under MIPS, which replaced the Value-based Payment Modifier.

N701 FAQ

Could the Value-based Payment Modifier increase payment?

Yes. Depending on quality and cost results, it could produce an upward, neutral, or downward adjustment, so N701 doesn't always mean a cut.

Is the modifier still in use?

No. It ended after the 2018 payment year and was replaced by MIPS under MACRA.

How was the modifier determined?

CMS applied it based on quality and cost measures from a performance period two years before the payment year, generally at the taxpayer identification number level.