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N894 Remark Code: Payment Under Reservation of Rights

N894 is an alert that the payer made these payments subject to a reservation of rights. It may later recoup all or part of them depending on pending or future litigation, new or updated state, federal, or regulatory guidance, or other actions affecting its obligation to pay.

Quick facts

Code
N894 (RARC N894)
Status
Active In use since March 1, 2024.
Code set
Remittance Advice Remark Codes (RARC)
Group codes
  • CO (Contractual Obligation): Any contractual adjustments on the paid claim. N894 itself does not change the amounts; it flags that the payment could be revisited.
Official description
Alert: These payments are made subject to a reservation of rights for the Payor to recoup or otherwise recover all or part of these payments based on any of the following: outcome of pending or future litigation/ new or updated state, federal or regulatory guidance/ any other actions that may affect the Payor's obligation to make these payments.
X12 Remittance Advice Remark Codes, retrieved September 25, 2026
Last verified
against the official X12 list.

What N894 means

N894 does not reduce or deny anything. It warns that the payment is not necessarily final. The payer is signaling that a legal or regulatory question affects its obligation, and it reserves the right to recover money if the answer goes against you.

What to do

  1. Post the payment normally.
  2. Tag the claims in your system so you can identify every payment made under the reservation.
  3. Keep documentation that supports the services and the rates paid.
  4. Watch for notices from the payer about the litigation or guidance involved, and budget for possible recoupments if the exposure is significant.
  5. Review any recoupment notice against your contract and applicable law before accepting it.

Codes that may appear with N894

  • CO-45 (Charge exceeds fee schedule/maximum allowable or contracted/legislated fee arrangement.): Ordinary contractual adjustment on a claim that was paid, with N894 attached to the payment.
  • N432 (Alert: Adjustment based on a Recovery Audit.): An adjustment that actually resulted from a recovery audit, rather than a warning of one.
  • N199 (Additional payment/recoupment approved based on payer-initiated review/audit.): Additional payment or recoupment approved after a payer-initiated review or audit.
  • M32 (Alert: This is a conditional payment made pending a decision on this service by the patient's primary payer.): A conditional Medicare payment that may need to be refunded if another payer is primary.

N894 FAQ

Does N894 mean money will be taken back?

Not necessarily. It means the payer is preserving the option. Recoupment would depend on how the litigation or regulatory issue is resolved.

Can a payer really recoup under a reservation of rights?

Whether a recoupment is enforceable depends on your contract, state law, and program rules, including limits on how far back a payer can go. Talk to your contract manager or counsel if a recoupment arrives.

What should I do now?

Flag the claims, keep your documentation, and watch for news about the underlying dispute.