Denied, Paid, or Pending: CMS Wants to Know
CMS Can Now See Your Denials: Four New Codes Are Coming to Encounter Data
Excerpt: Starting September 11, 2026, CMS wants every MA encounter to answer one question — did you pay for this? — using four new codes that turn your denial patterns into structured, monitorable data.
The blind spot CMS just closed
For years, there's been a gap in Medicare Advantage encounter data: CMS collects the encounters, but it can't consistently tell which ones the plan actually paid for and which ones it denied. The HHS Office of Inspector General flagged this directly — the inability to identify denied claims in MA data hinders fraud, waste, and abuse oversight.
On July 17, 2026, the Medicare Plan Payment Group answered with an encounter data software update. The fix is elegant in its simplicity: four new informational remittance advice remark codes (RARCs) that report an encounter's payment status right inside the submission. Beginning September 11, 2026, the Medicare Advantage Encounter Data System (EDS) will accept them, and CMS strongly encourages their use on every submission from that day forward.
Once these codes are flowing, CMS can consistently identify, monitor, and analyze denial patterns across every MA organization. That's not our characterization — it's the memo's stated purpose.
One question, four answers
Strip away the code numbers and the whole update is this: every encounter now answers "did you pay for this?"
Yes → N923 (Not Denied). You made a payment responsibility determination and paid.
No → N925 (Denied). You determined you had no payment responsibility.
Not yet → N924 (Pending). No determination at the time you submitted — with a follow-up expected once you decide.
Partly → N926 (Partially Denied). Some service lines denied, some not. This one lives at the header only, and every line underneath must then carry its own yes/no/not-yet answer.
If your team remembers nothing else, that framework carries them through the rest.
Part 1: What This Means for Your Organization
What's changing
Payment status becomes structured data. The memo declares these codes "the authoritative indicator of encounter payment status." Not your CARCs, not inference — the RARC is the record.
A watch-word on the denial definition. CMS considers a service denied when the MAO determines it has no payment responsibility at adjudication or re-adjudication — including circumstances where the entirety of the payment responsibility rests with another payer. If another payer is fully responsible, that's a denial under this framework. For many plans, that's not how internal systems think today.
Pending claims create a follow-up obligation. Submit N924 now, and CMS expects a replacement encounter updating it to N923, N925, or N926 once the determination lands. Payment status changes after submission? Same answer: replacement encounter.
Two new informational edits on the MAO-002 — 28000 and 28005 — will tell you exactly where your pipeline isn't populating the codes. Details in Part 2.
What's staying the same
Nothing rejects. Both edits are informational. The memo says "strongly encourages," never "requires," and announces no enforcement date.
Your CARC reporting is untouched. The new RARCs may ride with or without a CARC in the CAS segment, and all other X12 standards and CMS submission guidance continue to apply.
Chart review records are exempt. Both edits bypass CRRs entirely.
Read the room, though
Informational today doesn't mean invisible. CMS says it "will actively monitor RARC code usage" and expects MAOs to "make every effort" to report accurate payment status from day one. An edit born from OIG feedback, with monitoring attached, is worth taking seriously well before anyone makes it mandatory.
Your move
Map your adjudication statuses to the four answers now. The other-payer clause is where the mapping gets non-trivial — socialize it with your claims and COB teams early.
Build the replacement-encounter workflow. Pending-to-final updates are a new resubmission loop, even when nothing else on the encounter changed.
Watch your MAO-002s from September 11 onward. Treat edits 28000 and 28005 as a free diagnostic of your own readiness.
Part 2: The Technical Specification
The four codes, precisely
All four report in CAS segments, at the header (loop 2320) or service line (loop 2430) as noted:
N923 — Not Denied. "The Medicare Advantage Organization (MAO) made a payment responsibility determination." Reported at 2320 or 2430. The memo's narrative adds the operative qualifier: the MAO has paid for the service, and therefore the service was not denied at the time the encounter was submitted.
N924 — Pending (Not Denied). The MAO has not yet made a payment responsibility determination for the service at the time the encounter record was submitted. Reported at 2320 or 2430. CMS expects subsequent submissions to include or update N924 to N923, N925, or N926.
N925 — Denied. The MAO determined it had no payment responsibility for the service at the time the encounter record was submitted. Reported at 2320 or 2430 — at the header when the entire encounter (all service lines) is denied, or at the line level for a specific denied line.
N926 — Partially Denied. The MAO determined it had no payment responsibility for one or more service lines, but not all. Header (2320) only. When N926 sits at the header, each associated service line must be reported with N923, N924, or N925, as applicable.
One drafting nuance for anyone writing validation logic: the memo's definition table gives N923 only as "made a payment responsibility determination" — the "and paid" qualifier appears in the narrative text, not the table. Read strictly, a denial is also a determination. CMS's intent is clear from the narrative (N923 = paid = not denied); build your code-assignment rules from that, not the table alone.
Edit 28000 — Missing/Invalid Remittance Advice Code
Header-level, informational. Applies to institutional, professional, DME, and dental encounters; bypassed for chart review records. It fires when none of the four codes — N923, N924, N925, or N926 — appears on the header in any 2320 CAS segment.
Edit 28005 — Missing/Invalid RARC on Service Line
Line-level, informational. Same claim types, same CRR bypass. It fires when N926 (Partially Denied) is on the header in a 2320 CAS segment but a service line lacks N923, N924, or N925 in its 2430 CAS segment — enforcing the rule that a partial denial must be resolved line by line.
Both edits are returned on the MAO-002 report.
Submission mechanics
Report the informational RARCs in the 2320 or 2430 CAS segment locations per the reporting levels above; CMS will validate all CAS segments for their presence.
Because the codes are informational, they may be submitted with or without an existing CARC.
Submitters should report the final payment status of an encounter; if status changes after submission (the memo's example: pending to denied or not denied), submit a replacement encounter.
Outside the RARC instructions in this memo, all other X12 standards for the CAS segment continue to apply.
What the memo does not say
Just as important for planning:
Nothing about risk adjustment treatment. The memo is silent on how diagnoses from denied encounters are handled for risk score purposes. This release changes no filtering logic and no diagnosis eligibility.
No enforcement timeline. There is no stated date for these edits becoming rejections — and no statement that they ever will.
No linked-CRR guidance. CRRs bypass both edits; the memo doesn't address chart reviews tied to encounters whose payment status later changes.
Questions for CMS
RiskAdjustmentOperations@cms.hhs.gov, with "Encounter Data Software Release payment denial informational RARCs" in the subject line.
Health Data Max helps MA organizations keep encounter data submissions accurate, complete, and audit-ready. If you're mapping adjudication outcomes to the new RARC framework — or want to see your denial patterns before CMS does — talk to us.