RARC M27: Patient Relieved of Liability — Provider Holds the Charges
RARC M27 means the patient has been relieved of liability under the limitation of liability provision: the service was found not reasonable and necessary (or custodial), the provider knew or should have known, and the provider — not the patient — absorbs the charges, including coinsurance already collected.
- Type
- Informational (liability shift)
- Usually paired with
- CO-50 on Medicare claims
- Fixable?
- Appeal only — patient billing is barred
- Typical fix
- Refund patient cost sharing; appeal necessity if supported
What does remark code M27 mean?
M27 tells you the patient has been relieved of liability for these charges under the limitation of liability provision of the law: the service was not reasonable and necessary (or was custodial care), the provider knew or could reasonably have been expected to know it would not be covered, and therefore the provider is ultimately liable — including for any coinsurance the patient paid.
ERA mini-example: a screening test repeated inside its frequency window bills $240.00, denies CO-50 with M27, $0.00 patient responsibility. The office had no signed ABN, so the $48.00 coinsurance collected at check-out has to go back to the patient along with the write-off.
Which denial code does M27 come with?
On Medicare remits it typically accompanies CO-50 — the medical necessity denial — with the CO group code doing the real damage: contractual obligation, provider write-off. Contrast that with the same service billed with modifier GA after a valid ABN, which denies as patient responsibility instead. Verify pairings in the denial code lookup.
What do you do after an M27?
- Stop any patient statement immediately and refund cost sharing already collected for the line.
- Review the applicable LCD/NCD. If the documentation supports necessity, file a redetermination with the record attached.
- If necessity is not supportable, write off the charge and log the root cause: no ABN, wrong frequency, missing covered diagnosis.
- Fix the intake step that let the service go out unprotected.
How do you prevent M27?
M27 is almost always an ABN process failure. Build frequency and coverage checks into scheduling for the services your specialty repeats — screenings, injections, therapy — and issue a compliant ABN with a genuine cost estimate whenever coverage is doubtful, billing with GA. Audit a sample of ABNs quarterly: unsigned, undated, or blanket ABNs are treated as invalid and land you right back at M27.
Frequently asked questions
No. M27 is the payer formally shifting liability to the provider under the limitation of liability rules. You must not bill the patient, and if you already collected coinsurance or deductible for the service, you are expected to refund it. Billing anyway invites a compliance problem, not just a complaint.
Usually yes, for Medicare. A valid Advance Beneficiary Notice signed before the service, with the claim billed using modifier GA, shifts liability to the patient and turns the denial into a PR (patient responsibility) code. M27 with provider liability is the standard outcome when no valid ABN exists — billed GZ or with no modifier at all.
The underlying medical-necessity denial is. If you believe the service was reasonable and necessary under the applicable LCD or NCD, appeal with records through the standard Medicare appeals process. Winning the necessity argument makes the liability question moot because the claim pays.
Sources & further reading
Reviewed by the ImmediCare Solutions RCM team
Certified billers and coders handling claims across 50+ specialties nationwide. This entry is reviewed against current payer policy and CMS rules. Last review: Jul 5, 2026.
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