EDI 835 Remittance Advice

is a standardized electronic transaction used in healthcare to provide detailed payment information about claims processed by a health insurer or payer. The "835" transaction set is defined by the ASC X12N standard under HIPAA (Health Insurance Portability and Accountability Act) and is commonly referred to as an Electronic Remittance Advice (ERA).

Key Components:

1. EDI 835 Transaction:
   • Purpose: The EDI 835 transaction is used by health insurers to electronically communicate payment details to healthcare providers after claims have been processed. It includes information on the amount paid, reasons for any adjustments, denials, or partial payments, and the details necessary to reconcile accounts.
   • Structure: The transaction contains multiple segments, including claim information, payment details, adjustments, and explanations of benefits (EOBs).
2. Payment Information:
   • Payment Amounts: The 835 includes the total payment made, as well as line-item details for each claim, such as the amount paid, any deductibles, copayments, or coinsurance applied, and adjustments made by the payer.
   • Adjustments and Denials: Provides detailed explanations for any differences between the amount billed and the amount paid, including reasons for claim denials or partial payments, such as coding errors, lack of coverage, or patient responsibility.
3. Reconciliation:
   • Accounts Receivable: The 835 transaction enables healthcare providers to reconcile their accounts by matching payments to submitted claims. It streamlines the process of posting payments and adjustments to the provider’s billing system.
   • Automation: The EDI 835 transaction allows for automation of the payment posting process, reducing the need for manual data entry and minimizing errors in financial records.
4. Compliance:
   • HIPAA Compliance: Ensures that the communication of payment information between payers and providers adheres to HIPAA regulations, safeguarding patient information and ensuring the accuracy and standardization of data exchange.
   • Audit Trail: The transaction provides a clear audit trail of payments, adjustments, and any actions taken on claims, which is essential for financial reporting and compliance.

Importance:

• Efficiency: The EDI 835 remittance advice automates the payment reconciliation process, reducing administrative burden and improving the efficiency of billing and collections.
• Accuracy: Provides detailed and accurate information on claim payments, adjustments, and denials, helping providers understand the outcomes of their submitted claims and take necessary actions.
• Financial Management: Helps healthcare providers manage their cash flow by providing timely and detailed payment information, allowing for better financial planning and reporting.
• Communication: Facilitates clear and standardized communication between payers and providers regarding the payment of claims, ensuring transparency and reducing misunderstandings.

In summary, the EDI 835 Remittance Advice is a crucial tool in the healthcare industry, enabling providers to efficiently and accurately manage the financial aspects of their claims, ensuring that they receive proper payment for services rendered and can effectively reconcile their accounts.