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Remittance Advice

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Definition:

A Remittance Advice (RA) is a document supplied by the insurance payer that provides notice of and explanation reasons for payment, adjustment,denial and/or uncovered charges of a medical claim.

Usually accompanies Medicare and Medicaid payments.

Often referred to as an explanation of payment by other insurance payers.

There are two types of RAs:

  1. Electronic Remittance Advice (ERA): an RA that is transmitted in an electronic format
  2. Standard Remittance Advice (SRA): an RA that is submitted in a paper format

Most insurance payers have implemented the use of the ERA. The benefits include the ability to post payment information automatically and quickly identify denials made during initial billing to make necessary corrections.

The ANSI 835 is the electronic payment and remittance advice standard format for health care claims. HIPAA regulations require the use of 835 as a set of rules to replace paper EOB's when health care providers receive electronic payments.

Remittance Advice should include some or all of the following information:

  • Payer Paid Amount: the dollar amount paid by the payer
  • Approved Amount: the approved amount equals the amount for the total claim that was approved by the payer
  • Allowed Amount: the allowed amount equals the amount for the total claim that was allowed by the payer
  • Patient Responsibility Amount: the amount of money that is the responsibility of the patient which represents the patient copay, coinsurance, and deductible amounts
  • Covered Amount: the covered amount equals the amount for the total claim that was covered by the payer
  • Discount Amount: the dollar value of the primary payer discount or contractual adjustment
  • Adjudication date: the date the claim was adjudicated and/or paid

The remittance advice may also show the payers internal control number (ICN), check number, service codes, description of services, denial reason codes, and remark explanations.

Electronic Remittance Advice (ERA)

Using electronic remittance advice (ERA) is a fast and accurate way to post your payments as well as adjustments and denials. The ERA, however, is not effective without the electronic funds transfer (EFT). EFT will assure that your payment will post directly to your bank account to reflect your ERA. You can sign up for these benefits directly or through a clearinghouse. The process will work similar to the electronic billing process.

Other glossary terms related to Remittance Advice may include some or all of the following but not limited to:

Also Known As: Explanation of Benefits, Explanation of Payment, Notification of Payment, Summary Payment Voucher, Remit
Examples:
SAMPLE REMITTANCE ADVICE
  • ABC INSURANCE COMPANY

PATIENT NAME: JOHN DOE
PATIENT ACCT: 123123123
MEMBER ID NO: 554554554
PAYER ICN NO: 123456789XYZ
DATE OF SVC : 01/01/2012
PAYMENT DATE: 01/15/2012

SERVICE DESCRIPTION: OFFICE VISIT

TOTAL CHARGES: $100.00
ALLOWED AMOUNT: $80.00
DISCOUNT AMOUNT: $20.00
COPAY: $20.00
COINS: $8.00 (10%)
PATIENT RESPONSIBILITY: $28.00
PAID AMOUNT: $52.00
  • REMARKS
PAYMENT PAID ACCORDING TO CONTRACT

This sample remittance advice reflects the basic information, category names and other information may differ based upon the insurance payer.
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