What Is a Claim Payment Remittance Advice and Check?
Decode the financial paperwork you receive after an insurance claim. Understand payment details and manage your benefits effectively.
A claim payment remittance advice and check provide information about how an insurance claim was processed and the associated payment. These documents are key in financial transactions, especially within healthcare and insurance. Understanding their purpose and content helps individuals manage financial responsibilities and confirm claims were handled correctly.
Understanding the Remittance Advice (RA) and Explanation of Benefits (EOB)
A Remittance Advice (RA) and an Explanation of Benefits (EOB) are distinct but related documents detailing how an insurance claim was adjudicated. An RA is typically sent to the healthcare provider by the insurance company, offering a breakdown of payments and adjustments for services rendered. This document helps medical offices track revenue and reconcile payments with billing records. RAs can be paper (Standard Paper Remittance – SPR) or electronic (Electronic Remittance Advice – ERA), which integrates with practice management systems.
An Explanation of Benefits (EOB), conversely, is a statement sent to the patient or policyholder from their health insurance company. This document explains what medical services their insurance covered, the total cost, and any remaining balance the patient is responsible for. An EOB is not a bill, but an informational statement helping patients understand claim processing. Both documents are generated after a healthcare provider submits a claim to the insurer, detailing services provided.
Both the RA and EOB contain specific information to interpret claim processing. These details include service dates and information about the healthcare provider. The billed amount, the original charge, is listed, along with the allowed amount, the maximum the insurer agrees to pay. The documents also show any deductible applied, the amount counting towards the annual deductible the patient must pay before coverage begins. Patient responsibility components like copayments (fixed amounts paid for specific services) and coinsurance (a percentage of the total charges the patient is responsible for) are clearly outlined.
Services not covered by insurance, and the reason for non-coverage, are also noted. The amount paid by the insurance company is stated, as is the patient responsibility, the portion the patient still owes after the insurer’s payment. Claim numbers and patient account information are included for reference. Remittance Advice documents often include Claims Adjustment Reason Codes (CARCs) and Remittance Advice Remark Codes (RARCs) to provide specific reasons for adjustments or denials.
The Claim Payment Check
The claim payment check represents the actual monetary payment issued by the insurance company following claim processing. Its purpose is to fulfill the financial obligation of the insurance policy for covered services.
In most healthcare scenarios, the claim payment check is sent directly to the healthcare provider. This is common practice as providers typically bill the insurance company first, and the payment settles the insurer’s share of medical costs. In some situations, such as when a patient pays for out-of-network services upfront or for certain direct reimbursement claims, the check may be sent directly to the patient.
When a healthcare provider receives a claim payment check, their billing department processes it by applying the funds to the patient’s account. This reduces the outstanding balance for services provided. If a patient receives a check, they should deposit it into their bank account. After depositing the funds, the patient should apply the amount towards any outstanding balance with the healthcare provider. If the patient has already paid the provider in full or overpaid, the funds from the check are retained by the patient as reimbursement for expenses already covered.
Matching Documents and Taking Action
After receiving both the Explanation of Benefits (EOB) or Remittance Advice (RA) and any associated claim payment, reconcile these documents with the original bill from the healthcare provider. This involves comparing the “amount paid by insurance” on the EOB or RA with the actual payment received or sent to the provider. Also confirm the “patient responsibility” amount on the EOB aligns with the balance requested on the bill.
If discrepancies are identified, or if the EOB arrives before a bill, take action. First, contact the insurance company to clarify inconsistencies or to initiate an appeal if a service was denied or processed incorrectly. Second, reach out to the healthcare provider’s billing department to question billing errors, request an itemized bill, or discuss the remaining balance. Common discrepancies include incorrect patient information, wrong medical codes, duplicate charges, or errors in the payment amount.
Understanding billing cycles is beneficial, as providers may send bills at different times than insurers send EOBs. Wait for the EOB before paying a medical bill to ensure the correct patient responsibility is confirmed. Maintaining thorough records of these documents is important for future reference, potential tax purposes, and resolving disputes. Records like EOBs and medical bills can be relevant for tax deductions if medical expenses are itemized. The Internal Revenue Service suggests keeping records related to tax deductions for up to seven years.