What Is a Remit in Medical Billing?

A “remit” in medical billing refers to a Remittance Advice (RA), a document or electronic message from an insurance payer to a healthcare provider. This communication details how a medical claim has been processed and handled. Its role is to inform the provider about the payment decision for services rendered, including any adjustments or denials. The Remittance Advice is a tool for financial reconciliation, enabling providers to match payments received with original claims submitted. It serves as a record of the payer’s determination regarding claim reimbursement.

Key Elements of a Remittance Advice

A typical Remittance Advice contains specific information, providing a detailed breakdown of claim processing. It includes patient information, such as the patient’s name and identification number. Details about the services provided are listed, including dates of service and procedure codes, which specify the medical treatments performed.

The RA outlines the financial aspects of the claim. This includes the billed charges, the allowed amounts (the maximum the payer considers eligible), and the paid amounts (the actual sum disbursed).

The Remittance Advice also details patient financial responsibilities, such as deductibles, co-insurance, and co-pays. If a claim was not paid as originally billed, the RA includes adjustment or denial reason codes. These codes provide specific explanations for why the payment differs from the billed amount.

Electronic Remittance Advice and Explanation of Benefits

In medical billing, a “remit” primarily takes two forms: the Electronic Remittance Advice (ERA) and the Explanation of Benefits (EOB). Both documents convey similar information regarding claim processing, but they serve different audiences and purposes. An ERA is a digital version of the remittance advice, sent electronically from the insurance payer directly to the healthcare provider.

The ERA is delivered as a standardized electronic file, typically in the HIPAA 835 format, which allows for automated processing and integration into the provider’s billing system. This electronic format speeds up the reconciliation process, minimizes manual data entry errors, and offers improved security and easier storage compared to paper documents.

An Explanation of Benefits (EOB) is a statement sent by the insurance company to the patient. It details the services received, the amount billed, the amount covered by insurance, and any remaining patient financial responsibility. EOBs are traditionally paper documents mailed to patients, though some may be available digitally.

The distinction lies in their primary recipient and intended use: ERAs are for providers to manage their accounts and reconcile payments. EOBs are for patients to understand how their insurance plan covered their medical services and what they may owe. Although their content is similar, their format and delivery cater to distinct aspects of the healthcare financial ecosystem.

The Remittance Advice in Practice

Upon receiving a Remittance Advice, medical billing staff engage in a procedural action known as “payment posting.” This process involves recording the payment information from the RA into the provider’s medical billing software. The primary goal is to accurately update patient accounts and reconcile the billed amounts with the payments received from the payer.

During payment posting, staff match each payment line item to its corresponding claim and service within the system. This step helps identify any discrepancies between the expected reimbursement and the actual payment. It also helps track patient responsibility for deductibles, co-insurance, and co-pays, ensuring these amounts are accurately reflected in the patient’s balance.

The process also involves identifying claims that were denied or partially paid, prompting further investigation. By systematically posting payments, billing teams can pinpoint issues such as coding errors, unbundling of services, or services not covered by the patient’s plan. This operational step maintains accurate financial records and manages the revenue cycle.

Interpreting Adjustment and Denial Codes

Understanding the adjustment and denial codes found on a Remittance Advice is a key aspect of medical billing. These codes provide specific reasons for why a claim was adjusted, partially paid, or denied, necessitating further action. The two main types of standardized codes are Claim Adjustment Reason Codes (CARCs) and Remittance Advice Remark Codes (RARCs).

CARCs offer a broad explanation for the adjustment to the billed amount, such as a contractual obligation, patient responsibility, or a duplicate claim. For example, a CARC might indicate that the billed charge exceeds the fee schedule, meaning the provider’s charge was higher than the amount the insurer allows for that service. These codes are mandatory for electronic healthcare transactions under HIPAA regulations.

RARCs provide additional, more detailed explanations for an adjustment already described by a CARC, or convey information about remittance processing. For instance, if a CARC indicates missing information, an RARC might specify exactly what documentation is required, like a missing radiology report. RARCs can be supplemental, offering further detail, or informational, providing general advice.

Interpreting these codes correctly allows billing staff to determine if a claim needs to be corrected and resubmitted, appealed, or if the remaining balance is patient responsibility. Analyzing trends in these codes helps identify recurring issues, such as common coding errors or documentation deficiencies, enabling practices to improve their claim submission process and reduce future denials.