What are Remittance Advices or Remittance Advice Statements?

Remittance advices, also known as remittance advice statements or payment explanation statements, are documents provided by insurance companies or third-party payers to healthcare providers or medical billing companies. These documents serve as a communication and payment notification for the healthcare services that have been processed and paid by the payer. Remittance advices provide detailed information about the payment, including the amounts paid, adjustments made, and reasons for any denied or reduced payments.

Here are the key components typically found in a remittance advice:

• Payer Information: The remittance advice includes the name, contact information, and identification number of the insurance company or third-party payer.
• Provider Information: The remittance advice identifies the healthcare provider or medical billing entity to which the payment is being sent. This includes the provider’s name, address, and any associated identification or account numbers.
• Patient Information: Remittance advices often include patient-specific information, such as the patient’s name, identification number, and the dates of service for which the payment is being made.
• Claim Details: The remittance advice provides a breakdown of the claims that have been processed and paid. This includes the claim number, date of service, billed charges, allowed amounts, and any adjustments or contractual write-offs applied by the payer.
• Payment Information: The remittance advice specifies the payment amount being made by the payer. This may include the total payment for all claims or individual payment amounts for each claim. It also indicates the method of payment, such as a check number or electronic funds transfer (EFT) details.
• Explanation of Payment: Remittance advices provide an explanation of the payment, including any adjustments made to the billed charges. This may include contractual adjustments, coinsurance, deductibles, copayments, or any other payment details specific to the payer’s reimbursement policies.
• Denial or Adjustment Reason Codes: If a claim is denied or the payment is reduced, the remittance advice includes reason codes or remarks explaining the specific reasons for the denial or adjustment. These codes help the provider understand the rationale behind the payment decision and assist in the claims follow-up process.
• Secondary Payer Information: If the payment is made by a secondary insurance company, the remittance advice may include details about the coordination of benefits (COB) process and the payment adjustments made based on the primary payer’s determination.

Remittance advices are crucial for healthcare providers to reconcile their billing records, track payments, and understand the payment decisions made by insurance companies or third-party payers. These documents provide valuable information for managing accounts receivable, identifying claim denials or underpayments, and initiating any necessary follow-up actions or appeals.