835 Transaction balancing description and formula
The 835 Transaction is used primarily by Healthcare insurance plans to make payments to healthcare providers, to provide Explanations of Benefits (EOBs), or both. It has been specified by HIPAA 5010 requirements for the electronic transmission of healthcare payment and benefit information. Dollar amounts on the 835 Transaction must balance. The standard states that they must be balanced three ways: Service Level, Claim Level, and Transaction Level. By subtracting adjustments from submitted charges the result is the amount paid. Adjustments within the 835 Transaction, through use of the Claim Adjustment and Service Adjustment Segments, CAS, or Provider Level Adjustment Segments, PLB, DECREASE the payment when the adjustment amount is POSITIVE, and INCREASE the payment when the adjustment amount is NEGATIVE.
These are the specific formulas for balancing:
Service Level Balancing Formula:
These segments can be found in LOOP 2110:
Submitted Charges (SVC02) – Sum Of Adjustments (CAS-03, CAS-06, CAS-09, CAS-12, CAS-15, CAS-18) = Service Amount Paid (SVC03)
Note: Although the SVC (Service Line) segment is not mandatory on the 835, it should still be sent if there were adjustments made to the line item on the original claim. Also according to the standard the SVC is mandatory for all professional claims.
Claim Level Balancing Formula:
These segments can be found in LOOP 2100:
Submitted Charges (CLP-03) – Sum of Adjustments (CAS-03, CAS-06, CAS-09, CAS-12, CAS-15, CAS-18) = Claim Paid (CLP-04)
Transaction Level Balancing Formula:
These segments can be found in LOOP 2100 and Table 1 and Table 3:
Sum of All Claim Payments (Sum of all CLP04) – Sum of All Provider Adjustments (SUM of PLB04, 06, 08, 10, 12, and 14) = Total Payment Amount (BPR-02).
Electronic Data Interchange (EDI) customer service and technical assistance requests focus solely on the generation, processing, and/or transmission of a HIPAA standard transaction. The Health Insurance Portability and Accountability Act (HIPAA) of 1996 is intended to provide better access to health insurance, limit fraud and abuse, and reduce administrative costs of the health care industry.