835 EDI transaction usage description

835 EDIThe 835 EDI is an important aspect for the provider of service. Most providers of service have an internal mechanism to parse the 835 EDI into their accounting programs. The receipt of the 835 EDI is a major labor savings device for financial reconciliation of the claim to determine any subsequent amounts that may be due from the patient. In rare cases there may be an amount due to the patient or responsible party.

It is a common event that there is a paper check and a paper explanation of benefits sent to either the payer, or more commonly to the responsible party (insured). This is done even if the provider of service normally receives an electronic 835 EDI transaction. The more common reason for this occurring is that the provider of service requires full payment for the services at the time they were rendered. In these cases the amount of the payment by the insurance company is reimbursed to the insured.

A paper EOB is generally always sent to the insured. At this time it is very rare that this does not occur. It is designed to inform the insured what was paid and why. It provides a “checks and balances” so the insured is informed as to what was paid and generally lists what the payer feels is due to the provider of service. It is also used to assist in preventing fraud or billing misunderstandings or mistakes. As an example a patient is treated for procedures A, B and C however the EOB states that payment was made for procedures A, B, C and D. Was the last procedure actually performed? Was it erroneously billed or was a bill submitted to the payer for services that were not performed? Conversely the response lists A and B as being paid and C is not paid. In the electronic world the 277 should address this, however in the non-EDI world this is generally listed as not being paid and reason for not being paid. There can be multiple reasons such as the procedure is not covered, the payer needs more information, or the payment is being made by separate check or EFT.

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