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Health Care Payment and Remittance Advice

Electronic Remit Advice (ERA) and Standard Paper Remit (SPR)

After Medicare processes a claim, either an ERA or an SPR is sent with final claim adjudication and payment information. One ERA or SPR usually includes adjudication decisions about multiple claims. . Itemized information is reported within that ERA or SPR for each claim and/or line to enable the provider to associate the adjudication decisions with those claims/lines as submitted by the provider. The ERA or SPR reports the reason for each adjustment, and the value of each adjustment. Adjustments can happen at line, claim or provider level. In case of ERA the adjustment reasons are reported through standard codes. For any line or claim level adjustment, 3 sets of codes may be used:.

  1. Group Code
  2. Claim Adjustment Reason Code
  3. Remittance Advice Remark Code

Group Codes assign financial responsibility e.g., CO would mean contractual obligation or provider responsibility and PR would mean patient responsibility. Medicare beneficiaries may be billed only when PR Group Code is used with an adjustment. Claim Adjustment Reason Codes provide an overall explanation for the financial adjustment, and may be supplemented by more specific explanation using Remittance Advice Remark Codes. Medicare beneficiaries are sent Medicare Summary Notice that indicates how much financial responsibility the beneficiary has.

At the provider level, adjustments are usually not related to any specific claim in the remittance advice, and PLB reason codes are used to explain the reason for the adjustment Some examples of provider level adjustment would be: a) an increase in payment for interest due as result of late payment of a clean claim by Medicare; b)a deduction from payment as result of a prior overpayment; c) an increase in payment for any provider incentive plan . SPR also report these standard codes, and provide the code text as well. One check or electronic funds transfer (EFT) is issued when payment is due; representing all benefits due from Medicare for the claims itemized in that ERA or SPR.

There are a number of advantages of ERA over SPR. The amount payable for each line and/or claim as well as each adjustment applied to a line or claim can be automatically posted from an ERA, eliminating the time and cost for staff to post this information manually from an SPR. ERAs generally contain more detailed information than SPR. Please see the separate page in this EDI section for further information on the benefits of acceptance of EFT for Medicare claim payments.

All ERAs sent by Medicare contractors are currently in the X12N 835 version 4010A1 format adopted as the national HIPAA ERA standard. There is a link below to this version of the ERA. Medicare is currently working on implementing the new HIPAA standard that has been adopted, and will be ready on January 1, 2011 to start testing with any partner willing to receive ERA in the new HIPAA standard format – ASC X12 version 5010.

Medicare provides free software to read the ERA and print an equivalent of an SPR using the software. Institutional and professional providers can get PC Print and Medicare Easy Print (MREP) respectively from their contractors. These software products enable providers to view and print remittance advice when they're needed, thus eliminating the need to request or await mail delivery of SPRs. The MREP software also enables providers to view, print, and export special reports to Excel and other application programs they may have.

See the Medicare Claims Processing Manual, (Pub.100-04), Chapters 22 and 24 for further remittance advice information.