Module 1, Topic 2
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Day 2: Remittance Advice

Petria September 3, 2020
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The Remittance Advice (RA)

 

The Remittance Advice (RA)
a notice of payment sent as a companion to claim payments by Medicare Administrative Contractors (MACs), including Durable Medical Equipment Medicare Administrative Contractors (DME MACs) to providers, physicians, and suppliers.

WHAT IS AN RA? When you submit a claim to a MAC, you will receive an RA that explains the payment and any adjustment(s) made to a payment during Medicare’s adjudication of claims.
The RA provides justification for the payment, as well as input to your accounting system/accounts receivable and general ledger applications.

RAs provide itemized claims processing decision information regarding:

  • Payments
  • Deductibles and co-pays
  • Adjustments
  • Denials
  • Missing or incorrect data
  • Refunds
  • Claims withholding due to Medicare Secondary Payer (MSP) or penalty situations

The codes in the RA will help you identify any additional action you may need to take.

For example, some RA codes may indicate that you need to resubmit the claim with corrected information, while others may indicate that you can appeal a payment decision.  ​​​​

 

 

 

ONCE I RECEIVE AN RA, WHAT DO I DO?

When you receive an ERA, you may:

• Post decision and payment information automatically, for individual claims in the RA, to the appropriate beneficiary accounts when you are using a compatible provider accounts receivable software application

• Identify the reasons for adjustments (denials or payment reductions)

 

 

WHAT TYPES OF RAS ARE AVAILABLE?

MACs send RAs in either an:

electronic format (Electronic Remittance Advice [ERA]),

or a paper format (Standard Paper Remittance Advice [SPR]).

 

ERA vs SPR

You may get an RA from Medicare as an ERA or as an SPR. Although the information on ERAs and SPRs is similar, the two formats are different. The ERA offers some data and administrative efficiencies not available in an SPR. Additionally, an ERA can have more information than an SPR.

For example, an SPR has two basic page layouts: the Claims Page and the Summary Page. However, an ERA has four page layouts: the All Claims Screen, Single Claim Screen, Bill Type Summary Screen, and Provider Payment Screen.

ERAs can also be manipulated electronically into a variety of report formats. The Health Insurance Portability and Accountability Act (HIPAA) does not cover the SPR, so service-line information may not appear on some Institutional SPRs like it does on an ERA. The SPR shows the same lines, fields, and codes that are on the ERA, which helps you to make sure that the 835 balances at three levels (transaction, claim, and service line).

Health care professionals who are active in the Medicare Program and submit claims, may get an ERA. ERA is an outbound Electronic Data Interchange (EDI) transaction from the payer that enables you to get payment information in an electronic file format. If you have software capability in place in your system, your MAC can automatically post an ERA file created by Medicare to your accounts receivable system. Once you have the ERA in place, the payment posting process is more efficient and accurate.

There are advantages to using the ERA versus the SPR. Using an ERA saves time and increases productivity by providing electronic payment adjustment information that is portable, reusable, retrievable, and storable. Trading partners can exchange an ERA with much greater ease than an SPR. ERA advantages include:

  • Faster communication and payment notification
  • Faster account reconciliation through electronic posting
  • Automation of follow-up action
  • Generation of less paper
  • Lower operating costs
  • Ability to create various reports
  • Ability to search for information on claims
  • Ability to export data to other applications
  • More detailed information
  • Access to data in a variety of formats through free software supported by Medicare

The amount payable for each claim and/or service line as well as each adjustment applied to either can be automatically posted to accounting or billing applications 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 SPRs. Also, ERAs may enable providers to automate follow-up actions after getting an RA.

If you submit your claims on paper or if you send claims electronically and do not have your own submitter number but want to get ERAs directly, you must complete the Separate Remittance Agreement form. You may allow a billing service or clearinghouse to get the ERA files on your behalf by completing the Provider/ Submitter Agreement form

Note: MACs do not send SPRs if you have been getting ERAs for more than 31 days (Institutional Providers) and 45 days (Professional Providers) respectively. If you submit claims through a billing service or clearinghouse or a submitter/sender ID that is currently receiving ERAs, you will no longer get your SPR effective with the date of completion of the ERA setup.

 

 

PC PRINT

Free Medicare ERA Software Medicare provides free downloadable translator software that can both read ERAs as well as print the equivalent of an SPR.

PC-Print is available for Institutional Providers, and Medicare Remit Easy Print (MREP) is available for Professional Providers. These software products enable you to store, view, and print RAs when you need them, thus eliminating the need to request or await mail delivery of SPRs. The software also enables you to export special reports to Excel and other application programs you may have.

Note: CMS provides these software tools in downloadable form at no charge.

 

 

 

Institutional paper claim form (CMS-1450)

The CMS-1450 form (aka UB-04 at present) can be used by an institutional provider to bill a Medicare fiscal intermediary (FI) when a provider qualifies for a waiver from the Administrative Simplification Compliance Act (ASCA) requirement for electronic submission of claims

 

 

An adjustment refers to any change that relates to how a MAC paid a claim differently than the original billing. There are seven general types of adjustments:

  1. Denied claim
  2. Zero payment
  3. Partial payment
  4. Reduced payment
  5. Penalty applied
  6. Additional payment
  7. Supplemental payment ​​

 

 

Avoid future errors by identifying potential problems with the way original claims were submitted When you receive an SPR, you may:

  • Post manually to accounts receivable
  • Use it to correct any errors that you may have encountered during claims processing and
  • Bill secondary health care plans that cover the beneficiary ​​

 

 

FORWARDING BALANCE

What does forwarding balance mean on my remittance notice?

Forwarding balance means that a negative value represents a balance moving forward to a future payment advice. A positive value represents a balance being applied from a previous Remittance Advice (RA). A reference number (the original ICN and the patient’s Medicare ID number) is applied for tracking purposes.

What does that mean?

A negative value represents a balance that will be moved forward to a future remittance payment advice.

This means that an overpayment for a specific claim or claims (on this remittance) has been created because Medicare has paid for a service that should not have been allowed or has paid too much for a service.

Your remittance notice will show the corrected allowed amounts for the adjusted claim(s).

A positive value represents a balance that is being applied from a previous remittance advice.

This means they are notifying you that they have completed an adjustment on a claim or claims (included in this remittance) and they have determined that an additional payment is due in part or in full for a previously processed service(s).

Your remittance notice will show the corrected allowed amounts for the adjusted claim(s). A reference number (the original ICN and the patient’s Medicare ID number) will be provided for tracking purposes. ​​

 

 

Electronic Funds Transfer

With Electronic Funds Transfer (EFT), Medicare can send payments directly to a provider’s financial institution whether claims are filed electronically or on paper. All Medicare providers may apply for EFT.

Advantages of EFT

EFT is similar to other direct deposit operations such as paycheck deposits, and it offers a safe modern alternative to paper checks. Providers who use EFT may notice the following benefits:

  • Reduction to the amount of paper in the office
  • Valuable time savings for staff and avoidance of hassle associated with going to the bank to deposit a Medicare check
  • Elimination of the risk of Medicare paper checks being lost or stolen in the mail
  • Faster access to funds; many banks credit direct deposits faster than paper checks
  • Easier reconciliation of payments with bank statements.

 

How to Enroll in EFT

All Medicare contractors include an EFT authorization form in the Medicare enrollment package, and providers can also request a copy of the form after they have enrolled.

 

 

EFT Formats

Medicare contractors can use one of two formats to transmit provider electronic claim payments to financial institutions:

  • Automatic Clearinghouse (ACH) format, or
  • Table 1 of the Accredited Standards Committee (ASC) X12 835 version 5010 implementation guide which was adopted as a national standard under HIPAA for electronic payment and remittance advice. Both of these formats are considered national standards.