Understanding Remittance Advice

When you file a claim to an insurance company and it gets finalized, you, as the provider, will get remittance advice, which explains the insurance company’s rationale for that claim’s payment (or lack of). The remittance advice is sent to you as a written summary of what the insurance company will cover for a particular claim—what the insurance company paid, the amount that was applied to a client’s deductible, and what amount may now be due from your client. Remittance advice is oftentimes accompanied by a check or statement of electronic payment.

Depending on the insurance company, remittance advice can go by a few names. We’ve often seen paper remittance called Explanation of Payment (EOP) or Explanation of Provider Payment (EPP). If you get the information digitally, it’s called Electronic Remittance Advice (ERA). On the other side of the coin, patients receive an Explanation of Benefits (EOB), which gives them similar information. To make things easier in this post, let’s use EOP as our terminology of choice.

Here’s a sample EOP from Cigna.

On the EOP, generally in the table or on the far right side, you may see a few codes that explain the payments in further detail. These notes are called “remark codes” and are important to understand—in the case of a denial, they’ll help you determine what to fix on a claim before you file it again.

Should the EOP state that your client was fully covered by insurance but that the total charge was less than your hourly rate, note that Healthy Bytes does not recommend “balance billing” aka charging your clients the difference between your hourly rate and what insurance pays. This is tricky to get right and we do not recommend the practice of balance billing as it depends on the state that you're in and the contract you signed with each insurance company.

On some insurance company EOPs, you'll see a statement similar to "…The patient does not owe more than the insurance company pays." This means that once a payment has been paid to the provider, the patient owes no more than that amount and must not be charged extra. Sometimes this will mean you'll have to reimburse the patient. Other companies do not take a stance on balance billing. Either way, the details will be in your contract and your billing ally can help you sort through this, should you have questions.

You likely receive EOBs from your own medical providers – doctor, dentist, etc. They’re easy to spot as they often read “This is not a bill” on the form and outline the amount that your health insurance company covered for your last visit. It’s important not to speed-read an EOP – whether your own or your client’s – but instead, make sure the following are correct: 

  • Provider name 

  • Date of service

  • Service charges, any co-pay amounts and/or co-insurance amounts, amount due

Healthy Bytes also suggests filing away those EOPs for a few months or so, just in case you need them to bill a secondary insurance or in the event of a denied claim. 

What questions do you have regarding remittance advice?