How to Identify Billing and Remittance Discrepancies

Most healthcare billing runs on two electronic documents. The claim (the 837 transaction) tells the payer what was provided and what you're charging. The remittance advice (the 835 transaction, or a paper explanation of benefits) tells you what the payer decided, what it paid, and why. Discrepancies hide in the gap between the two.

Common types of discrepancies

• Underpayments: the payer paid, but less than your contracted rate or fee schedule.
• Partial or line-level denials: some services on a claim were paid and others were denied.
• Zero-pay claims: claims processed without payment that are easy to overlook if no one is watching.
• Recoupments and offsets: money taken back for an earlier claim, deducted from today's payment.
• Duplicate or misapplied payments: payments posted to the wrong claim, patient, or period.
• Deposits that don't match remittances: the bank deposit total differs from the remittance total.

Reconcile at three levels

Claim level. For each claim, compare the amount billed, the amount allowed, the amount paid, and the amount you expected based on your contract.

Payment level. Match each remittance to the bank deposit it arrived in. Electronic payments carry a trace number that ties the deposit to its remittance.

Ledger level. Confirm that what was posted to patient accounts and accounts receivable matches what arrived in the bank and what's recorded in your general ledger.

Read the adjustment codes

Remittances explain every adjustment with standard codes. Claim adjustment group codes tell you who is responsible for the difference:

• CO (contractual obligation): the amount you agreed to write off under your contract.
• PR (patient responsibility): deductibles, coinsurance, and copays owed by the patient.
• OA (other adjustment) and PI (payer-initiated reduction): other reductions that deserve a closer look.

Reason and remark codes add the detail. Tracking them over time shows which problems repeat.

Building a repeatable process

1. Load your contracted rates or expected reimbursement so every payment can be compared to a target.
2. Match remittances to claims automatically wherever possible.
3. Flag variances above a set threshold for review.
4. Tie each electronic payment to its remittance using the trace number.
5. Track recoupments separately so they don't disappear inside a deposit.
6. Follow up on every underpayment and denial, and record the outcome.

This is the kind of comparison our reconciliation technology automates. Learn more about our revenue cycle management services.