Background

The 835’s purpose is to allow the receiver to automatically post the remittance detail at either the claim or service line level. The governing principles are based upon the receiver’s needs and the enabling of automation, rather than the sender’s systems and their internal constraints. While this situation is frequently considered to be coordination of benefits, it also applies when the payer doesn’t actually coordinate benefits. In all instances below, references to a prior payer also include instances where that prior payer is the same payer that had adjudicated the claim under a different coverage. The principles involved are based upon a provider receiving multiple claim payments (2100 loops) related to a single patient accounting record or event.

In the case of claims that involve multiple payers, the fact is that each claim received within an 835 transaction must account for 100% percent of the original submitted charge for the related services. Every claim reports the same original submitted charge, not just the unpaid balance. Each claim must report adjustments and payments for the claim that also account for 100% of the original submitted charges. Because the results reported by subsequent payers must include information from the prior payers in order to balance, care must be taken to ensure that amounts are not sent in a way that providers will post multiple times. Since the provider’s system can only account for 100% of the original submitted charge it should be clear that the provider should not re-post amounts that were already reported by the prior payer(s).

When it comes to a secondary or later claim payment, items that have already been posted must not be re-posted to the provider’s Accounts Receivable (AR). Reposting of prior payer payments or contractual adjustments would negatively impact the AR system (i.e., cause negative balances). To automate posting, those prior posted items must be identifiable to the system so that they can be handled appropriately as informational and not be posted to the AR. That is where Claim Adjustment Reason Code (CARC) 23 applies. CARC 23 currently has a description that reads “The impact of prior payer(s) adjudication including payments and/or adjustments. (Use only with Group Code OA)”. The term “impact” in that description and within section 1.10.2.13 of the 835 TR3 is to be used to identify the payments and contractual reductions that have already been posted to the AR by the provider. This even applies when the secondary payer doesn’t take into account what a prior payer actually adjudicated. It isn’t about the payer or the payer’s system or processes or contracts or business – it is about the provider’s AR system, automation and posting.

It must be assumed that by sending prior adjudication detail to the subsequent payer(s), the provider has accepted and posted all previous information to the AR system.

As a result, we have a few guiding principles that apply when a payer is reporting a claim in an 835 transaction that another payer has already adjudicated:

• Report the total charge amount

• Do not repeat any contractual adjustments that the provider would have already posted to their AR

• Do not repeat any payment information that a provider would have already posted

• Include a CAS*OA*23 segment that includes the total of the above two bullets as the adjustment amount

• Report additional contractual adjustments that the provider needs to post to the AR in a CAS segment(s) with the appropriate CARC (not 23).

• Report remaining patient responsibility that the provider can bill to the patient or a subsequent payer in a CAS segment with the appropriate CARC representing the current payer’s adjudication (not 23).

• Report additional payment that the provider needs to post to the AR

While 835 TR3 section 1.10.2.13 uses different terms to describe the reasoning, this is the same intended message.

Process

The 835 TR3 identifies the ‘how’ using these four steps:

• Report the claim coverage amount or service allowed amount in the claim level AMT segment using qualifier AU (claim level) or B6 (service level) in AMT01.

• Report any adjustments related to patient responsibility where the patient is still responsible for the adjusted amount after coordination of benefits with the previous payer(s) using Claim Adjustment Group Code PR.

• Report any prior payer(s) payment and adjustment amounts other than patient responsibility that resulted from adjudication using Claim Adjustment Group Code OA and CARC 23.

• Report any additional contractual obligations, not previously reported by prior payer(s) that may remain after coordinating benefits with the other payer, using Claim Adjustment Group Code CO.

These steps would not apply to the first payer to adjudicate the claim.

Additional examples of complex scenarios

Scenario 1: Secondary payer paying more than remaining patient responsibility but less than billed charges

For various reasons a second payer may be prepared to pay more than the remaining patient responsibility. This occurs when the second payer’s allowed amount is greater than the primary payer’s allowed amount. Then the higher allowed amount will be the basis for the payment consideration. When that occurs, the OA 23 does not reflect the full payment and contractual reductions from the primary. It is reduced by the portion (additional amount) of what the secondary payer will consider payable to the provider.

Scenario 2: Secondary payer allowing more than remaining patient responsibility and more than billed charges

In the situation where the secondary payer allows more than the submitted charges, the difference between submitted charges and the secondary allowed amount is reported with CARC 94 (Processed in excess of charges) with Group Code OA as a negative dollar amount. Remember that a negative dollar amount in the CAS segment represents money paid to the provider.

Scenario 3: Primary payer allowing more than billed charges. Secondary payer allowing the same amount.

While the 005010X221A1 TR3 does not contain explicit instructions, the Payment Information Workgroup’s recommendation is displayed below.

Scenario 4: Primary payer allowing more than billed charges. Secondary payer allowing more than billed charges, but less than what the primary allowed.

While the 005010X221A1 TR3 does not contain explicit instructions, the Payment Information Workgroup’s recommendation is displayed below.

Scenario 5: Primary payer allowing more than billed charges. Secondary payer allowing only billed charges

Scenario 6: Primary payer covered charges. The secondary does not cover these same charges.

Scenario 7: How to handle Group Code PI adjustments reported by prior payers

When a payer receives a secondary or tertiary claim reporting a PI adjustment from the previous payer, do not add that amount into the OA23 adjustment. Adjudicate the amount remaining after the OA23 according to your own policies. For example, if you have a contract with the provider and determine that part or all of the remaining amount is not the member’s responsibility and not being paid by you, then adjust it with a CO. If you do not have a contract with the provider, you may choose to adjust that amount with a PI or a PR. Multiple adjustments may apply. Any appropriate remaining amount, per the patient's benefits, is your payment on the claim or service.

Scenario 8: When OA23 does not apply

Within the business of the 835, there are certain concepts or situations that don’t fit into the traditional COB model. Just because a payer is secondary does not mean they are the second to pay on a claim.

For example, take a situation where the first payer to receive and adjudicate a claim determines that they do not cover the claim and that, from their perspective, the full charges are then the provider or patient’s responsibility. Examples include non-covered service, benefits excluded, deductible, out of network provider, invalid pharmacy prescriber, Medicare supplemental plans, etc.

The claim is sent to a second payer, and the related 837 would include the identification of the first payer, as well as their adjudication results. That second payer to receive the claim determines that they will consider the full charge amount during adjudication. The second payer does not report any amount using CARC 23.

Other examples when OA 23 does not apply include:

• Duplicate claim

• Secondary claim received but the payer determines that they are primary

• Claim requiring additional information prior to benefit application

Glossary of industry codes used in this document