Basics of Medicare Remittance Advice (RA)

The A/B Medicare Administrative Contractors (A/B MACs), and Durable Medical Equipment Medicare Administrative Contractors (DME MACs) send to providers, physicians, and suppliers, as a companion to claim payments, a notice of payment, referred to as the Remittance Advice (RA). RAs explain the payment and any adjustment(s) made during claim adjudication. For each claim or line item payment, and/or adjustment, there is an associated remittance advice item. Adjustment is defined as denied; zero payment; partial payment; reduced payment; penalty applied; additional payment; and supplemental payment. Payments and/or adjustments for multiple claims can be reported on one transmission of the remittance advice. RA notices can be produced and transferred in either paper or electronic format.

  • The A/B MACs and DME MACs also send informational RAs to nonparticipating physicians, suppliers, and non-physician practitioners billing non-assigned claims (billing and receiving payments from beneficiaries instead of accepting direct Medicare payments) unless the beneficiary or the provider requests that the remittance advice be suppressed. 
  • An informational RA is identical to other RAs but must carry a standard message to notify providers that they do not have appeal rights beyond those afforded when limitation on liability (rules regulating the amount of liability that an entity can accrue because of medical services which are not covered by Medicare applies.
  • The MACs are allowed to charge up to a maximum of $25 for generating and mailing, if applicable, duplicate remittance advice (both electronic and paper) to recoup costs when generated at the request of a provider or any entity working on behalf of the provider.

Group Codes, Claim Adjustment Reason Codes, and Remittance Advice Remark Codes are used to explain adjustments at the claim or service line level. Provider Level Adjustment or PLB Reason Codes are used to explain any adjustment at the provider level.

Group Codes

A group code is a code identifying the general category of payment adjustment. A group code is always used in conjunction with a claim adjustment reason code to show liability for amounts not covered by Medicare for a claim or service. MACs always use appropriate group, claim adjustment reason, and remittance advice remark codes to communicate clearly why an amount is not covered by Medicare and who is financially responsible for that amount. Valid Group Codes for use on Medicare remittance advice is as follows:

  • CO (Contractual Obligations): This group code is used when a contractual agreement between the payer and payee, or a regulatory requirement, resulted in an adjustment. Generally, these adjustments are considered a write-off for the provider and are not billed to the patient. 
  • OA (Other Adjustments): This group code is used when no other group code applies to the adjustment. 
  • PR (Patient Responsibility): This group code is used when the adjustment represents an amount that may be billed to the patient or insured. This group would typically be used for deductible and co-pay adjustments.

Claim Adjustment Reason Codes

Claim Adjustment Reason Codes (CARCs) are used on the Medicare electronic and paper remittance advice and Coordination of Benefit (COB) claim transaction. The Claim Adjustment Status and Reason Code Maintenance Committee maintain this code set. These codes were developed for use by all U.S. health payers. As a result, they are generic, and there are a number of codes that do not apply to Medicare. These reason codes explain the reasons for any financial adjustments, such as denials, reductions, or increases in payment. These codes may be used at the service or claim level, as appropriate. 

Remittance Advice Remark Codes

Remittance Advice Remark Codes (RARCs) are used in remittance advice to further explain an adjustment or relay informational messages that cannot be expressed with a claim adjustment reason code. Remark codes are maintained by CMS but may be used by any health plan when they apply. There is another type of remark code that does not add a supplemental explanation for a specific adjustment but provides general adjudication information. These “Informational” remark codes start with the word ‘Alert’ and can be reported without Group and Claim Adjustment Reason Code. An example of an ‘Informational’ RARC would be:

  • MA01: Alert: If you do not agree with what we approved for these services, you may appeal our decision. To make sure that we are fair to you, we require another individual that did not process your initial claim to conduct the appeal. However, in order to be eligible for an appeal, you must write to us within 120 days of the date you received this notice unless you have a good reason for being late.

We shared the basics of Medicare Remittance Advice (RA) from Medicare Claims Processing Manual Chapter 22 for reference purposes. You can refer to the below-mentioned link for more information.  Medical Billers and Coders (MBC) is a leading medical billing company providing complete revenue cycle services. We can assist you in credentialing and enrollment with Medicare, Medicaid, and private insurance carriers. We can also assist in ERA/EOB and EFT enrollment for Medicare. To know more about our complete medical billing and coding services, contact us at 888-357-3226

Reference: Medicare Claims Processing Manual Chapter 22

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