What is the purpose of a remittance advice?

The purpose of a remittance advice is to provide a detailed breakdown of the payment made by a payer, which includes information about any claims that have been denied or rejected. It serves as a communication tool between the payer (such as an insurance company) and the healthcare provider, offering clarity on the status of submitted claims. This can help providers understand the reasons behind any denials or reductions in payment, allowing them to address these issues effectively.

In addition to clarifying the status of claims, remittance advice also details payments made, adjustments applied, and any patient responsibilities. This crucial information helps healthcare providers reconcile their accounts and follow up appropriately, making it an essential element of the revenue cycle management process. It is distinct from other documents like billing statements or financial agreements, as its primary focus is on payment processing and claim resolutions.