Glossary

Remittance terms, defined.

The words on an insurance remittance, and what they mean for what you're owed.

835ERA, electronic remittance advice: The HIPAA-standard electronic file (ASC X12 835) a payer sends with a payment. It lists every claim and service line paid or denied, the amounts billed, allowed and paid, and the adjustment codes that explain each difference.
837electronic claim: The HIPAA-standard electronic claim a provider sends to a payer. Therapy and other professional services use the 837P.
Allowed amount: The most a payer recognizes for a service under the provider's contract or the plan's fee schedule. The payer's payment plus the patient's share (copay, coinsurance, deductible) should add up to it.
Contracted ratefee schedule: The amount a payer agreed to pay for a procedure code, set out in a fee schedule that can vary by clinician license level, telehealth or in person, and effective date.
Underpayment: A claim line allowed for less than the contracted rate for that payer, code, clinician and date of service. The difference is owed to the provider.
CARCclaim adjustment reason code: A standard code on a remittance explaining why a payment differs from the amount billed, such as 45 (charge exceeds the fee schedule), 16 (missing information) or 109 (not covered by this payer).
RARCremittance advice remark code: A supplemental code that adds detail to a claim adjustment reason code, such as which piece of information was missing.
Group code: The two letters before an adjustment reason code that say who bears the adjustment: CO (contractual obligation, written off by the provider), PR (patient responsibility), OA (other adjustment) or PI (payer-initiated reduction).
Contractual adjustment: The difference between the billed charge and the allowed amount under the contract, usually reported as CO-45. The provider writes it off; it isn't billed to the patient.
Denial: A claim or service line the payer paid nothing on, with an adjustment reason code saying why. Many denials can be corrected and resubmitted or appealed.
Downcoding: When a payer processes a claim as a lower-level procedure code than the one billed, or reduces payment because it says the documentation doesn't support the level of service.
Credential tierlicense tier, licensure level: The license level a payer pays a clinician at. Many contracts pay doctoral clinicians (PhD, PsyD, MD, DO), nurse practitioners and master's-level therapists (LCSW, LPC, LMFT) different rates for the same code.
Add-on code: A procedure code billed only together with a primary service code on the same claim, never on its own. Behavioral-health examples include 90785 and 90840.
Recoupmentpayment offset, clawback: Money a payer takes back for what it says was an overpayment, by withholding it from a later payment. It appears as a provider-level adjustment (PLB) on the 835.
PLBprovider-level adjustment: The part of an 835 for amounts not tied to one claim, such as recoupments, interest and forwarded balances.
Prompt-pay law: A state law requiring insurers to pay clean claims by a deadline, with interest when they're late. In Tennessee, clean electronic claims are due within 21 days, with interest at 1% a month after that (Tenn. Code Ann. § 56-7-109).
Clean claim: A claim with no defect and all the information the payer needs to process it. Prompt-pay deadlines apply to clean claims; the exact definition comes from state law.
Timely filing limit: The deadline for submitting a claim after the date of service, set by the payer contract or plan. Claims filed late are denied, often with CARC 29.
Appealreconsideration: A request that the payer review and reprocess a claim it denied or underpaid, with the evidence. Appeal windows differ by payer and plan type and run from the payment or denial date.
Coordination of benefitsCOB: The rules deciding which plan pays first when a patient has more than one. Errors cause denials such as CARC 22 (another payer may cover it) or 109 (not covered by this payer).
Behavioral health carve-out: An arrangement where a health plan hands its mental health and substance use benefits to a separate company, which processes those claims. Claims sent to the medical plan instead are denied.
Telehealth modifier: A modifier on a claim line marking the service as telehealth: 95, GT, GQ, FQ, 93. Place of service codes 02 and 10 also mark telehealth.
Telehealth payment parity: A state law requiring insurers to pay telehealth at the same rate as the same service in person. Tennessee has one (Tenn. Code Ann. § 56-7-1002); self-funded ERISA plans generally aren't subject to it.
Fully insured plan: A health plan where an insurance company takes on the risk of paying claims, in exchange for premiums. State insurance laws, including prompt-pay, recoupment and telehealth parity laws, apply to it.
Self-funded planERISA plan: An employer health plan that pays claims from the employer's own funds, usually through an insurer acting as administrator. Federal ERISA rules govern it, and most state insurance laws, including prompt-pay laws, generally don't apply.
Business associate agreementBAA: The HIPAA contract a practice (a covered entity) signs with a vendor that handles its protected health information, binding the vendor to protect it and use it only for the agreed service.
Protected health informationPHI: Individually identifiable health information held by a covered entity or its business associates, such as a patient's name with the services they received. Remittances contain it.
42 CFR Part 2: The federal rule that adds protection to substance use disorder treatment records from federally assisted programs, limiting how they may be disclosed and used.