ASC X12 820 - Payment Order & Remittance Advice

Acronym: EDI

The EDI 820 transaction set specified under HIPAA 5010 establishes the format and data contents of the Payment Order/Remittance Advice for transmitting information electronically relating to payments. HIPAA 820 is used to pay by plan sponsors for insurance products, individual and group premiums, or to forward remittance advice, or both. The 820 may be a payment order directing a payment to a health plan. Payment reference information is communicated to enable the health plan’s system to match up the payment with coverages kept in force. Payments are frequently made in aggregate to cover several subscribers in a group policy. As electronic remittance advice, the 820 explains payment and partial payment. In healthcare, the 820 is similar to the EDI 835 transaction set. The 820 is specifically for plan sponsors – that is, companies providing healthcare benefits to their employees – to transmit information on premium payments to the health plans. The 835 is used by the health plans for transmitting information on payments to healthcare providers. The EDI 820 A1 transaction set can be used to make a payment, send a remittance advice, or make a payment and send a remittance advice. The information provided in an 820 document is payer and payee identification, bank and account IDs, invoice number(s), adjustments from an invoice, billed and paid amounts. This information allows suppliers and health plans to reconcile payments they receive against invoices they have issued. It can also be a remittance advice identifying the detail needed to perform cash application to the payee’s accounts receivable system. The remittance advice can go directly from payer to payee, through a financial institution, or through a third party agent.