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Understanding 835 files is essential for long-term care providers, as errors or oversights in these files can result in significant revenue loss or inaccuracies in billing. The 835 files or Electronic Remittance Advice (ERA) are electronic transaction files generated by health insurance companies and sent to healthcare providers, detailing payment transactions. They are critical for accurate payment reconciliation and revenue optimization and contain a range of information, including: 

  • Charges that were paid, reduced, or denied
  • Deductible, co-insurance, or co-pay amounts
  • Any bundling or splitting of claims
  • How payment was made to the healthcare provider

The files are then sent to healthcare providers electronically and can be accessed through healthcare provider portals, clearinghouses, and long-term care software. Using NetSolutions EHR, for instance, staff can import an 835 file, creating a receipt batch for long-term care staff to post the payments. 

The benefits of 835 files in long-term care include:

A nurse looking at 835 files in a portable device
By using 835 files, the risk of errors is significantly reduced, as the electronic data is automatically transmitted and accurately processed.
  1. Eliminating manual data entry: In traditional paper-based systems, healthcare providers must manually enter the payment and remittance data from paper-based sources into their practice management or medical billing services in California, which is time-consuming and prone to errors. With 835 files, meanwhile, the payment and remittance information is sent electronically, eliminating the need for manual entry and saving time and effort.
  2. Reducing posting errors: Manual data entry is often prone to errors, such as typos, and transposition errors. By using 835 files, the risk of such errors is significantly reduced, as the electronic data is automatically transmitted and accurately processed. This ensures that payment and remittance data is accurately recorded in the long-term care billing system.
  3. Increasing efficiency and saving money: Reducing posting errors saves healthcare providers a significant amount of money by reducing the need for costly follow-up and correction procedures.

Accurate payment reconciliation is essential for long-term care providers, who manage complex billing and reimbursement processes for various services—from skilled nursing care to rehabilitation therapy. 

Further, 835 files play a critical role in preventing payment errors and ensuring accurate payment reconciliation in long-term care. By providing detailed information about payment transactions—including the amounts billed, paid, and adjusted, as well as the reason for any denials or adjustments—835 files enable healthcare providers to track payments and identify any discrepancies or billing errors.

The 835 Healthcare Policy Identification Segment Explained

Financial staff in a nursing home analyzing the 835 healthcare policy identification segment.
If present, the 835 Healthcare Policy Identification Segment provides additional information about a denial.

Before we dive into errors commonly made when using 835 files, let’s first discuss the 835 healthcare policy identification segment. In healthcare billing, a claim is submitted by the long-term care provider to the payor (typically an insurance company or Medicaid) for reimbursement of services rendered to a resident. 

The payor then reviews the claim to determine if it meets their requirements for reimbursement. If the claim is denied, the provider may need additional information to understand why the denial occurred and what steps they need to take to rectify the situation.

This is where the 835 Healthcare Policy Identification Segment comes in. If present, this segment provides additional information about the denial, such as the specific policy or reason code used by the payer to deny the claim. This can help the provider identify the issue with the claim and take the necessary steps to correct it.

One should note that the 835 Healthcare Policy Identification Segment is not always present. This may be because the payor did not include this information or because the provider’s Electronic Data Interchange (EDI) vendor is not set up to receive it. In either case, providers should check with their EDI vendor to determine if they are set up to receive this information and how it can be accessed.

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Differences Between 835 vs. 837 Files

Before we wrap up, it is worth looking at the differences between 835 vs. 837 files. As we previously discussed when defining 835 files,  835 files in healthcare are the electronic transaction files that provide claim payment information and document the Electronic Funds Transfer (EFT). This includes the 835 healthcare policy identification segment, which contains added information related to a claim being denied.

A nurse learning about 835 vs. 837 files
The 837 files are generated by the healthcare provider, while the payor generates the 835 files.

Also contained in 835 files is information about the payment made by the payor to the long-term care provider for the services provided to the resident. The 835 file details the payment amount, adjustments, and reason codes for any denied claims. Financial staff can then use this file to reconcile their accounts receivable with the payments received from the payor.

As for the 837 file, it is a standard electronic file format for healthcare claim submissions. It contains information about the services provided to a resident by a long-term care provider, along with details about the resident, provider, and payor. This file is used to submit claims to insurance companies or government reimbursement agencies for payment of healthcare services. The 837 file can be created by long-term care providers, billing companies, or clearinghouses and is sent to the payor for adjudication.

The main difference between the two files is that the 837 files are used to submit payment claims, while the 835 files are used to receive payment and remittance advice. The 837 files are generated by the healthcare provider, while the payor generates the 835 files.

In case you are wondering how to read 835 files, the CMS states that the 835 format is for electronic transfers only, and one would need a special translator software, like the Medicare PC-Print translator software program, to print it in a readable format.

Best Practices for Managing 835 Files in Long-term Care

When it comes to dealing with 835 files, there are certain tips that can streamline the process for nursing homes and help their staff avoid common pitfalls:

  • Don’t assume: One of the biggest mistakes that people make when dealing with 835 files is assuming that everything will work smoothly without any issues. This is not always the case, and preparing for potential errors and discrepancies is essential. For example, the payment amount listed on the 835 files may not match the expected amount, or there may be missing information that needs to be addressed. By accounting for the likelihood of errors, you will be better prepared to deal when issues when they arise.
  • Don’t focus on what can’t be changed: While it’s vital for one to be aware of the limitations and constraints when dealing with 835 files, it’s also important not to get bogged down in what can’t be changed. Instead, it’s better to focus on what can be changed and how to maximize the available resources. For example, you might optimize existing processes and procedures or find creative solutions to work within existing constraints.

By keeping these tips in mind, you can ensure that your long-term care facility is well-equipped to deal with 835 files effectively and efficiently. 

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Elijah Oling Wanga