Medicare EDI and HIPAA Transactions Explained: 837, 835, 276/277, 270/271 and Acknowledgments

EDI, electronic data interchange, is the use of nationally established standards to exchange information electronically between business partners. HIPAA turned it into law for health care: it required standard formats for electronic claims and the transactions around them. Medicare fee-for-service follows those standards, and CMS says that all other health care EDI formats became obsolete on October 16, 2003. If you submit claims, check eligibility, track claim status or post payments, you are already using these transactions, often without seeing them.

What HIPAA standardized

The standard transactions are named in Part 162 of Title 45 of the Code of Federal Regulations. They come from two standards bodies: ASC X12 for medical, dental and institutional transactions, and NCPDP for pharmacy. Medicare fee-for-service uses ASC X12 version 5010 implementation guides for its claim, remittance, claim status and eligibility transactions, and NCPDP version D.0 and batch 1.2 for pharmacy claims at the DME MACs.

The life of a claim, step by step

1. Eligibility (270/271). You ask the payer about a patient’s coverage and it answers. Do this before the visit, not after the denial.
2. The claim (837). One standard for each of professional, institutional and dental claims. You send it directly or through a clearinghouse or billing service.
3. Acknowledgments (TA1, 999, 277CA). The replies that tell you whether the claim got in, covered next.
4. Claim status (276/277). You ask about a claim, and the payer’s 277 says where it is.
5. Remittance (835). The electronic explanation of payment: what was paid, what was adjusted and why. This is what your posting and denial work start from.

Three acknowledgments, three different questions

HIPAA does not require the acknowledgments, but Medicare requires its A/B MACs and the DME front end to send them, and most payers send something similar. Each answers a different question, and reading them in order tells you exactly where a claim stopped.

• TA1, the interchange acknowledgment. Was the envelope around your file readable? A problem here means nothing inside was looked at.
• 999, the implementation acknowledgment. Did each transaction follow the implementation guide? It reports syntax errors, and Medicare also uses it to confirm receipt of claims without errors, unless the submitter asks not to receive those.
• 277CA, the claim acknowledgment. Did each claim pass the payer’s business edits and get accepted? For Medicare, an accepted claim has passed the translator and the Combined Common Edits/Enhancements Module (CCEM) and has been given a claim control number, which comes back on the 277CA.

Two practical points follow from CMS’s manual. First, a 999 can be purged from your mailbox after five business days if you do not download it, though contractors are encouraged to keep it up to 30 days. If you miss it, a claim status query gives comparable information. Second, if that query shows no record of the claim, it was probably rejected at the front end for a syntax error, and you can correct and resubmit it to get a fresh 999.

How Medicare EDI is set up

Medicare fee-for-service EDI runs through the A/B MACs, the Common Electronic Data Interchange (CEDI) front end for DME MACs and, where CMS designates it, the new Technical Consolidation of EDI (TCEDI) gateway. The manual defines the pieces you will meet in onboarding.

• Submitter. The entity that owns the data being submitted, usually the provider, directly linked to each billing NPI.
• EDI enrollment. Documents which transactions you will exchange and how you will send them.
• EDI registration. Names the Medicare contractor you will work with and commits both sides to policies that protect the security and integrity of the data.
• Trading partner agreement. Covers the integrity of the electronic exchange between the parties.
• Third party agreement. Required when an agent represents you, such as a billing service, clearinghouse or certain value-added networks.

You do not need your own translator or a clearinghouse to bill Medicare: the manual says contractors make free claim submission software available and support it, along with software that converts an 835 into a printable document. Whether to send directly, through a clearinghouse or through a billing service is a business decision about volume, staff and the other payers you bill. The exact enrollment steps vary by MAC, so start with your contractor’s EDI page.

Is electronic billing required?

Mostly yes. The Administrative Simplification Compliance Act (ASCA) and the regulation at 42 CFR 424.32 require initial Medicare claims to be submitted electronically, with limited exceptions, and Medicare may not pay paper claims that do not qualify. Initial claims include resubmitted rejected claims, claims with paper attachments, demand bills and claims where Medicare is the secondary payer; they do not include adjustments, corrections or appeals.

• Small providers are exempt. That means fewer than 25 full-time equivalent employees for a provider billing a Part A MAC, and fewer than 10 for a physician, practitioner, facility or supplier billing a Part B MAC or DME MAC.
• Some claim types cannot be sent in the standard formats, and providers self-assess for them. Roster billing of vaccinations is the example CMS gives.
• The requirement does not apply to claims submitted by beneficiaries, to providers who only furnish services outside the United States, or to claims for Medicare managed care plans or any health plan other than Medicare.

Medicare is not the only payer

HIPAA binds health plans, clearinghouses and providers who conduct the standard transactions electronically, so Medicaid and commercial payers use the same standards. What differs is the detail: payers publish their own companion guides that say which optional data they want and how they respond, and they set their own edits. Test with each payer rather than assuming that what works for Medicare works everywhere.

A setup and monitoring checklist

1. Know who your submitter, clearinghouse and billing software are for each payer, and keep the enrollment and agreements current.
2. Reconcile every day. Match what you sent (837) to what came back (TA1, 999, 277CA) so no claim sits unacknowledged.
3. Work rejections the same day. They are the cheapest errors to fix because the claim has not started adjudication.
4. Use 276/277 sparingly and on purpose, for claims that are overdue, not for every claim.
5. Post from the 835 and reconcile it to the bank deposit. Route adjustments and denial reasons to the people who can fix the cause.
6. Keep an audit trail of what was sent and received, and limit who can see it. These files contain protected health information.
7. Ask your vendors and payers, in writing, how and when they will handle changes like TCEDI and the claims attachments rule.

Frequently asked questions

Major updates