The X12 820
transaction set provides the EDI format for transmitting information relating to payments. It is typically used in conjunction with an electronic transfer of funds for payment of goods, insurance premiums or other transactions. The actual funds transfer is often coordinated through the Automated Clearinghouse (ACH) system, and an 820 may be effectively wrapped in an ACH banking transaction.
The 820 transaction is used in a number of situations:
- by businesses to provide instructions to banks for making a payment, such as a funds transfer, to a payee
- by businesses directly to individual suppliers to communicate the details of a pending payment, including adjustments reflected in the payment
- by companies providing premium payment information to health insurance plans
The information provided in an 820 document includes payer and payee identification, bank and account IDs, invoice number(s), adjustments from an invoice, billed and paid amounts. This information allows the suppliers and health plans to reconcile payments they receive against invoices they have issued.
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.
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This X12 Transaction Set contains the format and establishes the data contents of the Payment Order/Remittance Advice Transaction Set (820) for use within the context of an Electronic Data Interchange (EDI) environment. The transaction set can be used to make a payment, send a remittance advice, or make a payment and send a remittance advice.
This transaction set can be an order to a financial institution to make a payment to a payee. 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.