Health care payers and intermediaries use the 277 transaction set to notify providers about the status of submitted claims. Typically sent in response to claim submissions (such as those transmitted via 837 transactions), the 277 allows payers to communicate detailed information about claim processing, adjudication results, and any actions required. The transaction relies on several key segments to convey this information: the HL (Hierarchical Level) segment establishes the structural relationships between entities such as subscribers, patients, and claims; the STC (Status Information) segment reports the specific status codes and descriptions for claims or individual services; and the SVC (Service Information) segment identifies particular line items or services within a claim and their associated statuses.

Consider how Blue Cross Blue Shield processes a claim submission from Metropolitan Hospital. After receiving the claim through an 837 transaction, Blue Cross generates a 277 notification that identifies the hospital as the submitter, the patient and subscriber information through hierarchical relationships, and then uses STC segments to communicate whether the claim is pending review, approved, denied, or requires additional documentation. If specific services within the claim have different statuses—for example, one procedure approved at 80 percent and another denied as non-covered—the 277 uses the SVC segment to itemize each service and its corresponding STC status information. Metropolitan Hospital receives this notification and updates its internal accounting systems accordingly.