Health plan payers (such as insurance companies and managed care organizations) send this transaction set to healthcare providers, facilities, and billing services to communicate the results of claim adjudication and provide payment details. Sent in response to healthcare claim submissions (X12 837), the 835 uses the BPR (Beginning Segment for Payment Order/Remittance Advice) segment to convey payment instructions and banking information, the CLP (Claim Level Data) segment within the Loop 2100 structure to detail the adjudication outcome for each claim, and the CAS (Claims Adjustment) segment to itemize specific reasons for claim modifications such as denials, reductions, or bundling.

For example, Midwest Insurance Company processes a claim submitted by Dr. Sarah Chen’s practice for emergency department services. Midwest’s system generates an 835 transaction stating via the BPR segment that payment of $2,850 will be deposited to the practice’s designated bank account on the 15th of the following month. Within the CLP segment, Midwest identifies the specific claim and indicates that the billed amount of $3,200 has been adjusted. Multiple CAS segments then explain the reductions: $200 was disallowed as not medically necessary, $150 was a contractual write-off, and the remaining $2,850 was approved and will be paid. If the claim contained multiple service line items, individual SVC segments in Loop 2110 would detail adjustments applied to each service separately.