Payment Card Reconciliation via Authorization Code Linking
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Solution Overview
Problem
The existing systems face challenges in reconciling virtual payment card transactions with remittance advice files, particularly in the healthcare sector, where practice management software struggles to link virtual card payment data with 835 remittance advice and 837 claim files.
Innovation Solution
A payment processor generates an authorization code during the settlement of a straight-through payment transaction, which is then linked to the remittance advice in the 835 file. This authorization code is used to reconcile the virtual payment card transaction with the merchant statement and practice management software, automating the reconciliation and billing processes.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Productivity
If virtual payment card transactions are used to pay healthcare claims, then payment efficiency is improved, but the ability to reconcile payments with remittance advice files deteriorates
Solution Approach 1:
The patent segments the payment reconciliation process by introducing distinct functional blocks: an authorization code generation block that creates unique codes during payment processing, and an 835 file generation block that incorporates these codes into remittance advice files. This segmentation allows virtual card payments to be efficiently processed while maintaining traceability through the authorization codes that link payments to specific claims.
Solution Approach 2:
The authorization code serves as an intermediary element between the virtual payment card transaction and the 835 remittance advice file. This intermediary code bridges the gap between the payment processor and practice management software, enabling reconciliation without requiring direct integration or data sharing between these systems.
2Adaptability or versatility
If virtual payment card data is transmitted for payment processing, then payment capability is improved, but fraud risk increases
Solution Approach 1:
The patent extracts the authorization code from the virtual payment card transaction data and transmits it separately through the 835 remittance advice file. This extraction allows the payment capability to be maintained while reducing fraud risk, as the sensitive card data remains with the payment processor and only the authorization confirmation is shared with the healthcare provider.
Solution Approach 2:
Instead of transmitting actual virtual card data, the system creates and transmits a copy in the form of an authorization code through the 835 file. This copying mechanism preserves the payment verification function while eliminating the security risks associated with transmitting sensitive card information across multiple systems.
3Measurement precision
If practice management software is integrated with payment processors, then reconciliation accuracy is improved, but system complexity increases
Solution Approach 1:
The 835 remittance advice file serves as a universal communication standard that can be generated by any payment processor and read by any practice management software. This multi-functionality allows accurate reconciliation without requiring custom integrations between specific systems, as the standardized 835 format with embedded authorization codes provides a common language for all participants.
Data Source
AI summary
A payment processor acting on behalf of a third party administrator to make payment on an adjudicated claim makes a straight through payment to an acquirer for a health care provider's merchant account. Via the authorization process, the payment processor generates an authorization code which is returned to the health care provider on its merchant statement for the payment. Concurrently, the remittance advice from the third party administrator is linked to the same authorization code as the payment by the payment processor which sends the advice in an 835-formatted transmission to the health care provider. Thus, the remittance advice may be linked (reconciled) with the payment on the merchant statement by the common authorization code.