By Bilscure Editorial Team · Published · Last reviewed
Key takeaways
- The ERA goes to the practice, and the EOB goes to the patient. Both describe one payment decision.
- The ERA and the money often arrive separately, since the money usually comes as an electronic funds transfer (EFT).
- Group codes and reason codes explain why a claim paid less than billed.
- Auto-posting saves time, but a person still has to work the denials.
Defining the term
An electronic remittance advice (ERA) is a payer's electronic explanation of payment. For each claim it shows what was billed, what the payer allowed, what it paid, what it adjusted and why, and what is left for the patient. Practices use it to post payments and to spot claims that need attention.
The standard format is the 835 transaction. Nobody reads it raw. Your billing system or clearinghouse converts it into a report you can follow.
ERA and EOB
An explanation of benefits (EOB) is addressed to the patient. It is not a bill. It shows what the insurer processed and what the patient may owe. The remittance advice goes to the provider. Same claim, different reader.
A paper remittance advice (RA) does the ERA's job when a payer has not gone electronic. Billing teams favor the ERA because it can be posted without retyping.
ERA and EFT
The ERA explains. The electronic funds transfer (EFT) pays. They may land on different days, so a deposit with no ERA is a reconciliation task and not a puzzle. CMS explains electronic billing and EDI transactions and how they relate for Medicare.
Reading a line
Look at four items:
- Billed versus allowed. The allowed amount is what the payer's contract says the service is worth.
- Paid. What is actually being sent.
- Adjustments. The gap between billed and paid, broken down by cause.
- Patient responsibility. The portion passed to the patient as copay, deductible or coinsurance.
Each adjustment carries a group code and a reason code. The group code says who owns the amount. CO is a contractual write-off the practice agreed to. PR is patient responsibility. OA is another adjustment, and PI is a payer-initiated reduction.
The reason code, called a CARC, says why. X12 maintains the list, and you can search the official CARC list. Some lines also carry a remark code (RARC) with extra detail.
Posting an ERA the right way
- Tie the ERA to the deposit with the trace number so every dollar is accounted for.
- Post payments and contractual write-offs to each claim.
- Move the patient's share to their account and send a statement.
- Flag any line paid at zero or below the allowed amount.
- Work each flagged line promptly: correct, resubmit or appeal.
Auto-posting covers steps 2 and 3 for clean lines. A good biller earns their keep at step 5, where the reason code points to the real cause.
Typical problems
- A deposit with no ERA, or an ERA with no deposit
- Payment posted to the wrong patient or service date
- Write-offs that do not match the contract
- Denials booked as adjustments and never worked
- Patient statements sent before the secondary insurance paid
Where this advice does not apply
If your system already auto-posts and your team clears denials within days, you do not need help with remittance. If your volume is very low, posting by hand can be perfectly fine.
How we handle them
We post ERAs inside your EHR or practice management system, reconcile them to deposits and work denials the same day. Collections, A/R and denials show on a live dashboard. Read about our medical billing services, the guide to revenue cycle management or pricing.
This article is general information, not legal or compliance advice. Payer rules and regulations change, so confirm current requirements with the payer or the governing agency.