In healthcare billing practices, electronic remittance advice (ERA) is one of the most efficient and effective ways to manage accuracy and communication in a patient’s billing process with the insurance payer. Read on to learn more about ERA in medical billing and how it applies to your operation’s financial management.

What Is ERA in Medical Billing?

So what exactly does ERA stand for in medical billing? It is the digital format of file 835. It is a virtual copy of the payer’s explanation of benefits (EOB) document. ERAs are sent from a payer to your healthcare practice, outlining the details of a specific claim, including whether the claim was paid, denied, or adjusted in some way. This information enables the healthcare practice to properly manage its cash flow and understand any concerns related to a filed claim.

ERA must be transmitted in a way that maintains compliance with HIPAA ANSI X12 5010 format. A provider that receives this format will not receive a standard paper remittance (SPR) through the mail. In short, it is the same information but contained in an electronic form, often with more robust details.

It is important to distinguish an electronic funds transfer (EFT) from an ERA, though they can seem similar. An EFT transfers a payment from the health plan to the provider’s bank account. An EFT transaction will show the amount paid, the names and identification of all parties, and the payment date.

What Is an ERA in Medical Billing Communicating?

An ERA transaction provides the healthcare practice with crucial information about a claim that the provider made to the insurance payer to cover the patient’s care. It includes:

• Denials of payment
• Confirmation of payment
• Adjustments to payments
• Contract agreements
• Secondary health plan information
• Patient benefit coverage
• Capitation payments
• Expected coinsurance and copay data

The Challenges of ERA in Medical Billing

Some healthcare providers worry about the transition to ERA, and rightfully so. There are numerous steps in the process and much to consider. Some of the most common concerns that healthcare practices have include:

• Learning curve: This could be a newer process for some, which means providers must teach team members how to handle the process itself and all HIPAA compliance requirements related to it.
• Integration: Another factor to consider is integrating existing tools into an ERA software product. The technology you use must communicate properly.
• Data security: Many organizations have key concerns about privacy standards and data security. To avoid violations and compliance risks, healthcare providers must move to ERA in a way that maintains all HIPAA requirements.

Notably, reliable, efficient, and specifically designed ERA software can minimize these risks. The right tools and resources ensure workflow improves by streamlining the process for employees without a steep learning curve. Once they learn the system, protecting privacy and data confidentiality is easier. Also, some of the most reliable ERA software programs handle most of the tasks needed and integrate well into existing systems.

ERA Healthcare Billing and Errors

Another component of using ERA in healthcare to note is its value in minimizing risks and errors. Much of the process is automated, meaning information flows from the payer to the provider without delay. This can also provide insight into what is “not right” about a claim.

The ERA documentation provides specific information about denials and adjustments. Should a payer deny a claim, the provider can:

• Note the denial quickly (faster than waiting for a paper document)
• Gather data using the related codes to determine what was wrong with the original claim, facilitating a faster resolution

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