Medical billing involves numerous steps and types of documentation used to communicate transactions. Knowing the ERA and EOB differences in medical billing is critical for any organization in the industry, especially providers and insurers.
What Is ERA?
Electronic remittance advice (ERA) refers to a digital document sent from the payer to the medical provider. They send this document after it processes the claim, providing information about the transaction. An ERA will provide:
- Amount of payment
- Date the insurer made the payment
- Documentation of any denials or adjustments to the payment
The ERA provides much of the same information as an EOB but does so to the healthcare provider instead. This document enables the provider to reconcile accounts receivable and track the status of their current claims to the payer.
What Is EOB?
Explanation of benefits (EOB) is a document that is patient-facing, meaning it is sent from the payer. It’s important to note that an EOB is not a bill. Rather, the payer sends this information to the patient after a healthcare provider creates a medical claim and it has been processed. The EOB outlines numerous details of the transaction, including:
- What services the healthcare provider performs that were included in this claim
- Amount the healthcare provider charged for those services
- Amount the provider paid for those services
- Amount the patient owes for the care provided after insurance covers their portion
The EOB is an important document because it explains to the patient what was charged and paid for the care received. Providers do not often use it, though it is possible that a patient may question information on this form and turn to the provider for clarification.
What Is the Difference Between ERA and EOB?
To provide a better level of detail about the difference between EOB and ERA, consider the following:
Audience
Healthcare providers are sent the ERA while patients are sent the EOB. Both are sent directly from the insurance company.
Purpose
The ERA documents the payment sent to the healthcare provider for the service they provided. It helps verify payment processing and claim status specifically. The EOB explains how the claim was or was not covered.
Format
The ERA is a digital format that is sent to the healthcare provider. In most situations, EOBs are sent to patients as a paper document, though some electronic methods may be applicable if the patient agrees to them.
Information
Though much of the information is similar, another difference between the ERA and EOB is in the content itself. The EOB will provide information specific about the services the patient received, along with the amount charged and paid and, finally, the amount the patient must still pay the healthcare provider.
The content in an ERA includes information specific about the claim instead, including the payment amount, date, and reasons for adjustments or denials.
What Are the Overlaps in Information Between ERAs and EOBs?
ERAs and EOBs contain some of the same information about the patient’s claims and the payments made, just in a different layout. Both will send information about the payment or processing of a claim. This includes the coverage amounts. They essentially help patients and providers understand what the insurance company did, including what they paid towards the care provided.
The Importance of Knowing the Difference of EOB vs ERA in Medical Billing
For healthcare providers, it is less likely you will need to manage or even handle EOB documentation unless a patient brings it to you with questions. However, an ERA is a critical component of your medical billing processes, one that outlines the very specific nature of payments coming into your practice.
As a healthcare organization, you must be able to understand health insurance payer actions, including if and when they make payment, if they deny a claim, and what adjustments are applicable because they directly impact revenue and cash flow. ERAs are an automatic electronic process, and depending on the medical billing solutions in place, they are made easy to verify and maintain.
