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Glossary Terms

What is an Electronic Remittance Advice (ERA)?

Glossary

A health insurance provider sends an electronic remittance advice (ERA) file to a healthcare provider following a claim. This electronic data interchange provides an Explanation of Benefits (EOB) to care providers regarding decisions made about claims submitted for payment. The electronic remittance advice outlines the adjustments and payments a health plan has made to charges from the care provider. In the event of a denial, it must explain why the claim was denied. Factors such as benefit coverage, co-insurance, expected copays, contract agreements between the provider and health plan, and secondary payers are used to make these adjustments. 

Why is Electronic Remittance Advice used?

An ERA file provides a comprehensive explanation of the payments and adjustments made to a claim submitted by a healthcare provider to an insurance company. This format (also known as an 835 file) lets the provider find all information about that claim in one place. Electronic remittance advice eliminates the need to manually post payments and adjustments in a practice management system. It also eliminates the need to reference multiple documents or online sources for the provider's adjustments to the claim. ERA files are imported and posted into a practice management to reconcile claims. This file typically contains all payments, adjustments, and reason codes for the adjudication. When providers choose to receive ERAs from a health plan, they will no longer get paper copies of the EOB or Explanation of Payment (EOP).

How Does a Provider Sign Up for Electronic Remittance Advice?

Most health plans let health providers sign up for ERA through their websites or through their clearinghouse. Clearinghouses are where you will exchange your 837 files for your claims and your 835/ERA files for payments.

Who Should Sign Up for Electronic Remittance Advice?

All medical practices with practice management systems with the capability of importing 835 files could benefit from receiving ERAs. The ERA records integrate with the medical billing system, making quick reference of claim adjudication easy. In addition, it eliminates manual paper EOB posting, which is time-consuming and inefficient. Also, the paperwork can become misplaced or overlooked. Most health plans do not charge for this service, making it cost-effective for providers. The lack of a hard copy also adds security and confidentiality for patients.     

Related terms:

Practice ManagementKnow more
American Academy of Professional Coders (AAPC)Know more
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