Like any other business, cash flow is necessary for healthcare agencies to operate effectively. Long reimbursement cycles and complex paperwork often hold up payments and impact your cash flow. Thankfully, technology is accelerating the process and enabling healthcare practices like yours to get paid faster.
An Electronic Remittance Advice (ERA) document is a digital report with a detailed breakdown of how the insurance company processed and paid a claim. Digital documents, including ERAs in medical billing, simplify the billing process and increase its accuracy, both of which improve your cash flow.
An ERA is similar to a physical Explanation of Benefits (EOB) document. It is a digital file you receive from a patient’s insurance company explaining how they paid or adjusted a claim. When you receive an ERA, it will outline:
Claim denials
Payment confirmations
Payment adjustments
Contract agreements
Patient benefit coverage
Copay and coinsurance information
Secondary health plan details
Although an ERA contains similar information to an EOB, there are differences. The main difference is that an EOB is a paper document mailed to the patient, while an ERA is electronically sent to the medical provider. As a healthcare clinician, you use ERAs to maintain financial records and manage incoming payments. Your patients use EOBs to understand their insurance coverage and plan for future visits based on what is covered under their insurance plan.
Your practice starts the billing process by uploading a claim or a batch of claims to a clearinghouse. Your clearinghouse will format those claims and send them to each insurance company.
Once the payer processes the claim, they will issue an ERA and send it back to your clearinghouse. Since the ERA details the reasons behind claim denials or adjusted payments, your administrative team can quickly research these issues and resubmit the claim if needed.
HIPAA standardized ERAs into secure, compliant formats, such as X12 835, to enhance processing efficiency. These standardized forms enable payers and clearinghouses to transmit ERAs securely, ensuring that confidential patient data is protected.
An ERA is different from an electronic data interchange (EDI), which refers to any electronic transfer of data from a clinician to a payer. In medical billing, EDI typically refers to Form CMS 1500 or File 837, which are used to submit claims to a clearinghouse.
Many payers use electronic fund transfers (EFT) to pay claims directly to your agency’s bank account. The ERA allows you to track an EFT and assign each transaction to the proper claim.
ERAs in medical billing make the billing process faster and more accurate. They offer multiple benefits to your agency, including:
Faster Payment Posting
Using a standardized ERA form lets you import the information directly into your system, unlike a paper EOB. ERA automates much of the posting process, which gives you faster access to money from processed claims.
Reduced Manual Errors
Since you can import information from an ERA into your practice management system, your administrative team doesn’t have to manually enter data from an EOB. This reduces the rate of manual data entry errors that often result in billing errors or client disputes.
Improved Denial Tracking and Resolution
Each ERA you receive through your medical billing software solutions contains a detailed explanation of payment rates, including reasons for claim denials. Instead of having to wait months for an insurance company to send you claim denial information in the mail, you get a claim denial code. Your team can then begin researching the initial claim to fix the error or resubmit the claim entirely.
ERAs are more efficient when they integrate with your practice management system. If your current system doesn’t support these forms, you must either switch to a new, compatible system or keep entering data manually.
If the ERA doesn’t match the initial claim, it can be hard to reconcile payments with claims. Some payers use different formats for their ERAs. If you use multiple payers in your practice, this can slow the process of reconciling ERAs. Utilizing a clearinghouse or software that standardizes ERA data can be beneficial.
Some of your accounting team members may also be hesitant to adopt a fully digital system. This can stem from a fear of change to concerns about patients’ data privacy. If your payers have already made the switch to ERA, tailor your training to focus on how the system will benefit your team.
Include training about ERA-specific adjustment codes, such as contractual obligation (CO) or patient responsibility (PR). Create a reference guide that your team can easily access when they start working with ERA.
Once your team sees ERA in action, they will come to appreciate its efficiency. Make your transition smoother by following these billing tips and best practices.
To get the most out of ERA, it needs to integrate with your billing software, practice management system, banking software, and your clearinghouse. Before getting started, make sure your current software is compatible.
Train and Educate Your Staff
Start the training process by being open and transparent with your team. Help them understand why you’re switching to ERA and how it will improve their workflows. If possible, create a dedicated training team, so everyone knows who to approach with issues during implementation. Develop subject-matter experts within your administrative team to guide individuals who may be experiencing issues.
Monitor Your New System
Regularly review ERAs to make sure the system is functioning correctly. Look at how payments are posted, claims are adjusted, and claims are denied, and verify their accuracy. Cross-check them against EOBs to make sure the information is accurate. Track your medical billing metrics to see if they’re improving.
AI in medical billing, including ERA processing software, has the potential to automate payment posting and adjustments. Since software automatically codes and enters claims, you should see a higher rate of clean claims, which means fewer denials.
Speeding up the revenue cycle in medical billing gives you the resources to invest more in your practice. However, ERA works best with the right billing software. PUREDI has over 20 years of experience in revenue cycle management, and we adapt our platform to changing reimbursement models, including ERA.
Request your demo to get started and see how PUREDI ERAs can help your bottom line.