Electronic Remittance Advice (ERA)
An Electronic Remittance Advice (ERA) is a digital document sent by insurance payers to healthcare providers that explains how claims were adjudicated, including payment amounts, adjustments, denials, and patient responsibility for each submitted service. Known technically as the ANSI 835 transaction, ERAs are the electronic equivalent of paper Explanation of Benefits (EOB) statements and are essential for efficient payment posting and revenue cycle management.
What an ERA Contains
Each ERA includes the payer identification and provider information, claim-level details (patient name, dates of service, claim number), line-item adjudication showing the billed amount, allowed amount, paid amount, and adjustment reasons for each CPT code, Claim Adjustment Reason Codes (CARCs) explaining any differences between billed and paid amounts, Remittance Advice Remark Codes (RARCs) providing supplemental payment information, patient responsibility amounts (copay, coinsurance, deductible), and check or electronic funds transfer (EFT) payment reference numbers.
ERAs in the Revenue Cycle
ERAs are the critical link between claim submission and payment reconciliation. When a practice submits a claim electronically (ANSI 837 transaction), the payer processes and adjudicates the claim, then returns an ERA (ANSI 835 transaction) detailing the payment decision. The practice's billing system reads the ERA and posts payments, adjustments, and denials to the corresponding patient accounts. Without ERAs, staff must manually post payments from paper remittance advice — a process that is slow, error-prone, and costly.
Auto-Posting and ERA Automation
Modern RCM systems can auto-post ERA data directly to patient accounts, dramatically reducing manual payment posting time. Auto-posting matches ERA line items to corresponding claims, applies payments and contractual adjustments, identifies denied line items for follow-up, calculates and posts patient responsibility amounts, and flags exceptions that require manual review (such as unexpected adjustments or payment discrepancies). Automated ERA posting can reduce payment posting time by 70-80% compared to manual processes.
Common Adjustment and Denial Codes
ERAs communicate payment decisions through standardized codes. Frequently encountered codes in behavioral health include CO-4 (procedure code inconsistent with modifier), CO-50 (not covered/excluded by plan), CO-197 (precertification/authorization not obtained), PR-1 (deductible amount), PR-2 (coinsurance amount), and OA-23 (payment adjusted based on payer's fee schedule). Understanding these codes is essential for effective denial management and appeals.
ERA vs EOB
While ERAs and EOBs contain similar information, they serve different audiences. ERAs are sent to providers in a machine-readable electronic format (ANSI 835) for automated processing. EOBs are sent to patients in a human-readable format explaining what their insurance paid and what they owe. Both originate from the same claim adjudication decision. Providers receive ERAs; patients receive EOBs.
FAQs
How do I receive ERAs?
ERAs are received through a clearinghouse (such as Availity, Waystar, or Change Healthcare) that connects your practice to payers electronically. Your EHR or billing system must be configured to receive and process ANSI 835 files from the clearinghouse.
What is auto-posting?
Auto-posting is the automated process of applying ERA payment and adjustment data to patient accounts in your billing system without manual data entry. It matches each ERA line item to the corresponding claim and posts the appropriate amounts.
How quickly do ERAs arrive after claim submission?
Most ERAs are received within 14-30 days of claim submission, depending on the payer's adjudication timeline. Some payers process and remit within 7-10 days, while others may take up to 45 days.
What should I do when an ERA shows a denial?
Review the CARC and RARC codes to understand the denial reason, determine if the denial can be corrected (billing error, missing information) or must be appealed, and take action within the payer's timely filing deadline — typically 60-90 days from the ERA date for appeals.
Learn More
- Understanding ERAs and EOBs — Complete guide to reading and posting ERA data
- Mental Health Claim Denials Guide — How to identify and appeal denials from ERAs
- Best EHR for Mental Health Practices — EHR systems with automated ERA processing