The Importance of High-Quality Electronic Remittance Advice (ERA)

The desire to achieve payment efficiency often prompts providers to transition from paper to electronic payments. But poor-quality ERAs can cause them to reverse course.

The Importance of High-Quality Electronic Remittance Advice (ERA)
The Importance of High-Quality Electronic Remittance Advice (ERA). Photo by Blake Wisz

Transitioning your provider network from paper checks to electronic payments will enable you to achieve significant gains in efficiency and cost savings. For the provider, however, the electronic payments can actually increase manual work during reconciliation if your ERA/835s are not high-quality.

What is a “high-quality” remittance? It contains the details needed to automate the matching of ERAs to payments. Read this article to see some of the most common pain points providers incur when 835s are not up to snuff, and what you can do to fix them.

Offering providers multiple electronic payment options, such as ACH, eChecks, and virtual credit cards can have a big impact on your adoption rate. But persuading providers to leave paper behind is only half the equation. You also must deliver high-quality ERA/835s if you want providers to be satisfied with this choice, otherwise, you risk them opting out.

What are the five most common frustrations providers experience with 835s? Read this article to find out, how you can remedy them and learn more about quality ERA’s for provider payments

Table of contents

Does your ERA meet providers’ needs and expectations?
Claim- or service-level payment transactions are out of balance
Payment trace numbers are incorrectly linked to remittance advice
The patient-encounter number included on the submitted claim is missing on the remittance advice
General ledger and payment-level adjustments due to payment cycles and government programs (e.g., withholding payment, incentive bonuses, penalties, delayed payments) are neither patients- nor claim-specific
Service-adjustment reason codes are generic
Providing quality ERAs is essential to successfully transition providers from paper to electronic payments.

Paying providers electronically versus manually may save you hundreds of thousands, or even millions, of dollars each year by reducing or eliminating the expenses associated with paper, printing, envelopes, and postage.

If you want to successfully drive provider adoption of electronic payments, however, you can’t underestimate the importance of high-quality remittance.

Without high-quality ERAs, providers can quickly become disgruntled and ask to opt-out of electronic payments. Soon, word of remittance headaches can spread among your provider network, preventing you from expanding electronic adoption.

Does your ERA meet providers’ needs and expectations?

Let’s look at 5 common frustrations providers experience when a payment platform doesn’t adhere to best-practice industry standards.

Claim- or service-level payment transactions are out of balance

Why this happens: Many platforms don’t enforce the integrity of transactions at a financial-balancing level. This can result in a claim-payment amount that doesn’t equal the sum of the adjusted service amounts.

Why it’s a problem: Provider accounting systems require the transaction to be in balance to fully automate posting processes and accurately represent adjudicated results for account reconciliation, patient billing, and quality reporting functions.

To resolve: The provider must manually reconcile the amounts, often reaching out to the payer’s customer support service for guidance.

How to Send Best-in-Class ERAs: Platforms that are CAQH Core Phase III-certified ensure:

  • Payment data balances to the claim data
  • Claim data balances to the service-line data
  • Service-line data balances to the payment and adjustment data

Payment trace numbers are incorrectly linked to remittance advice

Why this happens: Many payer platforms generate these data elements from separate systems, making it difficult to achieve alignment.

Why it’s a problem: Providers can’t easily re-associate and reconcile the payment and remittance transactions, neither in a manual nor automated environment. (It creates exceptions in an automated environment).

To resolve: Providers must reach out to the payer for support. This can be time-consuming, frustrating, and interrupts the workflow. It is also inefficient for the payer, who experiences greater call volume and increased demand for customer support.

How to Send Best-in-Class ERAs: Platforms that are CAQH Core Phase III-certified ensure:

  • Automated Clearinghouse (ACH) Cash Concentration Disbursement (CCD) addendum records contain the trace number segment from the 835
  • Data elements are identical

The patient-encounter number included on the submitted claim is missing on the remittance advice

Why this happens: This often occurs when paper claims (vs. electronic files) are adjudicated and are due to human error.

Why it’s a problem: The patient-encounter number references a unique service event for the patient, and providers need it to link the event to the claim and remittance. If missing, it often causes posting errors.

To resolve: Providers must manually resolve this issue, and subsequent posting errors, which can be very time-consuming.

How to Send Best-in-Class ERAs: Invest in internal EDI subject matter expertise or partner with best-in-class solution providers that are experienced in electronic payment and remittance compliance to create a resolution within the payment platform.

General ledger and payment-level adjustments due to payment cycles and government programs (e.g., withholding payment, incentive bonuses, penalties, delayed payments) are neither patients- nor claim-specific

Why this happens: Some adjudication platforms apply adjustments at the global level, versus at the individual patient-encounter level, for withholds, recoupments, or interest applications.

Why it’s a problem: This often results in downstream manual workflows being required within the provider’s revenue cycle processes.

To resolve: Staff must determine to which (if any) patient encounters the global offsets should be applied. This requires manually researching to resolve the issue and/or reaching out to the payer to obtain guidance.

How to Send Best-in-Class ERAs: A best-in-practice payment platform prioritizes all information at the claim level as it relates to adjudication details, including reversals, recoupments, and interest explanations. This helps provider staff understand and more easily reconcile to the unique patient encounter records. Only if the offset is truly a general ledger-level adjustment will the information be presented at the global level.

Service-adjustment reason codes are generic

Why this happens: Many payment platforms don’t incorporate specific Claims Adjustment Reason Codes (CARCs) and Remittance Advice Remark Codes (RARCs) that provide the detail needed during the 835 posting process.

Why it’s a problem: When vague/generic codes are all that is supplied to the provider, it creates potential barriers to fully complete the automated posting process and often results in downstream manual workflows. It can also cause problems for the provider with denial management and improper patient balance billing.

To resolve: Providers must either research the paper version of the transaction to obtain adequate detail and/or reach out to the payer for support. This can be time-consuming, frustrating, and interrupts the automated workflow. It is also inefficient for the payer, who experiences greater call volume and increased demand for customer support.

How to Send Best-in-Class ERAs: Platforms that are CAQH Core Phase IIIcertified ensure: The use of detailed, specific, standardized code combinations based on specific business scenarios

Providing quality ERAs is essential to successfully transition providers from paper to electronic payments.

If remittance data is of poor quality and providers have to invest significant time and energy reconciling claims to ERAs and EFTs, their overall satisfaction with electronic payments will likely plummet. It is common for providers to become fatigued when dealing with ERA issues and to simply choose to opt-out of electronic payments and revert back to paper checks.

And rightly so. Can you imagine attempting to balance your checkbook each week, and discovering deductions with no associated explanations?

Source: Change Healthcare

Published by Natalie Wong

, as a technical writer for how-to guides, tutorials, fixes for common problem happen on gaming and console, and articles about the latest tech. My gaming alias is Midnight, and I usually play PUBG, CSGO, GTA V and some coop games.