he medical billing process begins when a healthcare provider submits a claim to the insurance payer. The claim includes: – Patient and provider details – Procedure codes (CPT) – Diagnosis codes (ICD-10) – Billed charges Claims are sent electronically via Electronic Data Interchange (EDI) for processing.
Once the payer receives the claim, they review it to determine: – Payment eligibility based on the patient’s insurance plan – Adjustments (contractual obligations, write-offs) – Denials or reductions in payments – Patient responsibility (co-pays, deductibles, or out-of-pocket costs) After processing, the insurer generates an ERA file to communicate the results.
The ERA is an ANSI 835 format file, which includes: – Payment details (approved amounts, adjustments) – Denial codes and reasons – Co-insurance, deductibles, and patient responsibility amounts The ERA is electronically transmitted to the provider’s billing system through a clearinghouse or direct connection.
Once received, the ERA is auto-posted in the billing system, matching payments with submitted claims. Benefits include: – Reduced manual entry errors – Faster claim reconciliation – Quick identification of denied claims If a claim is denied or underpaid, the ERA provides detailed reasons, allowing providers to take corrective action.
Based on the ERA, patient statements are generated, reflecting: – Insurance-covered amounts – Outstanding balances – Payment instructions Providers may follow up on denied claims by submitting appeals using ERA data or contacting the payer for clarification.
– Faster processing and payments – Reduced administrative burden – Improved accuracy and reporting – Better financial control and revenue cycle management
ERA streamlines medical billing, reducing delays and improving cash flow for healthcare providers. By leveraging electronic payment posting and real-time claim status tracking, practices can optimize revenue and minimize denials.