Electronic remittance advice (ERA)
Electronic remittance advice (ERA) is an important term to know when it comes to billing and reimbursement. Therapists running a private practice or seeing a few clients on their own will need to know some electronic remittance advice basics.
Electronic remittance advice refers to an explanation sent to a provider from a health plan regarding a claim payment.
As a provider, reimbursement for services starts with submitting a claim to insurance (including Medicare and Medicaid). The health plan reviews the claim and sends a Remittance Advice (RA) back that includes the final claim adjudication and payment amount.
This form will tell you whether the claim you submitted was paid in full, paid partially (due to certain adjustments), or denied.
The Remittance Advice includes itemized information and adjustments to charges based on factors such as:
- Benefit coverage
- Estimated co-insurance and copays
- Secondary payers
- Other determinants
There are two ways healthcare plans can send this information to the provider:
- Paper format (Standard Paper Remit (SPR)) or
- Electronic (Electronic Remittance Advice (ERA))
Providers will see that there are several benefits to receiving Electronic Remittance Advice. Let’s break down what those are, and more of the must-know information about ERA.
What is ERA and how do I use it?
Previously, healthcare plans sent Remittance Advice in the form of paper documents. On January 1, 2014, Electronic Remittance Advice (ERA) went into effect.
Providers can enroll to receive Electronic Remittance Advice by submitting a designated form with the appropriate healthcare plan provider for their client.
TheraPlatform is a practice management and EHR/EMR Software that offers automated ERAs, which can reduce rejections for insurance claims.
ERA, which is also known as an 835, helps providers ensure that the file is balanced at 3 specific levels; the transaction level, claim level, and service-line level.
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Benefits of using ERA
Like with so many other areas of documentation and billing, there are several benefits of choosing to go the electronic route versus paper when it comes to receiving remittance advice.
1. Less paper
Receiving Electronic Remittance Advice means this information from health plans for all of your clients will come electronically. Minimizing the amount of paper documentation around can help clinicians stay organized. SLPs, OTs, PTs, and other therapists don’t necessarily need a big office space to run their own practice. Opting to receive ERA allows providers to store that information electronically.
Need to quickly locate a Remittance Advice from an insurance provider for a client? With ERA, you can easily run a search online. Not only that, but ERAs offer the ability to create various reports and export data to other applications as needed.
Standard Paper Remit (SPR) can mean combing through piles of paperwork to find the information you need.
3. More efficient
According to CMS (Centers for Medicare & Medicaid Services), ERA results in faster communication and payments, and is more efficient than the paper format. The payable amount for each claim, including the adjustment applied, can be automatically posted from the ERA. Therapists can also automate follow-up actions needed after they receive an ERA.
A busy clinician’s time is precious. Therapists can save time on claims when using ERAs, which can mean more time available for treating clients.
1. Improved accuracy
Payment posting is more accurate when ERA is used, according to the U.S. Department of Health and Human Services. For therapists treating clients privately, accuracy with billing and payments is usually a top priority when it comes to practice management.
2. Additional information included
Because HIPAA does not cover paper Remittance Advice (SPR), it’s possible that not all client information will be shown when the form is sent through this method. Certain data and administrative efficiencies, as well as service-line information, might not appear on SPR, but would be shown on ERA.
Are there any limitations to using ERA?
As with other areas of clinical documentation and EMR, those who are used to working with Standard Paper Remittance would need to adjust to the transition to ERA. It’s also possible that some paper documentation may be necessary here and there.
SPR is still available. However, the U.S. government has developed the Administrative Simplification Standards to streamline paperwork for providers and health plans, which encourages electronic communication.
An organization that isn’t complying with the Administrative Simplification Standards may be reported to CMS.
Payment receipt options
If a provider receives Electronic Remittance Advice (ERA), this does not affect their payment receipt method.
The process of reimbursement looks a little like this:
1. The health plan sends the ERA and the electronic funds transfer (EFT) to the provider (they are sent at different times).
2. Once the healthcare provider receives them, he or she has to “reassociate” the ERA with the payment it outlines. This reconciles the amount paid, and posts the amount to the accounts receivable system. The client’s account is updated.
Other ways to streamline billing
Let’s be honest. One thing that holds many therapists back from starting a private practice is billing. Luckily, practice management tools offer several ways to streamline the billing process.
An Explanation of Benefits, or EOB, is a statement sent from the health insurance plan that breaks down the costs to cover the health care services that were received.
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It will show the amount the health plan paid for and the amount that the client owes, and is not a bill. Tools like TheraPlatform automatically process EOB files.
And one more acronym you should know about. The health plan will also send an EOP, which is the Explanation of Payment. This is sent to the provider once a claim is processed. It breaks down the reimbursement (or denial) for the claim.
Practice management software allows therapists to earn more through automatic claim validation and tracking. Therapists can reduce rejections with auto claim submission, claim batching, and automated EOB and ERAs.
TheraPlatform is a fully integrated EMR, practice management and teletherapy all-in-one software for therapists that helps streamline billing and reduce insurance denials. Therapists that use TheraPlatform have the ability to submit claims to more than 2,000 available payers. They also offer a free 30-day free trial. No credit card required and cancel anytime.