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What is an Electronic Remittance Advice (ERA)

Written by   Updated June 25, 2024

For digital payment clarification, insurance payers send healthcare providers electronic remittance advice (ERA), which shows claims received and processed by the payer, indicating those that were paid, denied, or adjusted. Instead of sending information through mail for faster and more accurate payments, ERAs substitute paper explanations of benefits (EOBs) with electronic transmission.

To survive financially in today’s rapidly changing healthcare industry, medical practices must be efficient and accurate regarding their billing systems. One major development that has helped in this area is the Electronic Remittance Advice Service (ERA). WeCare Billing LLC, a reputable American healthcare revenue cycle management and billing company, has put together this guide to help providers understand what ERAs are and how to utilize them best. By adopting electronic remittance advice as part of their billing process, medical practices can open up revenues while empowering patient care because it makes everything easy to see.

Decoding Your ERA: A Breakdown of Key Terms

Medical billers must know the terms when dealing with ERAs to manage them effectively. Here are several key terms you may come across:

Explanation of Benefits (EOB)

An explanation of Benefits is a statement health insurance companies send to covered individuals explaining what was paid for in terms of medical treatments or services on their behalf. Although EOBs are electronic documents, ERAs serve similar purposes but usually exist as papers; both contain vital information concerning claims, payment, patient responsibility, etc.

Electronic Data Interchange (EDI)

Electronic Data Interchange (EDI) means the computer-to-computer exchange of business documents using standardized electronic formats in business parlance. Within ERA’s context, EDI allows secure transmission of remittance information from payers to providers, thus ensuring efficiency between billing systems employed by these two parties during payment processing stages.

Health Insurance Portability & Accountability Act (HIPAA) Standards

HIPAA sets forth guidelines for safeguarding confidential patient data, which any entity handling Protected Health Information (PHI) must adhere to. ERAs are designed in compliance with HIPAA to ensure that patients’ details remain safe while being transmitted.

Benefits of Using ERAs

Improved Efficiency and Reduced Costs

Automation of remittance through the use of ERAs dramatically enhances efficiency. Manual data entry is eliminated, resulting in less administrative overheads, thereby cutting down expenditure on staff salaries. Staff should then concentrate more on caring for patients and performing other vital duties within the healthcare facility.

Faster claim processing & reduced errors

Electronic remittance advice accelerates the payment process, allowing providers to receive their funds much faster. Automation also reduces the chances of human mistakes; hence, few rejections or denials occur because claims were not filled correctly.

Enhanced Transparency and Streamlined Communication

ERAs provide detailed information about a claim’s payment, including adjustments made, if any, and the reasons behind denials. This transparency improves communication between payers and providers, making it easy for them to solve any discrepancies or address issues promptly.

Using ERAs in Your Practice

Getting Started with ERAs: A Step-by-Step Guide

Enrollment Form Completion & Agreement for Electronic Transactions Terms with Payers

Understanding EDI 835 File Format

The EDI 835 file format is a standard for electronic remittance advice. Integrating ERAs into your practice management system requires understanding how this document is structured. An EDI 835 file can include each claim’s payment, adjustment, and denial reason.

Integrating ERAs with Your Practice Management System

When you integrate ERAs into your practice management system, it facilitates the smooth running of payment information. It automatically posts payments to patient accounts, eliminating manual entry and reducing errors caused by such processes.

Who Should Consider Using ERAs?

Benefits for All Healthcare Providers

ERAs should be used by all healthcare providers, regardless of their size or specialty, because they have many advantages. Electronic remittance advice offers efficiency, accuracy, and transparency that enhance a medical facility’s overall billing process and financial health.

Ideal for Practices with High Claim Volumes

If you deal with many claims, you will find ERAs very helpful. Processing many claims manually is time-consuming, but it becomes faster when done electronically through remittances, thus freeing staff’s hands for other important duties.

The Future of Medical Billing is Electronic: Embrace ERAs for a More Efficient Practice

Electronic ways are what the future holds for medical billing. Healthcare providers can streamline their billing operations, cut down on costs, and enhance general efficacy by adopting E-Remits (electronic remittance advice). WeCare Billing LLC aims to enable establishments to realize higher revenue streams while fostering caregiving through innovative billing solutions. Therefore, switching to these methods would make practices more efficient in terms of time management and profitability, allowing doctors to concentrate on patients alone.


What is electronic remittance advice (ERA)?

Electronic remittance advice (ERA) is an electronic payment explanation that insurance companies send to health care providers. It contains information about processed claims, including paid, denied, and adjusted claims, and replaces traditional paper Explanation of Benefits (EOB).

How does ERA streamline medical billing efficiency?

ERA accelerates the remittance procedure by automating it, eliminating manual data entry and faster payment processing. This leads to decreased administrative costs and convenient access to funds.

What are the healthcare providers’ benefits of using ERAs?

They are associated with streamlining hospital operations, lowering expenditures incurred, and quicker claim processing, leading to reduced errors. They also create more transparent systems and foster better communication between payers and providers.

What does the EDI 835 file format mean?

This is a standardized electronic remittance advice method represented as an EDI 835 file format. Every claim is shown in detail, including payment amounts, adjustments made, and reasons for denial, making seamless integration with practice management systems possible.

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