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for HealthcareAn Electronic Remittance Advice (ERA) is a standardized electronic document sent by a health plan to a healthcare provider that explains the payment details and adjustments related to medical claims. It serves as an electronic explanation of benefits, detailing how much was paid, denied, or adjusted for each claim submitted by the provider.
ERAs replace paper Explanation of Benefits (EOBs) and enable providers to receive payment information in a structured, automated format, facilitating faster and more accurate payment posting within the revenue cycle management (RCM) process.
While ERA and Electronic Funds Transfer (EFT) are closely related, they serve distinct roles in healthcare payments. EFT refers to the actual electronic transfer of funds from a payer’s bank account to a provider’s bank account, whereas ERA is the accompanying electronic document that explains the payment details.
The use of ERA and EFT in healthcare is mandated and regulated to ensure standardized and secure electronic transactions. The Patient Protection and Affordable Care Act (ACA) requires health plans to adopt these electronic payment methods to improve efficiency and reduce administrative costs.
Additionally, the Council for Affordable Quality Healthcare (CAQH) Committee on Operating Rules for Information Exchange (CORE) sets operating rules that standardize the format and transmission of ERA and EFT transactions. These rules became mandatory for applicable health plans starting January 1, 2014.
ERAs significantly enhance the revenue cycle management process by automating payment posting and reconciliation, reducing manual data entry errors, and accelerating cash flow. By receiving detailed electronic explanations, providers can quickly identify payment issues, denials, or adjustments and take corrective actions.
This automation reduces administrative burden, shortens the time between claim submission and payment posting, and improves overall financial performance for healthcare organizations.
An ERA document contains comprehensive details about the payment and adjustments related to healthcare claims. This information enables providers to understand exactly how payments were calculated and what amounts remain outstanding.
Key data elements in an ERA include:
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