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Why ERAs Are More Efficient than EOBs


It is no secret that the healthcare industry is burdened with costly administrative processes. A good example of this are paper explanation of benefits (EOB) forms that have been estimated to cost nearly $18,600 per physician per year in administrative fees.

With the availability of tools like the electronic remittance advice (ERA), medical practices, hospitals, billing companies and other healthcare providers can jump on the paperless bandwagon and reduce these exorbitant administrative costs.

An electronic remittance advice (ERA) — or what is frequently referred to as the HIPAA 835 file — is essentially an electronic EOB. ERAs contain information on whether a claim was paid or denied, final status claims and any adjustments the payer made to the billed amount.

The Affordable Care Act (ACA) requires health plans to implement ERAs under Stage 2 of its Administrative Simplification provision. This represents a strong incentive for payers like Medicare, Medicaid, and other large insurers to phase out paper EOBs.

Why Do You Need ERAs?

Manually posting payments and reconciling patient accounts is time consuming and therefore costly. According to one study, the average physician spends approximately five hours per week on administrative and nonclinical tasks. This translates into three weeks per year on billing and insurance-related tasks.

What causes this “hassle?” EOB formats and claim adjudication codes are not standardized across payers, making it challenging to manually post and reconcile payments. Also, manually processing EOBs is highly susceptible to data entry errors. If your staff accidentally inputs $20.00 instead of $200.00, they will have to check the entire batch to locate the error.

It’s easy to switch to ERAs from paper EOBs. 

If your practice, hospital, billing company or provider group implements a full-service outsourced payment posting solution, you can immediately convert your paper EOBs to ERAs. Your outsourcing partner will use a technology solution that will import 837 claim data and convert your paper EOB’s into postable ANSI 835/ERAs. The data will easily integrate with your lockbox or document management system. By outsourcing this work, you can immediately treat every remittance as an ERA.


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