835 ERA Posting Explained

The 835 Electronic Remittance Advice (ERA) is the electronic equivalent of the paper Explanation of Benefits. It tells you exactly how each claim was processed and what you're being paid. Understanding ERAs is essential for efficient billing operations.

What Is an 835 ERA?

The 835 is a standardized HIPAA transaction that payers send to providers showing:

• Which claims are being paid
• Payment amounts for each claim line
• Adjustments made and why
• Denials and denial reasons
• Total payment amount in the remittance

Key Components of an 835

Header Information

• Payer identification
• Payment date and check/EFT number
• Total payment amount
• Provider information

Claim-Level Detail

• Patient/member information
• Original claim number
• Claim status (paid, denied, adjusted)
• Total charge, payment, and patient responsibility

Service Line Detail

• Procedure codes and dates of service
• Billed amount per line
• Allowed amount
• Payment amount
• Adjustment reason codes and amounts

Understanding Reason Codes

ERAs use standardized codes to explain adjustments:

• CARC (Claim Adjustment Reason Codes): Why payment differs from billed amount
• RARC (Remittance Advice Remark Codes): Additional information about the adjustment
• Group Codes: Who is responsible (CO=Contractual, PR=Patient Responsibility, etc.)

Common examples:

• CO-45: Charges exceed fee schedule
• CO-4: Procedure code inconsistent with modifier
• PR-1: Deductible amount
• CO-16: Missing information
• CO-197: Prior authorization required

Manual vs. Auto-Posting

Manual posting: Staff reads ERA (or paper EOB) and enters payments claim by claim. Time-consuming and error-prone.

Auto-posting: Software reads 835 file and matches payments to claims automatically. Much faster and more accurate.

Auto-posting typically handles 80-95% of payments automatically, flagging exceptions for manual review.

The Auto-Posting Process

1. Receive 835 file from payer or clearinghouse
2. System reads file and identifies claims
3. Matches to original claims using claim number or service details
4. Posts payments, adjustments, and denials
5. Updates A/R and flags items needing review
6. Generates posting report for verification

Handling Exceptions

Not everything auto-posts. Common exceptions:

• Payment doesn't match any claim in your system
• Claim was voided or already posted
• Payment amount seems wrong
• Denial requires review before write-off

Your workflow should route these for manual review while allowing the bulk to post automatically.

Reconciliation

After posting, reconcile:

• ERA total should match bank deposit
• Posted payments should equal ERA payments
• Any differences need investigation
• Keep ERA files for audit documentation

Best Practices

• Enroll for ERA with every payer possible
• Use auto-posting to save time and reduce errors
• Review denial reason codes for patterns
• Work denials promptly before appeal deadlines
• Keep ERA archives for audit purposes