ERA/EOB Processing and Reconciliation

An Electronic Remittance Advice (ERA), also known as an 835 file, is the electronic equivalent of an Explanation of Benefits (EOB). It is sent by the insurance payer through your clearinghouse to communicate how each claim was adjudicated, including the amount paid, any adjustments applied, and the patient's financial responsibility. PracticeABA receives ERAs automatically through your clearinghouse integration and displays them in the Payments section of the billing module.

When a new ERA is received, PracticeABA matches it to the corresponding claims in your system using the claim control number and payer identification. The matching process is automatic in most cases, and the platform presents a summary showing each claim line, the billed amount, the allowed amount, the paid amount, any adjustments, and the patient responsibility. You can review this summary to verify that the payments align with your contracted rates before posting.

PracticeABA supports auto-posting, which applies the ERA data to your claims with a single click. Auto-posting records the payment amount against each claim line, applies contractual adjustments, and sets the patient responsibility balance. For ERAs that match cleanly with no discrepancies, auto-posting can process hundreds of payment lines in seconds, dramatically reducing the manual work of payment posting. Claims that cannot be auto-matched, typically due to mismatched control numbers or missing claims, are flagged for manual review and posting.

Every ERA includes adjustment reason codes that explain why the paid amount differs from the billed amount. Understanding these codes is essential for determining whether an adjustment is correct (such as a contractual discount) or whether it requires follow-up (such as a denial that can be appealed). PracticeABA displays these codes alongside their plain-language descriptions so you do not need to memorize code numbers.

The most common adjustment categories include Contractual Obligation (CO) adjustments, which represent the difference between your billed charge and the payer's allowed amount. These are expected adjustments based on your contracted rates and should not be appealed. Patient Responsibility (PR) adjustments indicate amounts that the patient owes, including copays, coinsurance, and deductible amounts. Other Adjustment (OA) codes are used for various reasons including coordination of benefits and duplicate claim adjustments.

Denial reason codes are also communicated through adjustment codes and require careful attention. Common denial codes include CO-4 (procedure code inconsistent with modifier), CO-16 (missing or incomplete claim data), CO-27 (expenses incurred after coverage terminated), CO-29 (time limit for filing has expired), and CO-197 (precertification or authorization was not obtained). Each denial code suggests a specific corrective action. PracticeABA maintains a built-in reference that links each denial code to recommended next steps, whether that is correcting and resubmitting the claim, filing an appeal, or writing off the balance.

Payment reconciliation is the process of verifying that the payments posted in PracticeABA match the actual deposits in your bank account. PracticeABA provides a Deposit Reconciliation report that groups posted payments by deposit date and payer, allowing you to match each ERA's total against the corresponding bank deposit. Discrepancies between posted payments and bank deposits can indicate processing errors, missing ERAs, or clearinghouse issues that need investigation.

To reconcile, pull the Deposit Reconciliation report for the period you want to verify and compare each line against your bank statement. PracticeABA allows you to mark deposits as reconciled once confirmed, creating an audit trail. Regular reconciliation, ideally weekly, ensures that no payments are missed and that your financial records accurately reflect your practice's revenue.

When an ERA indicates patient responsibility amounts such as copays, coinsurance, or deductible balances, PracticeABA automatically generates patient balance records. These balances appear in the Patient Balances section where billing staff can review them, generate patient statements, and track collections. You can configure the platform to automatically send patient statements at regular intervals, and payment posting is available for recording payments received from patients. Keeping patient balances current and actively managed is important for maintaining healthy cash flow, as patient responsibility amounts can represent a significant portion of revenue for ABA practices, particularly for clients with high-deductible health plans.