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What is ERA in Medical Billing?

The ERA stands for “Electronic Remittance Advice” and is used electronically when and where the need for EOBs is negligible.
But –what is ERA in medical billing? Healthcare providers always seek claim acceptance in the first go. Thus, it becomes essential for providers to eliminate repeating errors from the claims. However, this is only possible if the medical billing service staff is trained and efficient enough to read and understand EOB and ERA accurately.
Experts still believe that there remains a chance of errors in medical billing claims – which become the reason for subsequent claim denials. Let’s explore how EOB/ERA effectively boosts reimbursements and collection rates – but before we must understand in-depth:

ERA in Medical Billing

Medical billing is an essential function of most modern healthcare practices. When your medical practice sends data to an insurance company or a patient – it employs various processes. These processes include ERA for navigating the complex HIPAA requirements and the insurance allowances. ERAs, essentially in medical environments, are virtual copies of EOBs (explanation of benefits) from paying entities.
There is rampant confusion between ERAs and EOBs – while both offer similar information, these do differ in formats. EOBs come as a hard copy through your mail service; however, you receive ERAs digitally for storage in your computerized infrastructure.

Why is EOB or ERA used in Healthcare?

EOB and ERA play a vital role in the medical industry, assisting in the confirmation of information related to:

  • Denials
  • Submissions
  • Payment schedules

These tools provide clarity on the following:

  • Service costs
  • Co-payment
  • Co-insurance
  • Deductibles—expenses shouldered by the patient.

By obtaining this information, healthcare professionals can efficiently manage reimbursement collections, staying informed on what needs collection and payment. To track patient liabilities accurately, providers input details into EOB management systems.

Entering data into billing software offers several advantages, including:

  • Consolidating taxed and collection amounts in one place
  • Facilitating tracking of patient liabilities
  • Simplifying the follow-up process for unpaid or incorrectly paid bills and claims

In short, utilizing EOB and ERA in medical billing ensures a streamlined billing process, enhancing overall efficiency for healthcare providers.

How ERA in Medical Billing Functions?

Losing or misplacing a physical copy of patient information is a common challenge, even with the strictest filing protocols. Physical record-keeping has flaws and consumes valuable practice resources in terms of space and time.
While using Electronic Remittance Advice (ERA) in your practice brings efficiency, the digital organization allows easy accessibility for your staff members directly from their devices. The added advantage is the ability to log into a secure cloud from any device when needed.
ERAs are comprehensive repositories of essential information about a patient’s health plan and insurance company. ERA in medical billing typically includes:

  • Copays and coinsurance details
  • Insurance terms and agreements
  • With an ERA, you have patient benefit data at your fingertips, ensuring a more efficient and accessible approach to medical billing processes.

Benefits of ERA for Medical Practices

The following are the benefits of ERA in medical billing:

Eliminating Manual Processes

With ERA in medical billing, practices can eliminate the waiting game for EOB statements to arrive in the mail—no more manual entry, verification, and posting of payment checks. Instead, practices can ensure consistent ERA processing on their management software. They can post payments and standard adjustment reason codes directly to the patient’s account. This slashes costs and saves precious time, eliminating the risk of misplacing EOBs.

Easing COB Processing

Coordination of benefits (COB) becomes a breeze with ERA, especially when a patient is covered under multiple insurance plans. ERA removes the hassle of scanning and attaching secondary claims to paper EOBs. It facilitates faster secondary billings, eventually speeding up the revenue life cycle.

Improving Cash Flow

Embracing electronic processes like the ERA in medical billing, in general, can mean faster payments. According to the American Medical Association (AMA), payers reimburse more swiftly when physicians utilize ERA. This, in turn, leads to notable improvements in cash flow.

Enhancing Payment Accuracy

ERA enables medical practices to identify paid and unpaid claims. It encourages an increase in collection efforts, a reduction in denials, and an overall improvement in the payment collection rate.

Streamlining Denials Management

By enhancing reliability in payment information, ERA enables smooth comparisons between payers. It helps identify practice claim submission issues, effectively standardizing and improving denial management processes. ERA in medical billing ensures smoother operations for provider practices in handling and resolving denials.

Implementing ERA in Medical Billing

Implementing ERA in your medical billing operations can bring substantial advantages. To fully take advantage of these benefits, it’s essential to have a reliable, HIPAA-compliant medical billing system in place. This system should not only keep all patient records secure but also make them accessible to authorized parties.
However, the challenge arises for many practices that lack the resources to develop such solutions independently. Fortunately, there is a solution. Medical billing services offered by third parties present scalable options that include the organization of ERAs within their comprehensive packages and simplifying healthcare financial management. The third-party billing services customize their solutions to align with strict HIPAA requirements, providing the means to enhance how your staff organizes data without compromising security.
Implementing ERA becomes a smooth process when integrated with third-party medical billing services. This ensures the optimization of organizational processes and compliance with the necessary security standards.


Understanding the role of ERA in medical billing is essential for healthcare practices aiming for efficiency and accuracy. Though subtle, the difference between EOBs and ERAs marks a shift towards faster, error-resistant processes. The ERA streamlines operations, enhancing payment accuracy and cash flow. For smooth implementation, third-party billing services offer custom solutions, ensuring HIPAA compliance and optimal data organization.

Frequently Asked Questions

An Electronic Remittance Advice (ERA) serves as an explanation from a health plan to a healthcare provider regarding a claim payment.

ERA is a HIPAA-compliant electronic substitute for traditional paper-based Explanation of Benefits (EOBs). It includes the same vital information as an EOB but comes with a quicker generation process and is less susceptible to errors. In medical billing, ERAs outline a patient’s:

  • Paid and denied medical claims
  • Adjusted amount owed
  • Final claim status
In the context of an Explanation of Benefits (EOB), ERA stands for Electronic Remittance Advice. Following a submitted claim, a health insurance provider sends an ERA file to a healthcare provider. This electronic data exchange provides detailed information to care providers regarding decisions made about claims submitted for payment.