Read ERA and EOB

To begin reading an ERA and EOB, you need to understand the basic structure of these reports. The ERA is an electronic report that provides a summary of the claims that have been processed by the payer, while the EOB is a detailed report that explains the payment adjustments made to each claim. The first step is to identify the claim identification number, which is usually located at the top of the ERA and EOB reports. This number is used to match the ERA and EOB reports to the original claim submission. For example, if you're using a billing system like Valant or Tebra, you can use the claim identification number to track the status of your claims and identify any issues that may be causing delays in payment.

The next step is to review the payment information, which includes the amount paid, the date of payment, and the payment method. This information is usually located in the summary section of the ERA report. By reviewing this information, you can quickly identify any issues with payment, such as underpayments or missing payments. For instance, if you notice that a payment is missing, you can use the claim identification number to investigate the issue and determine the cause of the missing payment. In my experience, missing payments are often caused by issues with the claim submission, such as incorrect patient information or missing documentation.

In addition to reviewing the payment information, it's also essential to understand the CARC and RARC codes that are used to explain payment adjustments. These codes are usually located in the details section of the ERA and EOB reports and provide a detailed explanation of the payment adjustments made to each claim. For example, the CARC code CO-45 is used to indicate a contractual adjustment, which means that the payer has reduced the payment amount based on the terms of the contract. On the other hand, the RARC code N115 is used to indicate that the claim is pending additional information, which means that the payer needs more information to process the claim.

Some of the most common CARC codes include CO-45, which indicates a contractual adjustment, CO-50, which indicates that the service is not covered or is not medically necessary, and CO-197, which indicates that the prior authorization is missing. These codes are essential to understand because they can help you identify issues with your claim submissions and improve your overall revenue cycle management. For instance, if you notice that you're receiving a high volume of CO-45 codes, it may indicate that there's an issue with your contract with the payer, and you may need to renegotiate the terms of the contract.

In addition to understanding the CARC codes, it's also essential to understand the RARC codes, which provide more detailed information about the payment adjustments. Some common RARC codes include N115, which indicates that the claim is pending additional information, and N236, which indicates that the claim has been denied due to a lack of medical necessity. By understanding these codes, you can quickly identify issues with your claim submissions and take corrective action to improve your revenue cycle management. For example, if you notice that you're receiving a high volume of N115 codes, it may indicate that there's an issue with your documentation or coding, and you may need to provide additional information to support your claims.

In my experience, one of the most common issues that practice owners face is understanding the difference between a denial and a rejection. A denial is a claim that has been processed by the payer but has been denied payment, usually due to a lack of medical necessity or a contractual issue. On the other hand, a rejection is a claim that has been rejected by the payer before it's been processed, usually due to an issue with the claim submission, such as missing information or incorrect coding. By understanding the difference between these two terms, you can take corrective action to improve your revenue cycle management and reduce the number of denied and rejected claims.

To use the ERA and EOB to improve your revenue cycle management, you need to regularly review these reports and identify any issues that may be affecting your cash flow. One of the most effective ways to do this is to use a billing system that can automatically track and analyze your ERA and EOB reports. For example, systems like Valant and Tebra provide detailed reporting and analytics tools that can help you identify trends and issues with your claim submissions.

Another essential step is to establish a workflow that ensures timely follow-up on outstanding claims. This can include setting up reminders and notifications to track the status of your claims and following up with the payer to resolve any issues that may be causing delays in payment. By establishing a timely follow-up workflow, you can reduce the number of outstanding claims and improve your overall revenue cycle management. For instance, if you notice that a claim has been pending for more than 30 days, you can follow up with the payer to determine the cause of the delay and take corrective action to resolve the issue.

In addition to establishing a follow-up workflow, it's also essential to regularly review your ERA and EOB reports to identify any trends or issues that may be affecting your revenue cycle management. For example, if you notice that you're receiving a high volume of denials due to a lack of medical necessity, you may need to review your coding and documentation procedures to ensure that you're providing sufficient information to support your claims. By regularly reviewing your ERA and EOB reports, you can identify issues and take corrective action to improve your revenue cycle management and reduce the number of denied and rejected claims.