ERA vs. EOB: what they are and why an ERA won't balance

The short version

• An EOB (explanation of benefits) shows what the plan allowed, what it paid and what the patient owes.¹
• An ERA (electronic remittance advice) is the electronic version. The federal standard for it is called the 835.²⁶
• An ERA is not the money.¹⁰ The money comes as a direct deposit (EFT) or a check. A trace number links the two.²
• Common "won't balance" problems include a claim that doesn't match, a payment that isn't split by procedure, or an adjustment that isn't tied to any one claim.⁷¹¹

What an EOB is

An EOB is the insurance company's explanation of how it handled a claim. The ADA says every EOB should clearly explain these things, even if it uses different words:¹

• The negotiated or allowed amount
• The covered percentage (coinsurance)
• Any amount applied to the deductible
• What the plan paid
• What the patient has to pay
• Remark codes that explain the payment decision

The ADA's advice is to read each EOB "each time, every time," and check the math. It also says write-offs "should not be posted until all plans have paid." If a decision looks wrong, appeal it in writing.¹

What an ERA is

CMS, the federal agency, defines an ERA as "an explanation from a health plan to a provider about a claim payment." The adopted standard is X12 Version 5010 (835).² Open Dental's manual puts it simply: the ERA 835 is "an electronic explanation of benefits (EOB)." ⁶

One ERA can cover many claims. It lists each claim (and often each line), with the reason and amount of every adjustment.³ Plans must use standard adjustment codes, not their own made-up codes.²

The big difference from a paper EOB: your software can read an ERA and fill in the paid amounts for you. Open Dental, for example, tries to attach each claim on the ERA automatically.⁶ Dentrix Ascend can import ERA files to cut down on typing in payments and adjustments.¹⁰

How an ERA matches your deposit

Signing up for ERAs and signing up for direct deposit are two separate steps. Dentrix Ascend's training says an ERA "is not the same as an electronic funds transfer (EFT)." ¹⁰ CMS encourages offices to sign up for both with each plan.²

The deposit and the ERA usually travel separately, so they often arrive on different days. Your office then has to pair each ERA with the payment it describes. CMS calls this "reassociation."⁴

Here's what makes the pairing possible. The plan puts a trace number (the TRN) on the deposit, and the same number on the ERA.² The catch: federal rules don't make your bank pass that number along to you.⁴ Banking rules do require it, but only after you ask.⁵ Plans must tell you to ask your bank for it when you sign up.⁴ In Open Dental, you can look up an ERA by its check number or EFT trace number.⁶

There are timing rules too. Plans must release the ERA no sooner than three business days before the deposit date, and no later than three business days after. Plans are held to this for at least 90% of payments each month.⁴⁵ If one half is still missing four business days after the other arrives, it counts as late or missing. Plans must give you written steps to follow in that case.⁴

For the full matching routine, see our guide on how to match deposits to ERAs.

Why an ERA won't balance

"Won't balance" can mean two things. The ERA total may not match the deposit, or the ERA won't post cleanly to your claims. Here are common causes from Open Dental's own manual.⁷

• The plan paid a different code than you billed. For example, it paid a full-mouth series instead of the X-rays you billed. Open Dental then posts the payment as a total. You can leave it that way or split it across the procedures.⁷
• A claim won't match. If a claim can't be processed in the ERA window, the manual says to detach it, then process the ERA outside the window as a bulk check.⁷ If one claim on an ERA hits an error, Open Dental still receives the other claim payments and leaves the ERA partly processed.⁸
• The patient name doesn't match. This is a warning. If the claim is the right one, you can go ahead.⁷
• Primary and secondary on one ERA. Some plans send the primary and secondary payment on the same ERA, and both attach to the primary claim. Move the secondary payment to the secondary claim before you finalize.⁷
• A duplicate ERA. This can happen when the clearinghouse doesn't mark the file as downloaded. Delete the copy.⁷
• Credits on patient accounts. For in-network plans, write-offs calculate correctly only when the plan is set up with a PPO type in Open Dental. If a write-off wasn't posted with the first payment and belongs on a supplemental payment, you have to enter it by hand.⁷

Take-backs and provider-level adjustments

Sometimes a plan changes how it paid an earlier claim. One insurer's 835 guide (for its Medicare Advantage and Medicaid plans) says its method is to "reverse the entire claim and resend the modified data." ¹¹ So one ERA can show an old claim reversed and the same claim paid again.

Plans can also add adjustments that aren't tied to any one claim. These are provider-level adjustments. The same guide explains the math: the sum of all claim payments, minus the provider-level adjustments, equals the total payment.¹¹ An adjustment can lower the payment (such as taking back an overpayment) or raise it (such as interest owed to you).¹¹

Here's a made-up example. An ERA lists $1,200 in claim payments. It also takes back $150 for an overpaid claim from months ago. The deposit is $1,050. If you only add up the claims, the ERA looks $150 short.

That guide also warns that these adjustments "must be taken into consideration" when payments are posted automatically.¹¹ In Open Dental, provider adjustments show in the ERA window when an ERA has any.⁹

What to do, step by step

1. Sign up for both ERA and direct deposit with each plan. Ask your bank to pass along the trace number with each deposit.²⁴
2. Pair each ERA with its deposit by trace number or check number, not by amount alone.⁴⁶
3. Compare totals first. Add the claim payments, then subtract any provider-level adjustments. That should equal the deposit.¹¹
4. Look for reversals. A claim that shows up twice, once negative and once positive, is often a correction of an earlier payment.¹¹
5. Work the claims that didn't match. Check for a wrong code, a name mismatch, or a primary and secondary mixed together. Detach a claim and post it by hand if needed.⁷
6. Check every write-off before you finalize. Don't post write-offs until all plans have paid.¹⁷
7. Verify, then finalize. Open Dental says to confirm the right claims are attached and the amount is correct before you save.⁹
8. Chase what's missing. If a deposit or ERA still hasn't arrived four business days after the other one, follow the plan's written late or missing steps.⁴ If the plan's answer looks wrong, appeal in writing.¹