How do I read an ERA?
Quick Answer
An Electronic Remittance Advice (ERA) is the provider-facing electronic version of the payment explanation. Start with the payer and check information, review each claim's payment status, identify CARC and RARC codes at the claim and line level, post payments and adjustments, then reconcile against your original claims.
Step-by-Step Instructions
Identify the payer and check information
The ERA header identifies the payer, the payee (your practice), the check/EFT number, and the total payment amount. Verify the payer matches your records and the payment amount matches your expected deposit.
Review claim-level information
Each claim on the ERA shows the patient name, member ID, date of service, billed amount, and payment amount. Match each claim to the corresponding claim in your practice management system. Note any claims that were denied or adjusted.
Identify CARC codes at the claim and line level
CARC (Claim Adjustment Reason Code) codes explain why the payment differs from the billed amount. They can appear at the claim level (affecting the entire claim) or the service line level (affecting a specific CPT code). Common CARCs include CO-45 (contractual adjustment), CO-97 (bundling), and CO-16 (missing information).
Check RARC codes for additional detail
RARC (Remittance Advice Remark Code) codes provide supplementary information alongside CARC codes. For example, if you see CO-16, look for the accompanying RARC (like M51 or N290) to identify exactly what was missing. RARCs are essential for understanding the full reason for any adjustment.
Post payments and adjustments
Post the payment amount to the correct patient account and date of service. Apply contractual adjustments (CO-45) as write-offs. Post patient responsibility amounts (PR-1, PR-2, PR-3) to the patient balance. If your practice management system supports ERA auto-posting, review the posted entries for accuracy before finalizing.
Reconcile against your claims
Compare the ERA against your original claims to identify: claims that were not paid, payments that are lower than expected, or unexpected denials. Any discrepancy should be investigated and tracked for follow-up. Reconciliation ensures no revenue falls through the cracks.
Route denials for action
For each denied claim on the ERA, route it to the appropriate team member for resolution. The action depends on the CARC/RARC codes: corrections for CO-16, appeals for CO-50, write-offs for CO-45. Set follow-up timers to ensure timely resolution.
Common Mistakes to Avoid
Not reading the RARC codes — they contain critical detail about what went wrong.
Auto-posting without reviewing — errors in the ERA can propagate to your accounting.
Not reconciling payments against expected amounts — underpayments go unnoticed.
Ignoring small adjustments — they can indicate systematic billing issues.
Not routing denials promptly — delays push claims past timely filing or appeal deadlines.