It’s no secret the healthcare industry is rife with costly administrative processes. Case in point: paper explanation of benefits (EOB) forms amount to nearly $18,600 in administrative costs per physician, per year.
However, with the recent upswing of tools like electronic remittance advice (ERA), the industry can exhale, relieved. Like practices, hospitals, and other healthcare providers, payers are jumping on the paperless bandwagon in hopes of reducing administrative costs.
Read on to learn the what, why, and how of ERAs.
What Are ERAs?
An electronic remittance advice (ERA), or what is frequently referred to as the HIPAA 835 file, is essentially an electronic EOB. ERAs contain information on whether a claim was paid or denied, final status claims, and any adjustments the payer made to the billed amount.
The ACA requires health plans to implement ERAs under Stage 2 of its Administrative Simplification provisions by January 1, 2014. This represents a strong incentive for payers like Medicare, Medicaid, Aetna, and Tricare South, who have already begun phasing out paper EOBs.
Why Do You Need ERAs?
Manually posting payments and reconciling patient accounts is time-consuming and therefore costly. According to one study, the average physician spends approximately 5 hours a week on administrative and non-clinical tasks. This translates into 3 weeks a year on billing and insurance-related tasks.
Why the hassle? EOB formats and claim adjudication codes are not standardized across payers, making it challenging to manually post and reconcile payments. Also, manually processing EOBs is highly susceptible to data entry errors. If your staff accidentally inputs $20.00 instead of $200.00, they will have to check the whole batch to locate the error.
In addition to inefficient processing and high administrative costs, EOBs contribute to your struggles with physical storage and document inaccessibility. Rummaging through paper archives as a means to investigate and manage secondary claims doesn’t exactly scream efficiency.
Worst of all, you miss out on the opportunity to harness the power of big data. In the absence of a readily accessible and centralized data warehouse, providers forfeit the opportunity to effectively analyze their payments and denials in hopes of making smarter business decisions.
How ERA Will Benefit Your Practice
ERAs were manufactured in light of increasing transaction volume, complex compliance issues, and high administrative costs. Imagine the benefits – you can alleviate the tedious process of manually entering, checking, and posting payments by automating processes and accelerating the revenue cycle.
The American Medical Association (AMA) estimates that the average provider can save almost $9,500 annually by switching to ERAs, seeing as your office staff won’t have to collect mail, file paper documents, manually post payments, and speak with payers. The aggregated effect of this transition equates to less administrative waste and more effective patient care.
Adopting a system with the capacity to accept ERAs, post denials, and run real-time analytics will allow your practice to track, analyze and manage the revenue cycle seamlessly.
Your practice would operate most efficiently with a system that has the capacity to:
- Receive ERA 835 files
- Differentiate ERAs that contain payment from ERAs that deny payment.
- Organize denials in a manageable application
- Run real-time analytic reports
- Allow users to verify check by check and charge by charge to ensure that the batched amount equals the check amount.
Coupling ERA with a robust analytics application will also allow your practice to pinpoint claim underpayments and increase collection efforts. Scrutinizing denials will lead to an increase in first-pass resolution rates, enhanced collection efforts, and a decrease in future denials, ultimately benefiting your practice’s bottom line.
Roger Ximenez is an Implementation Coordinator at CareCloud, where he manages all ERA channels, eligibility configurations and aggregated client analysis for existing and prospective clients. He also sporadically contributes to technology blogs, advocates personal health and is deeply interested in the evolution of Healthcare IT.
