Key takeaways
- Every service line follows one equation: billed = paid + contractual adjustment + client's share + any other adjustments. If it doesn't balance, something is missing.
- One bank deposit usually covers many claims. The reassociation trace number (TRN) in the remittance matches the one sent with the deposit, but you may have to ask your bank to show it.
- A deposit smaller than the claims it pays usually means a takeback: the insurer recovering an earlier overpayment from this payment.
ERA, EOB, and EFT
- ERA (electronic remittance advice, the X12 835 file): the electronic explanation of what an insurer paid, claim by claim and line by line.
- EOB (explanation of benefits): the paper or PDF version. Clients get their own EOB too, which is why they sometimes call about one.
- EFT (electronic funds transfer): the money itself, sent by ACH to your bank account.
The ERA and the EFT travel separately and can arrive days apart. You enroll for each with every insurer, usually through the insurer's portal or a clearinghouse. Until you do, you'll get paper checks and paper EOBs.
Reading one service line
Here's a 90837 session at an in-network practice, billed at $180:
| Line | Amount | What it means |
|---|---|---|
| Billed | $180.00 | Your full charge. |
| Allowed | $120.00 | The most your contract with this insurer allows for the code. |
| CO-45 | $60.00 | Contractual adjustment: billed minus allowed. You write it off. |
| PR-3 | $20.00 | The client's copay. It moves to the client's balance. |
| Paid | $100.00 | What the insurer actually paid for this line. |
The check: $100 paid + $60 CO-45 + $20 PR-3 = $180 billed. Every line on an ERA balances this way. When a line is denied, the paid amount is $0 and the adjustment codes explain where the full charge went. See denial codes explained for what each code means.
The amount allowed is also the place to catch problems. If the same code is allowed at different amounts from one month to the next with the same insurer, check your contract's fee schedule.
Why one deposit covers many sessions
Insurers pay in batches. A single $2,340 deposit from one insurer might cover 24 sessions across 15 clients and three clinicians, plus a denial or two that paid $0. Your bank statement only shows the total, so on its own it can't tell you which sessions were paid.
To match the deposit to its remittance, use the reassociation trace number (TRN). HIPAA standards require insurers to put the same TRN in the ERA and in the payment instructions sent with the EFT. Banks don't always pass that number through to you by default. CMS's guidance is that providers should ask their bank to deliver the TRN (part of the “CCD+ addenda”) with deposit notifications. If your bank statement shows a long reference number on insurance deposits, that's usually it.
Without a TRN, you match by insurer, amount, and date, which works until two deposits from the same insurer land in the same week.
When the deposit doesn't add up: takebacks and interest
Sometimes the deposit is smaller, or larger, than the sum of the claims in the ERA. That difference is reported as a provider-level adjustment at the bottom of the remittance, separate from any one claim. The most common ones:
- Overpayment recovery (WO), often called a takeback or recoupment: the insurer decided it overpaid an earlier claim and is taking the money back out of this payment. The original claim needs to be reopened in your records, or it will look paid when it isn't.
- Interest (L6): some insurers pay interest on claims they paid late, often because state prompt-pay laws require it. It's income, but not payment for any session.
- Forwarding balance (FB): an amount carried between remittances, sometimes when a takeback is larger than one payment.
So the full equation for a deposit is: deposit = total paid on all claims − takebacks + interest, plus or minus any other provider-level adjustments.
Getting it into your books
Posting a remittance correctly takes a few steps:
- Record the payment on each service line, not just each claim, so a denied add-on or partly paid line stays visible.
- Write off the CO amounts and move PR amounts to client balances.
- Match the deposit in your bank to the remittance, and record takebacks against the claims they came from.
- In your accounting, record insurance income when it's paid (cash basis) or reduce what you're owed (accrual basis), whichever your accountant uses.
When the EHR and the accounting system are separate, these steps are done twice, once in each. That's where most of the time goes, and where deposits that never get matched come from.
Where Remitra fits
Remitra posts each insurance payment line by line: paid, written off, client's share, and the reason for anything unpaid. It then matches the deposit in your bank to the sessions it paid for and writes it to the general ledger, so your accountant gets books that already tie out. See why that's hard with an EHR plus QuickBooks.
Sources
- CMS: EFT and ERA payment remittance reassociation basics (June 2022)
- CMS: Operating rules for EFT and remittance advice
- X12: Claim Adjustment Reason Codes
This article is general information, not legal, coding, or reimbursement advice. Payer rules change and vary by plan and state, so check each payer's current policy. CPT® is a registered trademark of the American Medical Association.