EOBs and Remittance Advice

When your revenue cycle can't afford to stop.

The Document That Explains Your Payment

When a payer processes your claim and sends payment, they also send a document that explains exactly what they did with it. This document is called the Explanation of Benefits (EOB) when it arrives as paper, or the Electronic Remittance Advice (ERA) when it arrives electronically.

These two documents contain the same information. The ERA is simply the electronic version. Both tell you: what the payer allowed, what they paid, what they adjusted, why, and what balance -- if any -- remains for the patient or a secondary payer.

Reading an EOB or ERA accurately is one of the most critical skills in your billing operation. Every downstream decision -- whether to post, appeal, transfer, or write off -- starts here.

EOB vs. ERA: What Is the Difference?

EOB (Paper)

Arrives by mail with a check
Must be posted manually line by line
Can contain thousands of transactions across multiple pages
Takes more time and introduces more room for error
Still required by some smaller or older payers

ERA (Electronic)

Transmitted electronically through your clearinghouse
Loads directly into your practice management system
Accompanies an EFT (electronic funds transfer) deposit
Faster, more accurate, fewer manual steps
Still requires human review for exceptions, denials, and underpayments

Most practices use ERAs for the majority of payers and still receive some paper EOBs. The goal is to move every payer to ERA and EFT enrollment where possible.

What an EOB or ERA Shows You

Every EOB and ERA contains the same core fields for each claim line. Here is a simplified example of what that looks like for a single therapy visit:

Sample Remittance — Single Claim Line

Field	Amount	What It Means
Billed charge	$200.00	What the practice charged for the service
Allowed amount	$112.00	What the payer's contract permits for this service
Contractual adjustment	$88.00	The difference between billed and allowed -- written off per contract
Payer paid	$89.60	What the payer actually sent (80% of allowed after deductible met)
Patient responsibility	$22.40	Remaining 20% coinsurance -- billed to patient
Balance remaining	$0.00	Account fully resolved once patient pays

Note: Reason codes would also appear on this document if any line was denied or adjusted for a non-contractual reason.

Reason Codes and Remark Codes

When a payer denies a claim or pays less than expected, they are required to tell you why. They do this using standardized codes printed on the EOB or ERA:

CARC Claim Adjustment Reason Code. Explains the reason for a payment reduction or denial. For example, CARC 4 means the service is inconsistent with the patient's coverage. CARC 97 means the benefit for this service is included in another allowed payment. RARC Remittance Advice Remark Code. Adds detail or context to a CARC. For example, a RARC might specify what documentation is needed or point to a specific policy behind the denial.

Not every code means the claim was truly denied. Some codes are informational only -- they explain how the claim was processed without indicating that anything went wrong. Your billing team needs to know the difference.

A common mistake: treating an informational code as a denial and adjusting the balance off unnecessarily. Always confirm whether a code is a true denial before taking adjustment action.

Three Questions to Ask About Every Code

Is this a real denial, or is the code informational only? Some codes simply describe how the claim was processed correctly -- no action needed.

If it is a denial, what caused it? Is it a coding issue, a registration problem, a missing authorization, a timely filing issue, or something else? The cause determines the fix.

What is the correct next action? Write it off with the right code? Correct and resubmit? File a formal appeal? Each situation calls for a specific response -- not a default adjustment.

Transferring the Balance After Posting

Once a payer's portion is posted, any remaining balance must be moved to the next responsible party. This is called flipping the account. The balance goes to:

A secondary payer, if the patient has a second insurance plan
The patient, for their copayment, deductible, or coinsurance

If the primary payer automatically sends the claim to the secondary payer -- called an automatic crossover -- your team does not need to generate a separate secondary claim. If there is no automatic crossover, you will need to attach the primary EOB or ERA to a secondary claim and submit it manually.

This is why accurate insurance information at registration is so important. If the wrong plan is on file, the flip goes to the wrong place and the balance lingers unresolved.

The Danger of Skipping the Read

EOBs and ERAs are not just receipts. They are instructions. A poster who processes them without reading the codes carefully risks:

Writing off denials that could have been appealed and paid
Missing underpayments that fall below the contracted rate
Transferring balances to the wrong party
Letting accounts close with money still owed to the practice

Speed matters in posting, but accuracy matters more. When quantity and quality conflict, quality wins every time.