When an ERA is received, providers may:

•Post decision and payment information automatically, for individual claims included in an RA to the appropriate beneficiary accounts when a compatible provider accounts receivable software application is being used;

•Identify the reasons for any adjustments (denials or payment reductions);

•Note when an EFT payment issued with the ERA is scheduled for deposit in the provider’s bank account, or arrange for a deposit of a paper check being issued;

•Submit a secondary electronic claim that incorporates Medicare adjustment and payment data from the ERA to other health care plans that cover the beneficiary if the ERA does not indicate that Medicare has issued a Coordination of Benefits (COB) transaction;

•Submit a paper secondary claim when appropriate to other health care plans to which is attached a print-out of the Medicare ERA information for that claim;

•Print for specific payment information, as needed, by using translation software [e.g., PC-Print for institutional providers and Medicare Remit Easy Print (MREP) for professional providers and suppliers];

•Use it to quickly identify potential problems with the way the original claim was submitted, so as to avoid the same errors with similar claims in the future.

When an SPR (Paper EOB) is received, providers may:
•Post manually to accounts receivable;
•Use it to correct any errors that may have been encountered during claims processing;
•Bill secondary health care plans that cover the beneficiary.

Example EOB and payment posting




Example EOB

In the software, we need to go payment posting screen and Enter insurance and check information details in the summary page.

In the line item field, choose the right patient and correct DOS and CPT.  Enter the paid amount , patient responsibility amount in the respective field. For Example in the above EOB, For CPT 99205, paid amount is $74.51 and the patient responsibility is $128.42 ( Choose the correct reason for patient responsibility. Most of the software would calculate the write off adjustment automatically.  Post payment for all CPT and all patient in the EOB one by one in the same receipt.  Check amount and software paid amount has to be equal otherwise we did some mistake in the process. In the software payment posting would be like the below image.

Payment posing Software

This is how we have to post the payment in the software.

PAYMENT BASICS AND CONTRACTUAL TERMS

Payors pay providers according to a contract that they both have signed; in absence of a contract reimbursement is based on 100% of billed charges With rising healthcare costs, payors are constantly seeking payment methods, to encourage providers to reduce healthcare expenses Providers constantly seek payment methods, which cover their costs of service and allow them to treat patients according to what’s medically necessary. In general, payors use the following four bases to calculate provider payments

Charges – fee for service
Costs
Flat rate
Capitation

CHARGES: 

Payments are based on what a provider charges. This is the historic payment method and not commonly used today as there’s no incentive for the physician to cut costs (the more a physician charges, the more he is paid).

COSTS:
Payments are based on what costs a provider has incurred in treating a patient. Still used today, but slowly being phased out because here is not enough incentive for a provider to cut costs (a physician could be fiscally irresponsible and have high costs). Payment methods used are ‘UCR’ and ‘PIP’.

USUAL, CUSTOMARY, OR REASONABLE (UCR):

Providers paid according to the provider’s usual fee, the customary fee of other providers in the area, and the reasonable fee for the service.

PERIODIC INTERIM PAYMENT (PIP):

Provider paid a fixed amount on a regular basis according to costs. This is usually used with facility providers. Final reconciliation of underpayment/overpayment are made at the end of the contract.

FLAT RATE:
Fixed provider payments per episode of care regardless of intensity of services or length of services; however provider is not paid unless service is rendered. Whereas Case rate is a single fee for a specified procedure or course of treatment that is inclusive of all medical services.

CAPITATION:

Fixed payments paid to a provider periodically for each patient assigned to the provider. The provider is paid regardless of whether the patient is ever seen. The most common arrangement is Per Member Per Month (PMPM). Specified amount paid periodically to health provider for a group of specified health services, regardless of quantity rendered.

APPROVED AMOUNT or ALLOWED AMOUNT:

A reimbursement method in which a payor only pays a fixed amount per service; however, providers cannot seek patient contributions for charges that exceed approved amounts. Approved Amount = Insurance Payment + Patient Responsibility = Total Charges – Contractual Adjustment.

WRITE-OFF: For the claims or charges, which were denied. These claims or charges need to be written Despite all the efforts provider was not able to realize cash from insurance company off as the denial is due to providers fault/mistake

OUT OF POCKET EXPENSES/COSTS:

Portion of health services/health costs that must be paid for by the plan member, including deductibles, co-payments, and co-insurance.
Out of pocket expenses also refer to the payment of services not covered by or approved for reimbursement by the health plan.

DEDUCTIBLE APPROVED AMOUNT:

Claim denied for no authorization and insurance does not provide retro-authorization. Claim can be appealed with medical records showing medical necessity. Insurance can either apply benefit penalty or appeal can be denied. Maximum of three appeals can be sent after which the claim or charge needs to be written off as it was providers fault not to obtain authorization.

CONTRACTUAL ADJUSTMENT: The difference between total/actual charges and the amount of money approved by the insurance company (third-party payor). The payment amount is established based on the agreements between provider and payor allowing for discounts and/or reduced rates. Contractual Adjustment is also called ‘Contractual Allowance’, ‘Provider’s Write-off’, or ‘Provider’s Discount’.

Payment posting process

How to post payment