How to read an ERA 835 remittance line by line

What is an ERA 835, and how do you open it?

The ERA is the electronic remittance advice, sent as an ASC X12 835 transaction. HIPAA adopts the 005010X221 version of the 835 under 45 CFR 162.1602(d), and Medicare's Claims Processing Manual, chapter 22, section 40, says its ERAs must be produced in the HIPAA compliant 835 version 5010.

The raw file is a stream of segments that people do not read directly. Chapter 22, section 40.1, calls the 835 a variable-length record designed for wire transmission. Use your practice management system, your clearinghouse or a free viewer. CMS provides Medicare Remit Easy Print for professional providers and PC Print for institutional providers, and both can print all claims, one claim or a summary, along with the text of each reason and remark code.

The same logic applies to every payer, but the details differ. This post uses Medicare's rules where they are published, and the payer's own companion guide is where a commercial plan states its choices.

What does the top of the remit tell you?

The header tells you how much was paid, how it was paid and how to match it to the bank. The payment segment is the BPR, and for Medicare its payment method is ACH, CHK or NON, per the CMS companion guide. The trace number segment is the TRN, which 45 CFR 162.1602 names the Reassociation Trace Number, and it is how an electronic deposit is tied to its remittance.

A zero-dollar remit still matters. The payer may be denying every claim on it, and the denials need work as much as payments need posting.

How do you read one claim on the remit?

Each claim starts with a CLP segment. CLP02 carries the claim status code, and CLP06 carries the claim filing indicator, which for Medicare is MA for Part A or MB for Part B. CLP04 is the payment to the provider. Chapter 22, section 20, calls the computed field in the paper remit the "ProvPd" amount and ties it to CLP04.

Read three things on every claim: what the payer paid, what it adjusted, and who owes the adjusted amounts. Chapter 22, section 60, says the difference between the submitted charge and the payment must be accounted for so the 835 balances, and that an adjustment can be a denial, a zero payment, a partial or reduced payment, a penalty, an additional payment or a supplemental payment.

The rule that makes the remit checkable is in chapter 22, section 30: the total paid equals the total submitted charges plus or minus the adjustments, and every Medicare 835 must balance at the service, claim and provider levels. Section 20 adds that positive adjustment amounts reduce the payment and negative amounts increase it.

How do you read the service lines and their adjustments?

Each billed line is an SVC segment, with its own paid amount and adjustments. The CAS segment holds each adjustment: a group code, a claim adjustment reason code (CARC) and an amount. Chapter 22, section 60.2, says the current 835 structure allows only one reason code to explain any one adjustment amount, so a line with two causes shows two entries.

The remark code (RARC) is reported at the line in an LQ segment with the HE qualifier, and it explains the reason code further. A CARC 97 with no remark and a CARC 97 with M15 are different problems, as the CO-97 code page shows. The deeper reading of CO-45 and PR lines is in CO-45 contractual obligation or underpayment and PR-1, PR-2 and PR-3 patient responsibility codes.

What does a balanced claim look like?

Line 2 is the one that needs action. It balances on paper, but the money is missing, and the CO-97 says the payer treated the service as bundled into another one. The line goes to a denial work queue, not to the write-off list, until someone has checked the coding. See how to fix CO-97 bundled service denials.

What is the PLB segment at the end?

PLB is the provider-level balance segment. It reports adjustments that belong to the provider rather than to any one claim, with a reason code from the X12 provider adjustment reason code list. Chapter 22, section 20, requires every provider-level adjustment to be reported there.

• WO, overpayment recovery amount, where the payer takes back money from an earlier claim.
• 72, provider refund amount, which acknowledges a refund the provider sent for an earlier overpayment.
• L6, interest amount.
• FB, non-claim related balance forward amount.

The CMS companion guide lists those four among the PLB reason codes that Medicare uses. A recovery code on a remit is also a trigger to look up the original claim, because the money may have been taken for a reason you can dispute, such as a duplicate payment finding on a claim you consider correct. The overpayment side is covered in the 60-day overpayment rule.

What should you post, and what should you flag?

1. Post the payment total to the deposit and confirm the trace number.
2. Post each claim payment and each line. Move PR amounts to the patient or the next payer.
3. Post CO adjustments only when the reason code is a true contract adjustment, such as CO-45 on an allowed amount you have checked.
4. Send every zero-paid or CO denial line to a work queue with the CARC and RARC attached.
5. Flag any claim that does not balance, and any PLB line, for review before the batch is closed.
6. Flag secondary payments that came from a crossover, because Medicare reports only one crossover payer name on the remit (chapter 22, section 20).

Unworked remit lines are how A/R ages quietly; the order for working them is in how to prioritize an A/R follow-up worklist. The general method for denial queues is in the denial management playbook.

How Nucleus Align handles remittances

We post payments and read every adjustment line, and our accounts receivable team sends denial lines to the queue so denials are worked within 48 hours. Book a call to review a remit with us, or read more on the blog.