The EOB or ERA, EOP, 835, etc. There are many acronyms to describe the payer’s remittance when received. Understanding these is even more challenging. In this article we will try to de-mystify and provide a better understanding of the process.


First the acronyms: The most common are EOB- Explanation of Benefits, EOP- Explanation of Payment, ERA- Electronic Remittance Advice, and 835- electronic identifier for the ERA. They all mean the same thing essentially; terminology of what is being paid and how it should be applied.


All Remittances have the same basic information: the patient’s name, id#, claim number also referred to as an ICN or TCN, a CPT or description of each line item billed, the charges by line item and the total charges, and most importantly, the allowed amount(s), adjustment amount(s), paid amount(s), and patient responsibility amount(s) separated into deductible, co-insurance, and co-payment. This information is organized into horizontal columns for the patient data and charge details, and vertical columns for the allowed, adjustment, etc.


Understanding how a plan has processed a claim, posting it accurately, and assigning responsibility is vital to maintain proper billing records.


Using the example above, we see that this patient was seen on 01/30/2018 for a 36478 on the RT side. Her ID number is listed as well as her ICN or Claim number. The charge for the 36478 was 2218.00, the total allowed amount was 1224.53, the total adjusted amount as 993.47. The payment was 0.00, and under deductible the entire allowed amount of 1224.53 was assigned to the patient’s responsibility.


All EOB’s follow a basic math formula to determine proper payment. The formula can be calculated a couple different ways. The first is: allowed+adjustment = billed charges. The second more detailed method is: payment+adjustment+patient responsibility = billed charges. Even a third method can be used: payment + patient responsibility = allowed amount.


Using the example with the formulas above, 1224.53+993.47=2218.00, or 0.00+993.47+1224.53 = 2218.00 so on and so forth.


Another important piece of information on the EOB is called a CARC or remark code. These codes provide processing information such as denial reason, pt liability, and adjustment reasons. Our example above shows a CARC code of CO-45, this translates to contractual adjustment and would be on every EOB for every correctly processed and adjudicated claim regardless of payer. There are many of these codes, and not all follow the same methodology, but any EOB whether paper or electronic will include a summary of the CARC codes with their definitions.


I always say that in healthcare all rules have an exception, and this is no different. Secondary EOB’s and HSA account payments may not always include the details of a standard commercial remittance. They can however be puzzled together when a basic understanding of the principals is applied. Now that you know how to read the information provided on an EOB (who thought it would be that much!) I encourage you to select a few and try it out for yourself.

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