What would health care be without its love for initialism? And healthcare billing is no exception, which is why we decided to shed some light on three common ones: EDI, ERA, and EFT. If you’re in the rehab therapy billing world, you’ve probably heard these terms bandied about. But because they directly impact your practice’s ability to make money, it’s imperative that you’re crystal clear about electronic data interchange, electronic funds transfer, and electronic remittance advice definitions. So without further ado, here’s what you need to know about each (adapted from this Therabill resource and this one). If you’re already pretty familiar with these terms—but you’re looking for a quick refresher—jump to the bottom of the page for a few quick and dirty definitions.
Electronic Data Interchange (EDI):
EDI is a general term that indicates an electronic transfer of data between providers and payers. An EDI claim typically refers to the electronic version of the CMS 1500 form (which providers use to submit claims to third-party payers). These files—which are also known as 837 files—must pass through one or more clearinghouse(s) on their way from provider to payer. (As the explainer video in the above-cited resource explains, this is similar to the way paper forms pass through one or more post office(s) on their way to their final destination.) Clearinghouses serve as middlemen between providers and payers—and payers require providers to use specific clearinghouses to ensure that claims are formatted in ways that are acceptable for the payer. Payers also use EDI to acknowledge receipt of claims and to send payers claim rejection messages.
Some payers—including Medicare—require providers to complete EDI enrollment in order to submit electronic claims. If you haven’t done this—and you submit a claim to a payer that requires it—the payer will deny your claim. Enrollment is based on billing provider NPI, so it’s important to know how you’re credentialed with each payer.
Electronic Remittance Advice (ERA):
Electronic remittance advice—also known as an 835 file—is an electronic version of an explanation of benefits, which is what payers provide to beneficiaries to explain what amount insurance paid for services and what (if anything) the patient still owes.
Unlike EDI enrollment, which only certain payers require, all payers require ERA enrollment in order for a provider to receive electronic remittance advice. Without ERA enrollment, providers will receive paper EOBs. That said, some payers don’t provide ERAs, and providers will always receive EOBs from those insurance companies. As a note, being enrolled in EDI and/or EFT does not automatically mean you are enrolled in ERA.
Electronic Funds Transfer (EFT)
Electronic funds transfers occur when payers transfer funds to providers to reimburse them for their services; it’s essentially a direct deposit. These fund transfers never go through clearinghouses or billing applications; they are exclusively between payers and providers.
Because EFTs only occur between providers and payers, providers should request EFT enrollment forms directly from their payers. Along the same lines, if you experience an issue with a payment—like if it’s late, missing, or wrong—it’s best to reach out to the payer directly.
There you have it: an overview of EDI, ERA, and EFT for rehab therapists. As a bonus, if you’re a WebPT billing service or software Member, we help with the EDI and ERA process. Check out our knowledge base to learn more.