Beyond the Bank Deposit: Why Your Remittance Advice is Your Real Scorecard

Ever seen a deposit hit your bank account, given yourself a quick high-five, and moved on with your day? You’re not alone—most busy practice owners do exactly that. But here’s the sobering reality: a bank deposit only tells you that you have money; it doesn’t tell you if you have a healthy business.

Think of your bank statement like a box with no packing slip. You know there’s something inside, but was it for a 60-minute session, a lab, or an intake? To get those answers, you need the Remittance Advice (RA).

In the billing world, a Remittance Advice typically comes in two flavors:

1. The EOB (Explanation of Benefits): This is the traditional paper version mailed to your office.

2. The ERA (Electronic Remittance Advice): This is the digital version (often called an 835 file) that feeds directly into your EHR for faster, automated posting.

The "Store Inventory" Reality Check

Imagine you own a small shop where every item on the shelf costs exactly $10. If you sell 10 items, you know you should have $100 in the register at the end of the day. If you open the drawer and find only $85, you’d be asking questions immediately. Did someone give the wrong change? Was there a discount I didn't authorize?

As a clinician, your services are your inventory. Every session has a set value defined by your Fee Schedule (the "price tag" agreed upon in your insurance contract). If you provide a session that is "worth" $150 according to your contract, but the insurance company only sends you $120, you’ve just lost $30 of your "inventory" value without a clear reason.

Without the EOB or ERA, you’d never even know that $30 was missing.

The Header Hunt: Getting the most out of your Remittance Advice

It sounds basic, but the top of your EOB or the header data in your ERA is a goldmine of information. This is where you’ll find the check number and, more importantly, the payer address. If you ever need to appeal a claim because they didn't pay the "full price" of your session, you’re going to need that specific address and those claim numbers to get your foot in the door.

Mapping the Data

One of the biggest headaches in payment posting is realizing the Claim ID on your remittance rarely matches the one generated by your EHR. If you are using ERAs, your software might try to "auto-post" these for you. However, taking the time to manually audit and map these IDs ensures that every dollar is assigned to the right patient on the right date of service. If you treat this data like junk mail, you’re leaving your practice vulnerable to a mess of unallocated cash.

The "Allowed Amount" Trap

The "Good Stuff"—the meat of the document—lives in the service line details. Most practices look at what was paid and stop there. Don't fall for that trap. You must look at the Allowed Amount.

The difference between what you billed and what the insurance "allows" is your contractual adjustment. If that number is off, it’s a massive red flag:

• Your fee schedule is wrong: You might be leaving money on the table because your system isn't updated to reflect your highest possible reimbursement.

• The payer is underpaying you: Payers make mistakes too, and even a small discrepancy per claim can add up to thousands in lost revenue over a year.

Master the Scorecard, Master the Practice

Whether you are opening envelopes or reviewing digital files, mastering your remittances is the first step toward moving from an unsustainable practice to one built on clarity and confidence. It’s about more than just "getting paid"; it's about knowing you are being paid correctly in alignment with the value you deliver.

Follow-Up Actions to Take:

• [ ] Pull your last three remittances (either paper EOBs or digital ERAs) and compare the "Allowed Amount" to your current insurance contracts.

• [ ] Ensure your billing team is capturing the specific Claim IDs provided by the payer for easier follow-up.

• [ ] Identify one "CO" (Contractual Obligation) code on your remittance and verify that you aren't accidentally billing the patient for that amount.

Do you sense that something isn't working in your billing, but you can't quite put your finger on what it is? Reach out to us for a Practice Health Check—we'd love to help you take your practice's vitals.

Want to have a trained biller posting payments for you? Maybe our Done-for-You Billing Service is a better fit!