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The Importance of EDI and ERA

EDI Electronic Data Interchange / ERA Electronic Remittance Advice

You’ve done it; you’ve completed credentialing with an insurance company! You may think that the enrollment paperwork stops here, but along with your insurance contract you receive enrollment paperwork for EDI Claims Submissions, and ERA Receipts. It can feel daunting to have to sit down and fill out yet another form, but in this article we are going to talk about the importance of EDI and ERA, and how it can help your practice in the long run.


What is an EDI?

EDI stands for Electronic Data Interchange, and is the term used to describe electronic claim submission. Applying for EDI involves connecting your EHR system (Electronic Health Record system) to a clearinghouse whose role is to pass on digital claim submissions from your EHR to the insurance company. The clearinghouse serves a few different purposes, namely scrubbing claims for potential errors, and routing claims to insurance companies through secure and HIPAA compliant channels. Applying for EDI allows you to submit claims electronically as an ANSI-X12-837 file, rather than the traditional paper method of the CMS-1500 form. This is why you may see the term 837 during the application process for EDI, referring to the electronic file type.

The Benefit of EDI

Establishing a connection between your EHR and the Clearinghouse to allow for the submission of electronic claims has some great advantages. The first advantage is that the time from you creating the claim to the insurance company processing the claim is reduced when the file is sent electronically when compared to claims submitted by mail. While claim processing can still take some time at the insurance company, by removing the time the paper claim would spend in the USPS you are putting yourself that much closer to payday.

The second advantage is the fact that claims get scrubbed by the clearinghouse for errors prior to reaching the insurance company. This means that you have the opportunity to correct and resubmit claims prior to them reaching the insurance company for a lower chance of denials and rejections. The third advantage is also provided by the clearinghouse in that they take care of the HIPAA compliant portion of submitting claims and protecting patient health information. By utilising the clearinghouse, you can rest easy knowing that you are complying with HIPAA laws.

Many people who are submitting paper claims are using an EHR to generate the paper claims, however if you are still filling out forms by hand there is an added benefit of EDI. Relying on the information stored in your EHR to auto populate the form fields can cut a lot of time from the claim generation process, and as long as you are diligent about the upkeep of your patient records can yield greater accuracy when generating claims.

What Do I Need to Apply for EDI?

The process for EDI enrollment can differ based on the EHR you are using, as well as the insurance company that you are intending to submit claims to. A good place to start would be to review our list of Important Identifiers for Therapists. Many of these identifiers will be needed in setting up EDI. Next, check with your EHR and see if they have instructions to help you in setting up the EDI connection with their preferred clearinghouse for a specific payer. You may need to fill out paperwork to submit to the clearinghouse, as well as to the insurance company. There may also be an online enrollment process that the insurance company may be able to help walk you through.

There are three entities involved in EDI: your EHR company, the clearinghouse, and the insurance company. Each of them likely has a point of contact for EDI, and it may be helpful to contact each entity if you are having trouble with getting EDI setup. You can also refer to each of their websites for information related to EDI setup.


What is an ERA?

ERA is an acronym for Electronic Remittance Advice. Upon payment of claims, an ERA is transmitted electronically from the insurance company through the clearinghouse to your EHR. This particular electronic file contains information about how much was paid, which claims were paid, and which claims were denied or rejected. The paper equivalent of an ERA is called an EOB, or Explanation of Benefits. This file may be referred to as an 835, which again is derived from the name of the file type.

The Benefit of ERA

Since an ERA has all of the information for claim payments delivered directly to your EHR, it makes payment posting a breeze! It takes some of the guesswork out of matching a payment to an open claim, and can yield a more accurate insurance aging report. Posting ERAs can also prove to be a time saver. The EHR does the work for you in terms of organizing the information and gathering it in the same spot, whereas if you are relying on paper EOBs you will need to take the time to make sure that you’ve gathered everything that you’ve received. Another drawback of the paper EOB is that they are more easily lost in the shuffle of paperwork. Unless you have a really great system of organization, paper EOBs could get lost and never posted, resulting in an inaccurate aging report.

Sometimes when enrolling for ERA you may also enroll in EFT (Electronic Funds Transfer) at the same time, meaning that along with an electronic report of claims paid or not paid, you will get a direct deposit payment rather than a paper check. This is dependent on the payer, as some have a separate direct deposit enrollment process. When direct deposit is included in the ERA enrollment, it has the added benefit of faster receipt of payments.

What Do I Need to Apply for ERA?

Similar to EDI, refer to the list of Important Identifiers for Therapists linked above. When applying for ERA and EDI, it is important to make sure that the information submitted is the same as what was submitted for EDI, which should be the same information as what you credentialed with. Making sure that all of the information matches up is the most important!

Again, check with your EHR for specific instructions on how to apply for ERA, as they may have paperwork available for you to complete with some further instructions on where to send it.

You may also need an identifier for the EHR system that you work with, you will need to know which clearinghouse your EHR works with, which may also have an assigned code or identifier, and lastly you will need to know the Payer ID of the insurance company that the clearinghouse has assigned to that payer.

Rely on Your Resources

Getting these connections set up can be daunting, but there are many people who are able to support you in the process! Communicating with a representative from your EHR is a great place to start, as they can tell you which clearinghouse you should be working with. Getting in touch with the EDI/ERA department of the insurance company is also helpful, as they can explain any portals or processes specific to them that may be required for the enrollment. Lastly, the clearinghouse itself is a great contact to have, as they can provide you with status updates of your enrollment, or they may be able to identify any issues with the enrollment.

If this process still seems daunting to you, consider signing up for Billing Services with Practice Solutions! When you choose Practice Solutions as your billing partner, we will take care of all EDI and ERA enrollments for you so that your practice can be running as smoothly as possible. Not only will we complete these enrollments, but we will also manage your claim submissions, payment postings, and following up with denials and rejections. If this sounds like the solution you need, reach out via our website, call us at 734-437-9432, or email us at

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