How to Read a TherapyNotes ERA for Denials and Underpayments

An ERA is the payer’s explanation, in a format software can read

The electronic remittance advice is a federally adopted standard transaction: ASC X12N 835, health care payment and remittance advice.¹ It is the same information a paper explanation of benefits carries, structured so a system can post it.

TherapyNotes describes an ERA as a digital version of the paper EOB that is routed directly into the account rather than arriving by mail, and says it provides details about the payment for the corresponding claims, including contracted rates, copay, coinsurance, deductibles and other payment adjustments such as interest, penalties and balance forwarding. It also notes that a payer may communicate claim rejections and refunds through an ERA.⁴

That last point is the one that catches practices out. An ERA is not only a payment document. Things that are not payments arrive in it too.

Start with the group code, not the dollar amount

Every adjustment on an ERA carries a Claim Adjustment Group Code, and the group code is what assigns responsibility. X12 defines five:²

• CO, Contractual Obligation. The amount you agreed to write off by signing the contract. This is not a shortfall to chase; it is the difference between your charge and your contracted rate.
• PR, Patient Responsibility. Copay, coinsurance or deductible. This is collectible, from the patient.
• OA, Other Adjustment. Neither of the above. Worth reading every time.
• PI, Payer Initiated Reductions. The payer reduced the payment on its own initiative. This is the group code most worth a second look.
• CR, Corrections and Reversal, which X12 notes is not used with version 005010 and up.

A practice that treats every adjustment as a write-off is accepting PI and OA reductions it never agreed to. Reading the group code first separates the money you gave up on purpose from the money that simply did not arrive.

CARC says what happened. RARC says a little more about it.

The two code sets do different jobs and are easy to conflate.

Claim Adjustment Reason Codes describe why a claim or service line was paid differently than billed.² They sit with the group code and the dollar amount.

Remittance Advice Remark Codes exist, in X12’s own words, "to provide additional explanation for an adjustment already described by a Claim Adjustment Reason Code (CARC) or to convey information about remittance processing."³ There are two kinds: supplemental remarks that expand on an adjustment, and informational remarks prefaced "Alert:" which X12 says are never related to a specific adjustment.³

So an Alert is not a problem to solve. A supplemental RARC beside a PI or OA adjustment usually is.

Claim-level and service-level adjustments are not the same thing

An adjustment can apply to one service line or to the claim as a whole, and TherapyNotes handles the two differently. It notes that claim-level adjustments create a discrepancy between the payment amount and the Total Allocated value, and that alerts for them display after the corresponding line item. A claim-level adjustment may apply at the service level or at the provider level.⁴

In practice this is where posting goes wrong: the numbers do not reconcile, and the fastest way to make them reconcile is to force the difference into an allocation where it does not belong. TherapyNotes’ own guidance is to open the hyperlinked alert and decide: if the adjustment applies to the service, edit the corresponding amount; if it does not, record it in the payment adjustments section instead.⁴

A reconciled batch is not the same as a correctly posted batch. The difference shows up months later as an A/R balance nobody can explain.

A reading order that finds underpayments

Work the remittance in this order rather than top to bottom:

1. Compare the paid amount to your contracted rate, not to your billed charge. A charge is an asking price; the contract is the agreement.
2. Read every group code. Set CO and PR aside. Stop on OA and PI.
3. Read the CARC on anything that stopped you, then the RARC beside it. Ignore Alerts.
4. Reconcile claim-level adjustments deliberately, deciding whether each belongs to a service or to the claim.
5. Check for anything that is not a payment: a rejection, a refund request, a reversal, a balance forward.
6. Look across remittances, not just within one. One reduced line is an incident. The same CARC from the same payer every week is a pattern, and a pattern has a cause upstream.

That last step is the one a single ERA cannot give you, and it is the reason VixisTrace™ exists: an individual claim tells you what happened, and only the set tells you whether it keeps happening.

CareVixis is not affiliated with, endorsed by, sponsored by or certified by TherapyNotes. No API integration, native integration, certification or partnership with TherapyNotes is claimed. TherapyNotes is a trademark of its respective owner and is referred to here only to describe how a practice using it works. Uploading a remittance file is a supported data import, not a native integration.

Related reading

• VixisTrace™ for TherapyNotes users
• ERA, EOB and claim status: which one tells you what happened
• TherapyNotes says a claim is a duplicate: what to check
• Mental health billing and revenue cycle management