What Is Payment Posting in Medical Billing?
Discover how payment posting is a cornerstone of medical billing, ensuring financial accuracy and optimizing the healthcare revenue cycle.
Payment posting in medical billing involves recording all payments and adjustments into a healthcare provider’s billing system. This process tracks financial transactions for services rendered, whether payments come from insurance companies or patients. It is a fundamental step in the healthcare revenue cycle, establishing a practice’s financial health. Accurate payment posting maintains precise financial records, ensures proper claim resolution, and provides clarity on revenue streams and patient account balances.
Understanding the Information for Payment Posting
Effective payment posting relies on understanding input documents and financial transaction types. The Explanation of Benefits (EOB) is a statement from a health insurance company detailing how a claim was processed. An EOB outlines services billed, the allowed amount, the amount the insurer paid, and any patient responsibility like co-pays, deductibles, or co-insurance. It also specifies any denied amounts and the reasons for denial.
An Electronic Remittance Advice (ERA) is the electronic counterpart to an EOB, formatted as a HIPAA 835 transaction. ERAs offer significant advantages for automated posting due to their structured data, reducing manual entry and potential errors. They provide the same detailed information as EOBs, including payment amounts, adjustments, and denial specifics.
Payment posting includes several categories of financial transactions. Insurance payments are funds received from health plans, reflecting their portion of the service cost. Patient payments include direct contributions from individuals, such as co-payments, deductibles, co-insurance, or payments for services not covered by insurance. Contractual adjustments, also known as write-offs, account for the difference between the provider’s billed charges and the amount the insurance payer has contractually agreed to pay; this amount is typically not collected from the patient. Denials indicate instances where an insurance company refuses to pay for a service, with EOBs and ERAs providing the necessary codes and explanations for these rejections.
The Step-by-Step Payment Posting Process
Payment posting can follow either a manual or an automated workflow. Manual posting involves data entry directly from paper EOBs, while automated posting leverages ERAs for streamlined integration into the billing software.
The process begins by locating the specific patient account and claim in the billing software, often by matching claim numbers or dates of service. Next, the exact payment amount received, whether from an insurance company or a patient, is entered into the system.
Following payment entry, the amount is applied to the appropriate service line items within the claim. Any contractual adjustments or write-offs detailed on the EOB or ERA are then recorded, balancing the account by reflecting the difference between the billed and allowed amounts.
If a claim is denied, specific denial codes and reasons are posted to flag it for review and potential appeal. This information is important for denial management and subsequent follow-up actions.
Finally, the batch of posted payments and adjustments is balanced against the total amounts on EOB/ERA summaries or bank deposits. Once reconciled, the batch is saved, finalizing the posting process.
Reconciling and Analyzing Posted Payments
After payments are posted, daily or batch reconciliation ensures accuracy and identifies discrepancies. This process compares the total payments and adjustments recorded in the billing system against external financial records, such as bank deposits, EOB/ERA summaries, and internal payment logs. If discrepancies arise, an investigation is initiated, which may involve reviewing individual entries for data entry errors or contacting payers to resolve payment variances. Prompt resolution of these differences is important for maintaining accurate financial accounts and preventing revenue leakage.
The data generated from posted payments is then used to create various reports from the billing system. Reports include payment summaries, accounts receivable aging reports, and denial reports. These reports provide a comprehensive overview of financial performance and highlight areas requiring attention.
They are used for financial analysis, allowing practices to identify trends in payments, underpayments, or recurring denials. Aging reports pinpoint outstanding balances that require follow-up, while denial reports inform strategies for claim appeals or process improvements to reduce future rejections.