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Operating Rules EFT and Remittance Advice

Guidance for the operating rules for the EFT and ERA transactions.


Issued by: Centers for Medicare & Medicaid Services (CMS)

Issue Date: August 02, 2020

Operating rules for the EFT and ERA transactions went into effect on January 1, 2014.

View the EFT and ERA Operating Rules on the CAQH CORE website.

To understand the operating rules it is important to be familiar with the two transactions:

What is an Electronic Funds Transfer (EFT)?

An electronic funds transfer, or EFT, is the electronic message health plans use to order a bank to transfer funds electronically to a provider’s bank account to pay for health care services.

  • Amount being paid
  • Name and identification of the payer and payee
  • Bank accounts of the payer and payee
  • Routing numbers
  • Date of payment

What is an Electronic Remittance Advice (ERA)?

An electronic remittance advice, or ERA, is an explanation from a health plan to a provider about a claim payment. The ERA provides payment information about the transfer of funds and payment processing from a health plan to a health care provider's bank, or the explanation of benefits or remittance advice.

In addition to payment information, an ERA explains how a health plan has adjusted claim charges based on factors like:

  • Contract agreements
  • Secondary payers
  • Benefit coverage
  • Copays and co-insurance

What are the benefits of using EFT and ERA? 

The Electronic Funds Transfer (EFT) and Electronic Remittance Advice (ERA) can help providers and health plans save time and money by:

  • Streamline manual processes 
  • Speed up provider revenue cycles
  • Auto posting payments to accounts receivable

As a provider, how do I start exchanging the EFT and ERA transactions with my health plans?  

CMS encourages providers to enroll for both EFT and ERA transactions through each health plan with whom they participate.  To start, you will need to know your practice's TIN (Tax Identification Number) and clinicians' NPI (National Provider Identifiers).  Other payment methodologies are allowed, but all health plans must transmit payments through the Automated Clearing House (ACH) Network. 

The adopted EFT/ERA operating rule provides specific guidelines for the EFT and ERA maximum enrollment data set that health plans may require from providers.  For more guidance on standardized EFT/ERA enrollment data elements please refer to the CAQH CORE operating rules.

What are the adopted Standards for the EFT transaction?

HHS has adopted two standards for the EFT transaction:

  • CCD+Addenda, the NACHA Corporate Credit or Deposit Entry (CCD) with Addenda
  • Trace Number Segment (TRN) implementation specifications in the X12 835 TR3 for data content of the Addenda Record of the CCD+Addenda  

The adopted standard for the Electronic Remittance Advice (ERA) transaction is X12 Version 5010 (835).

Health plans are required to input the X12 835 TRN Segment into Field 3 of the Addenda Record of the CCD+Addenda.  The TRN Segment in the Addenda Record of the CCD+Addenda should be the same as the TRN Segment in the associated ERA that describes the payment.  Using the same TRN Segment helps to match the payment to the correct remittance advice, a process called reassociation.

What are the operating rules related to the EFT and ERA?

Operating rules for EFT and ERA became mandatory on January 1, 2014.  You can find them on the CAQH CORE website at EFT and ERA Operating Rules.

One of the phase three of the operating rules (Rule 360) is the use of claim and remittance advice remark codes.  Additional information about these codes and how they are best used is provided below.

What are Claims Adjustment Reason Codes (CARCs) and Remittance Advice Remark Codes (RARCs)?

Under HIPAA, all health plans, including Medicare, are required to use claims adjustment reason codes (CARCs) and remittance advice remark codes (RARCs) instead of property codes, to explain any adjustment in the claim payment.  X12 is the recognized code set maintainer for the CARCs and RARCs.

You can request new codes and revisions to existing codes at certain times each year.  Select the "Change Request Form" option on the Washington Publishing Company web pages for CARCs or RARCs.  Requests for codes must include suggested wording for the new or revised message, and an explanation of how the message will be used and why it is needed.

The CARC and RARC Committees review requests 3 times a year.


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DISCLAIMER: The contents of this database lack the force and effect of law, except as authorized by law (including Medicare Advantage Rate Announcements and Advance Notices) or as specifically incorporated into a contract. The Department may not cite, use, or rely on any guidance that is not posted on the guidance repository, except to establish historical facts.