Payment Posting, Reconciliation and Credit Balances

78% EFT, 89% ERA

Share of medical claim payments made by EFT in 2024 (2025 CAQH Index, now published as the DataSpring Index) and share of medical remittances delivered as a fully electronic 835 (2024 CAQH Index). Roughly one payment in five still arrives as a paper check or a virtual card, and each manual remittance costs a provider about $2.72 more to work than an electronic one.

11.875%

Annual interest rate on Medicare overpayment debts more than 30 days old, for the quarter beginning July 21, 2026 (the rate is reset quarterly; check the current MAC notice). An identified overpayment that is not reported and returned on time is also a potential False Claims Act liability at $14,308 to $28,619 per claim, plus treble damages.

Up to 5%

Fees charged on virtual credit card payments reported by the AMA and MGMA to CMS. CMS has stated that a health plan cannot require a provider to accept virtual card payments and must honor a request for the HIPAA EFT standard, for which the only legitimate charge is the provider's own bank fee.

An 835 arrives with no EFT, or an EFT with no 835. Without reassociation, the money sits in a suspense account and the claims age as if unpaid.

Auto-posting rules that write off every CO code treat a CO-197 denial like a CO-45 contractual allowance. The denial is never worked, and the write-off is invisible.

A PLB recoupment reduces the check but is not posted to the original claim, so the account shows paid while the bank shows less. The variance surfaces months later.

Secondary payments posted after the statement went out, or a copay collected at the desk but posted as a payer payment. Patients are billed for money already received.

Overpayments nobody researches. They understate A/R, they are owed to someone, and for Medicare they become reportable overpayments with a 60-day clock.

Payments posted to a holding account because the claim could not be found. Revenue is recognized late, follow-up works accounts that are already paid, and statements go out wrong.

Financial information

BPR01 tells you whether money is coming: I remittance only (payment sent separately by EFT), C payment accompanies the remittance (a check), H notification only (no payment, such as a zero-pay remit), D debit. BPR02 is the amount. BPR04 is the method: ACH, CHK, NON (no payment), FWT (wire). BPR16 is the effective entry date, the date the ACH credit is scheduled to settle.

Reassociation trace number

TRN01 = 1 (current transaction trace). TRN02 is the trace number the payer also places in the CCD+ addenda record, or the check number for paper. TRN03 is "1" followed by the payer's nine-digit tax ID. The pair TRN02 + TRN03 is unique and is the key that links money to explanation.

Claim payment information

CLP01 your patient control number (echoed from CLM01). CLP02 claim status: 1 processed as primary, 2 secondary, 3 tertiary, 4 denied, 19/20/21 processed and forwarded to another payer (crossover), 22 reversal of a previous payment, 23 not our claim, forwarded. CLP03 billed, CLP04 paid, CLP05 patient responsibility, CLP06 claim filing indicator (12 PPO, MB Medicare Part B, MC Medicaid, HM HMO, CI commercial), CLP07 the payer's claim number (ICN) you will need for appeals and corrected claims.

Claim and line adjustments

CAS01 group code: CO contractual obligation (provider write-off, not billable to patient), PR patient responsibility, OA other adjustment (neither; often the prior payer's payment, CARC 23), PI payer-initiated reduction. Then up to six triplets of CARC, amount and optional quantity. Every CAS amount is money that explains part of the gap between charge and payment.

Service line

SVC01 procedure code with modifiers (HC:99214:25), SVC02 line charge, SVC03 line paid, SVC04 revenue code (institutional), SVC05 units paid. If the payer re-coded the line, SVC06 carries the original code. Lines balance independently: SVC02 = SVC03 + line CAS amounts.

Allowed amount and remark codes

AMT*B6 is the allowed amount at the line level (AMT*AU, coverage amount, at the claim level). LQ*HE carries remittance advice remark codes (RARCs) that refine the reason: N-, M- and MA-prefixed codes. A CARC 16 (missing information) means nothing without its RARC.

Provider-level adjustment

PLB01 provider NPI, PLB02 the fiscal period end date, then pairs of a reason code with a reference (PLB03) and an amount (PLB04), up to six pairs. Positive amounts reduce the payment; negative amounts increase it. Chapter 06 covers the codes.

Medicare inpatient and outpatient adjudication

Medicare 835s carry DRG amounts, outlier and capital amounts (MIA) or the reimbursement rate and HCPCS payable amount (MOA), plus remark codes in MIA05 and MOA03 through MOA07. Institutional posting uses these to reconcile to expected DRG and APC payment.

Expected, by contract

The difference between the charge and the allowed amount under a fee schedule, DRG, APC or per diem (CARC 45), sequestration (253), and payer-defined bundling that the contract accepts. These are written off at posting. They should reconcile to the expected contractual allowance the contract-modeling system predicts; a variance is an underpayment or an overpayment, not an adjustment.

Avoidable, by someone

Denials (no authorization, not covered, timely filing, medical necessity, duplicate, missing information), bundling edits that a modifier would have cleared, non-covered services that an ABN would have shifted to the patient, and balances written off because follow-up ran out of time. These go into the denial and write-off inventory with a reason code, an owner, and an approval threshold. They are the measure of revenue leakage.

Transferred, not adjusted

PR amounts move the balance to the guarantor (or to the secondary payer) with the deductible, coinsurance and copay split preserved, because statements and payment plans explain them to the patient. A copay already collected at check-in must be matched here so the statement is net.

Policy, not habit

Balances under a threshold (often a few dollars), courtesy adjustments, prompt-pay discounts and financial assistance each need a distinct adjustment code and an approval level. Auto-writing small balances is fine when the policy is written down and applied to debits and credits alike.

Let the bank open the mail

A bank lockbox receives checks and EOBs, deposits the checks the same day, and sends you images and a data file. Advantages: faster cash, an audit trail, no checks in desks. Requirements: the EOB images must be complete and legible, the deposit file must carry the check number, and your posting system must be able to key paper EOBs against the deposit total.

Key it like an 835

Posting from paper should produce the same transactions as auto-posting: payment, contractual adjustment with CARC, patient responsibility with its split, denial with its reason. Posters who key "adjustment" for everything destroy the denial data. Many payers now post the same EOB as a PDF on the portal, and some will convert paper to 835 on request.

Every paper payer is an enrollment task

List the payers still paying by check and EOB, ranked by volume and dollars. Each one is an ERA and EFT enrollment to pursue. The CAQH Index estimates the provider's cost of a manual remittance at $5.67 against $2.95 for an electronic one, before counting the posting errors and float.

Batch, count, balance

Every manual batch has a header: source, date, number of checks, total dollars. The posted total must equal the deposit total before the batch closes. Unmatched remainders go to unapplied with the check number, never to a random account.

CLP02 = 22, then a new CLP

The payer sends the original claim again with status 22 and every amount negated (charge −$1,800, paid −$440, adjustments reversed), then a second CLP for the same claim with the corrected adjudication. The net of the two is the change. If the corrected claim pays less, the file's total goes down by the difference, and the deposit is smaller. If the payer is not ready to recoup, it offsets the difference with a negative PLB FB (forwarding balance) so the deposit is unchanged, and takes it on a later remittance with a positive FB or WO.

PLB WO

No claim loop at all. The PLB carries reason code WO (overpayment recovery), a reference that usually contains the payer claim number or your patient control number, and a positive amount that reduces the deposit. The original claim on your books still shows the full payment, so you must post the recoupment against it yourself, re-opening the balance if the recoupment was wrong.

BPR02 on each 835, check amount on each EOB

The control total for a posting batch. Internally, BPR02 must equal Σ CLP04 − Σ PLB04; if it does not, the file is corrupt or truncated and should be re-requested, not posted.

Deposit per the bank statement or CCD+ report

One ACH credit per EFT, matched by TRN; lockbox deposits by batch; card settlements by day. A deposit that matches no remittance is unidentified cash and is still revenue someone will ask about.

Posted in the PM system and booked in the GL

Payments posted to accounts plus provider-level items posted outside accounts must equal the remittance total. The GL cash entry equals the bank deposit; the difference between the two is an in-transit or suspense item with a date.

We know who paid; we do not know for what

A payer payment whose CLP01 matches no encounter (claim sent from another system, account number changed, a corrected claim with a new control number), or a patient payment with no statement reference. Post it to the payer's or guarantor's unapplied account the same day, then research with the payer claim number, the patient name and the date of service. Target: cleared within 30 days, with a weekly aging report.

We do not even know who paid

A deposit with no remittance, no TRN match, and no payer name (a wire with a bare reference, a check from a third-party administrator you have never heard of, a patient payment through a bank bill-pay service). Book it to a suspense liability, not revenue, and run the payer's late or missing ERA procedure or the bank's ACH originator lookup. After the dormancy period, unidentified money is unclaimed property.

The same claim paid twice, often because a corrected claim was adjudicated as a new one, or two payers both paid as primary.

Primary and secondary both paid as if primary; or the secondary paid the full allowed instead of the primary's patient responsibility.

Copay or deposit collected at the visit; the claim then adjudicated with no patient responsibility, or a lower one.

Payment posted to the wrong encounter, a contractual adjustment posted twice, a reversal posted without the reversal of its adjustments.

Paid above the contracted rate, paid for units not billed, paid a non-covered service, or paid after the patient's coverage ended.

Charges reduced or removed after payment (a late credit from the department, a coding correction) leave the payment larger than the balance.

Actual knowledge, reckless disregard, or deliberate ignorance

The 2016 rule said an overpayment was identified when a provider "has, or should have through the exercise of reasonable diligence," determined that it received an overpayment and quantified it. The 2025 rule replaced that with the False Claims Act's knowledge standard: a person has identified an overpayment when the person knowingly receives or retains it, where knowingly means actual knowledge, reckless disregard or deliberate ignorance (31 USC 3729(b)(1)(A)). Quantification is no longer part of the definition, so the clock can start before the amount is known.

Suspension of the 60 days, not an extension

When a provider has identified an overpayment and is conducting a timely, good-faith investigation to find related overpayments from the same or similar cause, the 60-day deadline is suspended until the earlier of the end of the investigation (with the total calculated) or 180 days after the initial identification. The 60 days then run. In practice that is a maximum of about 240 days from identification to return, and only if the investigation is real, documented and timely. The same standard applies to Part C and Part D organizations (42 CFR 422.326 and 423.360), which do not get the 180-day suspension.

Commonly 3 to 5 years

Measured from the date the credit arose or the check was issued, not from the last statement you sent. Keep that date on the account.

Letter before remittance

Written notice to the last known address for amounts above the state's threshold, within the state's window before the report. Document the mailing.

No limitations period

Multi-state audits (often contingency-fee auditors) can go back a decade or more. The cure is an annual report, filed, with a reconciliation to the credit balance ledger.

Three hands

Receiving and depositing cash, posting it, and reconciling it are separate roles, and none of them can issue a refund or approve a write-off above a low threshold alone. In a small office, the physician-owner reviews the bank statement and the refund list.

Nothing posts without a header

Every batch carries source, date, count and amount, and closes only when posted equals the header. The log is the reconciliation's starting point.

Thresholds by role

Posting staff may post contractual adjustments and PR transfers; denial write-offs, small-balance write-offs above a limit and all refunds need a second approver, with the reason captured in the transaction.

Auto-post rules are code

A rule change that converts a denial CARC into a contractual adjustment changes net revenue. Rules have owners, version history and a quarterly review against the CARC list and CORE 360 combinations.

Weekly report, named owners, compliance visibility

The aged credit report goes to a standing review with billing, finance and compliance. Medicare and Medicaid credits are tracked from identification date against the 60-day deadline.

Nothing lives in the queue

Unapplied, unmatched, out-of-balance and unreferenced PLB items each have an owner and a maximum age. The queue count is reported daily.

Knowledge-based "identified" and the 180-day window

The 60-day rule now turns on what you knew or recklessly ignored, and rewards a documented investigation. Credit balance aging is a compliance report.

CMS-838 on occurrence, not quarterly

Fewer blank certifications, but the duty to report Medicare credits when they exist is unchanged. Keep the internal quarterly review anyway.

Payment vendors and state recoupment laws

More payers route payments through vendors that default to VCC or fee-bearing EFT; more states are shortening recoupment lookbacks. Re-read enrollment terms annually and track your states' laws.