What is medical claims reconciliation?

Medical claims reconciliation is the process of verifying that the payments received from insurance payers (posted via ERA/835 files) match the actual cash deposited in the bank and the claims submitted in the billing system.

Why is reconciling ERAs to bank deposits difficult?

It is difficult because insurance payers often bundle payments for hundreds of patients into a single bulk wire transfer (EFT). The ERA file details the individual claims, but the bank statement only shows the lump sum, requiring complex 'one-to-many' matching.

Blog Post

Industry Spotlight
January 13, 2026

Medical Billing and Claims Reconciliation Explained

For healthcare providers, the Revenue Cycle doesn't end when a claim is submitted. It ends when the cash hits the bank. Medical billing reconciliation is the complex process of bridging the gap between your Practice Management System (PMS), your clearinghouse, and your bank account. In an industry plagued by denials and partial payments, mastering this process is essential for financial health.

The "Black Hole" of Healthcare Payments

Healthcare finance is unique because of the complexity of its payment streams. You have:

Insurance Payments (Payers): Coming via EFT (Electronic Funds Transfer) or paper check.
Patient Payments: Co-pays collected at the front desk (cash/card) or online portals.
ERAs (835 Files): The digital explanation of what the insurance company paid.

The challenge? These three streams rarely align perfectly. An ERA might post to your billing system saying $5,000 was paid, but the bank only shows a deposit of $4,950 due to bank fees or a "recoupment" (takeback) from a previous claim.

The Reconciliation Workflow

To ensure every dollar is accounted for, you need a robust 3-way reconciliation process:

1. Bank to ERA Matching

Goal: Verify that the cash landed.
Process: Match the trace number (TRN) on the 835 file to the ACH reference number on your bank statement. If they match, the cash is real.

2. ERA to Billing System Posting

Goal: Verify that the patient's balance was updated.
Process: Ensure that the 835 file was actually processed by your PMS (e.g., Epic, Cerner) and that the payment was posted to the correct patient encounter.

3. Patient Payment Reconciliation

Goal: Verify front-desk collections.
Process: Compare the "Day Sheet" from your PMS against the credit card settlement report from your merchant processor. (See our guide on Merchant Reconciliation for more on this).

Handling Recoupments (Takebacks)

Insurance payers often "take back" money from a current payment to cover an overpayment on a past claim. This creates a nightmare scenario where the check amount does not equal the sum of the current claims.

Automated software is essential here. It can parse the PLB (Provider Level Adjustment) segment of the 835 file to identify the recoupment and create the necessary negative journal entry, keeping your books balanced.

Automate Your Revenue Cycle with Reconwizz

Reconwizz is designed to handle the complexity of healthcare financial data. We ingest 835 files, bank feeds, and PMS reports to automate the matching process.

Whether you are a large hospital system or a growing private practice, our platform ensures that your revenue isn't lost in the shuffle of denials and deposits.

Stop revenue leakage. Ensure every claim paid is cash in the bank. Book a demo with Reconwizz and secure your revenue cycle today.

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