The five stages
1. The claim. Your PM system generates an X12 837 with diagnosis and procedure codes, routed to the payer through a clearinghouse that checks formatting first. 2. Adjudication. The payer pays, reduces, denies, or pends each line. Days to weeks. 3. The remittance. The payer’s explanation of what it decided. Electronic: an 835/ERA. Paper: an EOB. Every reduction carries a CARC/RARC code saying why. 4. The money. Sent separately: ACH deposit (EFT), paper check, or a virtual credit card that quietly costs 2 to 3% in fees unless you demand ACH instead (your right under 45 C.F.R. § 162.1602). Money and remittance travel different routes; rejoining them is reassociation. 5. Posting and reconciliation. Payments and adjustments get posted against open claims, and someone confirms the money the payer said it sent actually landed. That confirmation is reconciliation, the step most practices skip.Where the leaks are
- Unworked denials. A denial is a code, not a verdict. Many are correctable, but only if someone reads them.
- Virtual card fees. Negotiable to zero by switching that payer to ACH.
- Unposted paper. Checks and EOBs from small payers pile up and break the link between claims and cash. This is what lockboxes fix.
- Stale enrollments. After any bank change, every payer must be re-enrolled. The missed ones keep paying the old account. See switching banks.
The monthly truth test
Your financial reality lives in two documents: remittances (what payers say they paid) and the bank statement (what arrived). If month-end ties them together, your revenue is real. If not, you’re estimating.Lemma aside: Lemma is a bank account that reads remittances natively. It parses 835s and EOBs, matches them to deposits, and flags what doesn’t tie out.
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Setting up your practice's banking
The account structure that determines whether your books are easy or miserable.