Four-way reconciliation in dental billing
Four-way reconciliation is agreeing four records for every insurance payment: the payer’s remittance for the claim (the ERA or EOB), the posting in the practice management system, the deposit in the bank and the entry in the accounting books. When all four agree, the payment is reconciled. Any difference between them is named and resolved.
Also called4-way reconciliationClaim to books reconciliation
By Dr. Maya Arnaout, DDS, VP of RevenuePublished 3 min read
What are the four records?
| Record | Where it lives | What it proves |
|---|---|---|
| The claim remittance | The ERA or EOB from the payer | What the payer paid, adjusted and left to the patient on each claim |
| The PMS posting | The practice management system | That each claim line was applied to the right patient and procedure |
| The bank deposit | The bank statement | That the money arrived, and in which account |
| The books entry | QuickBooks, NetSuite, Sage Intacct or Xero | That the deposit was booked once, at the right amount, to the right location |
How is it different from three-way reconciliation?
Three-way reconciliation agrees the PMS, the bank and the books. Four-way adds the claim itself: the remittance that explains each deposit. That catches what a three-way check can miss, such as a claim the payer paid that was never posted, or a deposit cut by a recoupment against an older claim.
How does a four-way match work?
- Deposit to remittance: an EFT to its ERA by trace number, a check to its EOB by check number.
- Remittance to posting: each claim on the remittance to its posting in the PMS.
- Deposit to books: the deposit to its entry in the accounting books, with fees and recoupments on their own lines.
- Whatever does not agree becomes a named open item with a reason and an owner. Nothing is plugged to make the numbers agree.
Count a match as reconciled only when the proof is solid: the same trace or check number on both sides, or an amount, date and payer that agree with only one bank line. Anything looser is a proposal for a person to accept.
Why does it matter?
Each missing link hides a different problem. A deposit with no posting leaves a patient’s balance and your A/R wrong. A posting with no deposit may be a check that never reached the bank. A deposit with no books entry keeps the month from closing. Checking all four every day turns these into a short list instead of a month-end search.
How ScoutIQ handles it
ScoutIQ runs all four matches every day as deposits land: each EFT, check and virtual card to the ERA or EOB behind it, each claim to its posting in your PMS, and each deposit to its entry in QuickBooks, NetSuite or Sage Intacct, by location. With Xero, it reads the books and reconciles against them. 95% of insurance payments match with no human review, and the rest are flagged with the reason.
Insurance Billing Automation
ERAs and EOBs read; EFT, check and card payments reconciled.
See Insurance Billing Automation