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Explain the 'Explanation of Benefits'

Every time a doctor sends a medical claim to a medical insurance company or care management organization, the patient will receive an Explanation of Benefits – usually referred to as an EOB form. The exception may be some prescriptions.

Despite having “explanation” in its name, an EOB quite often confuses patients rather than explains anything; however, it is important that patients’ review each EOB they receive because neither insurance companies nor health care providers are perfect and any errors can be costly down the line.

Here is some of the information that should appear on the EOB and what it means.

First, the date the patient saw their health care provider. People don’t like to think about it, but health care fraud is a reality. If they receive an EOB for a date of service, they don’t recall, the patient should contact their provider or insurance company right away. It may be a simple clerical error or they may have been the victim of identity theft.

It should list the name of the provider. Again, if the patient doesn’t recognize the provider, they may be the victim of fraud and should follow up accordingly.

There should be a description of the services provided. This list may be the most important detail on the EOB. If the patient feels that the service billed does not match what was actually done, they should follow up first with their provider and next with their insurance company.

An incorrect description can cause all manner of grief. Insurance companies match their records to the diagnosis on the claim form. If the service provided is not considered appropriate for the diagnosis, the claim may be denied. Another problem is that many insurance policies limit certain services, such as chiropractic visits or mental health treatment. If the wrong service is billed, the patient could exhaust their benefits without realizing it.

Also, the fee that the health care provider charged the insurance company will be listed. If the provider is “in-network,” they have a contracted rate with the insurance company. The provider can list whatever charge they want, but the insurance company will cover only the negotiated rate. The patient is not responsible for the difference.

If the provider is “out of network,” then there is no contracted rate and the patient is responsible for whatever their insurance doesn’t cover. That difference in rates means it is always important to check with the insurance company about the health care provider’s network status.

What the patient owes will be listed. This amount usually refers to a deductible – the amount paid per year before insurance kicks in – or a copay – the percentage of each charge that the plan says the patient must pay. This moment is where many people get confused and sometimes upset, especially if they have already paid the provider. An EOB is not a bill. In fact, “This Is Not A Bill” is usually printed on the form. Despite this notice, there is usually a section that reads “You Owe This Amount” or some variation. Remember that the EOB does not list what the patient may already have paid their provider.

Lastly, a “reason” code will be included. If the claim was denied, in part or in full, this code tells the patient why it was denied. The service may not be covered under their plan, may have been deemed not medically necessary or they may have reached their annual plan limits.

People should keep all EOBs for the duration of their plan year. Find a safe place to store them. When it is time to dispose of them, the EOBs should be treated just like bank or credit card statements and be shredded. Many insurance companies offer the option of paperless EOBs that can be received by email for an added layer of protection.

And be sure to contact the insurance company’s customer service department with any questions or concerns.

Gordon Hopkins is an award-winning columnist and feature writer for The Fairbury (Nebraska) Journal-News. Before that, he worked for several years in the health insurance industry. His latest book is “Nebraska at War: Dispatches from the Home Front and the Front Lines.” He can be reached at [email protected].

 

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