The ABCs of EOBs

Has ANYONE ever looked at an EOB (Explanation of Benefits) and thought “oh, this is easy to understand?” I bet very few people would say that. EOBs are definitely not written in plain language. There are codes, there are a bunch of numbers in different categories, sometimes the numbers do not even add up correctly. When you try to compare it to the billing statement from your health care provider, the terms used aren’t identical and the billing statement generally has very limited detail. How do you know if your claim was processed correctly and if you are paying the right amount?

Estimates are that up to 80% of medical bills have an error. Therefore, it’s important to look at your bills and your EOBs and make sure that everything is correct.

Also, know that an EOB is NOT a bill. Wait to receive a bill from your provider before making any payment. But be sure to look at the EOB before paying the bill.

Here’s an example of an EOB (with identifying information blacked out):

Make sure the patient name, member ID, and group number are correct. You may think I’m kidding, but these mistakes do happen.

Provider — the name of the hospital or clinician who provided the service.

Service description — well, isn’t “Medical Visit” descriptive! Especially if you had multiple “Medical Visits” that month. You’ll need to double-check that anything listed under service description matches up with what your provider is billing you for.

Amount billed — this is the amount that the provider is charging. As journalist Marshall Allen writes in his book, “Never Pay the First Bill,” “this is like the manufacturer’s suggested retail price on a car. No one is expected to pay the amount, and it can be whatever charge they want. Often, it’s many times more than what they would accept for the service, because the insurance company wants to be able to say it got the patient a discount.”

Discounts and reductions — note the footnote explanation; this website lists almost 300 codes that could be on an EOB!.Basically, this amount is a contractually agreed upon discount between the provider and insurer. For a detailed, and appropriately cynical and sarcastic take on this, see this link.

Amount covered (allowed) — healthcare.gov defines this as “The maximum amount a plan will pay for a covered health care service. May also be called “eligible expense,” “payment allowance,” or “negotiated rate.’”

Your Responsibility section — this lists whether you owe a deductible, copay, coinsurance and/or the amount not covered (see my previous blog for definitions). In this example, the patient has a $50 co-pay for a specialist visit.

Summary — Plan Provisions & Your Responsibility- restates the above information in a different format. A key number that we all zero in on is the amount that “You may have to pay your provider.”

This was a pretty simple EOB — just one service listed, no denial codes. You can see that the one below is more complicated and also has a list of vague service descriptions (eg, “drugs” listed 6 times but no detail on the type of drug); this is why it’s helpful to compare your EOB with an itemized bill from your provider to make sure you are only being billed for services you received. Some of the patient’s responsibility falls under deductible/copay while some falls under coinsurance; this is because coinsurance kicks in after the deductible is met for the year (based on all claims for the year, not only the current EOB).

Make sense???

Bottom line: Compare your EOB and billing statements; request an itemized billing statement from your provider. If you have questions, call the customer service number listed on the EOB or the back of your health insurance card. I’m happy to help as well!