I Have Insurance, So Why Am I Receiving a Medical Bill Part II: Dissecting the Explanation of Benefits (EOB)
Written By: Jennifer Kastner, CPC, CPMA, CEMC, Owner of Patient Advocacy Solutions LLC
An Explanation of Benefits (EOB) is a significant document that provides a detailed breakdown of the cost covered by your insurance plan for specific medical services or procedures. Additionally, it tells you how much you are responsible for, based on the following:
● Your individual insurance benefits
○ Medicare: The annual deductible for 2024 is $240, co-insurance is 20% of the Medicare fee schedule (Medicare allowable).
○ Other Insurances: Varies based on individual coverage
● How the health care provider/entity submitted the claim using “codes”
○ ICD-10-CM codes: This reflects the specific diagnosis for the condition that you’ve been diagnosed with. Each condition has a specific code and this is often tied to medical necessity.
■ Example: ICD-10 Code S61.219A represents “Laceration without foreign body of unspecified finger without damage to nail, initial encounter”
○ CPT Codes: The Current Procedure Terminology (CPT) is a uniform language of medical codes that identify the specific procedure or service that was rendered.
■ Example: CPT code 12001 represents “simple repair of superficial wounds of scalp, neck, axillae, external genitalia, trunk and/or extremities (including hands and feet); 2.5 cm or less”
I point this out because I’ve witnessed thousands of denials over my years of working in the healthcare field where a claim was denied due to “not being medically necessary” simply because the way the claim was billed did not meet the insurance companies protocol. Each insurance company either creates their own coverage guidelines, or they go by Medicare billing guidelines. This, in turn, makes it extremely difficult for the healthcare community, because they are expected to keep up with each insurance company's medical coverage guidelines. This then opens things up to human error, thus leading to claim denials, which then often leads to patients being held responsible for services that should be paid by their insurance company. A key indicator that there may be an issue with how a claim was either processed or billed incorrectly is if the EOB indicates that you are responsible for charges in an amount that is higher than what you expected based on your individual benefits. As I mentioned in my previous article, many of these processes are automated; therefore, it’s likely that your doctor’s office/hospital may not even realize that there’s a coding error until YOU bring it to their attention.
This article aims to breakdown the EOB, explaining its purpose, key components, and how to make an informed decision on the next steps if your medical bill is more than what you expected.
1. What is an Explanation of Benefits (EOB)?
The EOB serves as a summary of the financial aspects of your healthcare transactions. It is a statement sent by your insurance company after you receive medical services showing how they processed the claim that was submitted by your healthcare provider for services that they rendered. It outlines the amount covered by your insurance, and any remaining balance that you may be responsible for paying based on your individual insurance benefits.
A patient’s first concern when it comes to the EOB is the “Patient Responsibility” column because this will likely be the amount that the patient will be billed for, which will be based on your individual benefits mentioned below:
● Deductible: The predetermined amount you must pay out-of-pocket before your insurance coverage kicks in.
● Co-pay: A fixed amount you pay for certain services, typically at the time of the visit.
● Co-insurance: A percentage of the allowed amount that you are responsible for paying.
● Out-of-Pocket maximum: The maximum amount you will have to pay in a given year before your insurance covers 100% of the allowed amount.
2. What other information is being conveyed in an EOB?
● Claim number: This is a unique identifier to make it easier for the insurance company to locate a specific claim. If you ever need to call an insurance company, then make sure that you have your claim number to make the process easier.
● Patient information: The patient’s name, policy number, and other relevant details.
● Provider information: Details of the healthcare provider/entity who rendered the services.
● Service details: Brief description of the medical service or procedure, including the date of service.
● Billed charges: The total amount charged by the healthcare provider. This amount is their standard charge amount and does not include contractual adjustments.
● Allowed amount: The maximum amount your insurance company will cover for the service (which should represent the contractual adjustments, meaning the amount that was agreed upon between the provider and insurance company for being in-network.)
● Insurance Coverage: The portion of the allowed amount that your insurance will pay.
● Patient Responsibility: The amount you are responsible for paying, including deductibles, co-pays, or co-insurance.
● Applied Deductible: The total amount that has been applied to the deductible.
3. How to Interpret Your EOB:
Review the EOB service details and ensure they match the services you received. Then, compare the “Amount Due” from the statement you received from your provider/hospital to the “Patient Responsibility” amount from the EOB.
4. When do I need to call the insurance company and what information do I need when calling them?
If the EOB reflects that you are being held responsible for more than what you expected based on your benefits, then you may want to call the insurance company. I recommend the following tips when calling an insurance company.
● First things first - take a deep breath! If you are nervous it’s simply because you are unfamiliar with this process. Override those thoughts with action!
● Have a copy of the EOB in front of you and highlight/circle the claim number, date of service, and service provider, so that this information can be easily located when you’re on the phone with the insurance representative. If you don’t have a copy of the EOB, then you will need to at least know the date of service and provider name. Being prepared by having this information available will make it easier for the representative, which in turn usually makes it a more pleasant calling experience.
● RECORD EVERYTHING. This is my biggest piece of advice because it’s very likely you may need to refer back to this conversation in the future. I recommend writing down or keeping a google/word document to track these conversations. You should record the following elements:
○ Date and time
○ Name of the representative that you are talking to
○ Date of service
○ Claim number
○ Summary of discussion
○ Reference number - Make sure to ask for this at the conclusion of your call
○ Ask and record the expected turnaround time for completion
Sometimes, you will need to call the billing department associated with the entity that sent you a bill. Make sure to calmly let them know your concerns and the conversation that you had with the insurance company, and also record this phone call as well. One of the most frustrating aspects of going through this process is that it usually takes some time before the issue is resolved. I recommend marking your calendars accordingly for when you are supposed to see resolution and follow-up.
Remember to review your EOB carefully, ask questions when needed, and take control of your healthcare finances!!!
References:
1.) CPT codes American Medical Association: https://www.ama-assn.org/topics/cpt-codes#:~:text=...Read%20More-,Current%20Procedural%20Terminology%20(CPT%C2%AE)%20codes%20provide%20a%20uniform%20nomenclature,claims%20processing%20and%20developing%20guid
I have insurance, so why am I getting a medical bill?
I have insurance so why am I getting a bill?
Know when to be concerned that you are being overcharged for your medical bill
A recent study was conducted on medical debt reports that nearly 1 in 4 Americans (23%) have medical-related debt. Additionally, it found that 98% of people who negotiated a medical bill, or at least inquired about it, received resolution. Unfortunately, this can be an intimidating process for some, especially if the person receiving the bill is not familiar with the medical claims billing process.
Before I dive into this discussion further, I want to point out that just like nearly every industry, the healthcare industry utilizes technology to assist with many processes, such as posting transactions to your account, submitting claims to the insurance company, posting claim payments and denials from the insurance company, etc. Additionally, it’s common for an insurance company to deny a service and put it to the patient’s responsibility if a claim is not submitted based on their unique policies and procedures. The reason that I want to bring this to your attention is because it’s helpful to know that it’s usually a computer software program that is making determinations on your claims, based on the rules and logic that have been created within the insurance claims processing system. Once the claim decision has been made by the system, the decision is submitted to the healthcare entity with either a payment and/or denial, which is then automatically posted to your account with minimal human intervention. Therefore, a provider’s office or hospital usually does not realize that there’s an issue with your claim until YOU, the patient, bring it to their attention.
So, what is a person to do when they receive a medical bill? Keep reading to learn steps that you can take before you pay that medical bill.
Step 1: Know your medical benefits.
If you have insurance, I recommend, when possible, that patients know their insurance benefits BEFORE they receive the service. However, unexpected medical needs happen all the time, so at least know the following key terms and what these amounts are when it comes to YOUR policy. You can usually obtain this information from the insurance company’s patient portal, or by calling the number on the back of the card. If your insurance is covered by your employer, your Human Resource department should also be able to help you.
Insurance Key Terms:
· In-network/ out-of-network: Determine if your healthcare provider and/or hospital is in-network. In-network rates are much lower and will save patients the most amount of money. If you go to an out-of-network provider or hospital, you can expect to pay substantially more for the same services that you can receive with an in-network provider/hospital. There is an exception to this, if you need to see a certain provider and there is not another provider within the same specialty within a specific radius from your home, then sometimes the insurance company will allow you to request an exemption. To do this, you will need to contact your insurance company and go through their formal process.
· Deductible: The deductible is the amount you pay before your insurance company picks up their portion. This amount starts over each year, usually calendar year. Usually plans have a different deductible amount for in-network versus out-of-network. Out-of-network deductibles are typically higher, in efforts to encourage you to use in-network providers.
· Co-insurance: This is the percentage amount covered by insurance after your deductible is met. An example is 80/20, this means that after your deductible is met, the insurance company will pay 80% and you will be responsible for 20%. Please note that the coinsurance amounts are based on the plan’s network-negotiated rate, instead of the typical amount that the provider charges.
· Copay: A co-pay is a fixed out-of-pocket amount paid for by the patient for covered services. Examples may include a $20.00 co-pay to see your primary care provider, $50.00 to see a specialist, $500.00 for an emergency room visit, etc.
· Out-of-pocket max: Out-of-pocket maximum is a cap, or limit, on the amount of money you have to pay for covered health care services in a plan year. Once you reach this limit, your health plan will cover 100% of your covered, in-network health care cost for the rest of the year.
This article is a part of a series. Next month we will be covering “Step 2: Reading an Explanation of Benefits (EOB)”, what are they and why are they so important when understanding how your medical claims are processed. Remember to sign up for our email list so that you can be notified when future articles are released.
Resources:
Lendingtree “As credit Reporting Agencies Remove Most Medical Debt From Credit Reports, Up to 45% of Americans Could Benefit” Nearly 1 in 4 Americans Have Medical-Related Debt | LendingTree
“Medical debt can be ‘a bit of a surprise,’ expert says- and 21% who have it owe $5,000 or more” Most adults with medical debt owe some of it to hospitals, study finds (cnbc.com)
Urban Institute “Most Adults with Past-Due Medical Debt owe Money to Hospitals” Most Adults with Past-Due Medical Debt Owe Money to Hospitals | Urban Institute