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
