If you are a caregiver who helps your parents with financial matters, you've probably seen a paper titled "Explanation of Benefits" or EOB. Just below the title, it typically reads, "This is not a bill." But, there are dollar figures all over it. So if it's not a bill, what exactly is it?
The EOB is exactly what it says it is: an explanation of the benefits provided by your parent's insurance plan for a particular service on a particular date. Its purpose is to report to your parent (the subscriber) and the doctor or hospital (the provider) exactly how the claim was processed. It is critical that you review each and every EOB received for accuracy. And if there are mistakes or questions, take action. Not doing so may cause your parent to become financially responsible for charges that otherwise would have been covered by his or her plan. However, most people are intimidated by the EOB and have no idea what to look at or what to do about what they see. Here then is your guide to your EOB.
Every EOB uses slightly different terms and formats, but the key items to review are:
- Patient Name: Check even this basic information. Is the name listed your parent's? If not, call the insurance company immediately and report the error.
- Date of Service: Refers to the date that the visit, procedure or service happened. Is it accurate? If not, report it immediately.
- Provider's Name: The doctor, hospital, or medical center that provided the service. Often, you will know that Dr. Jones was your parent's surgeon, but the provider on the EOB will be Everytown Surgical Associates. This is okay, as long as Dr. Jones is indeed part of that group. If you're not sure, call the surgeon's office and ask. Likewise, sometimes you will receive a bill for a provider you don't recognize. If your parent had surgery, it's very possible that this is an anesthesiologist, radiologist, emergency room physician, or pathologist who participated in your parent's care and who bills separately. When in doubt, ask.
- Procedure code or type of service: This is the shorthand where the provider communicates the service for which payment is being requested. It is often a five-digit number or an abbreviation. You may see several codes for one date of service as when, for example, your parent visited the orthopaedic surgeon and has an office visit, x-rays, and a cast applied. Likewise, when your parent has surgery there are often multiple procedure codes reported. One common question occurs when a service is reported as "surgery" but when you don't believe your parent had surgery – for example if he or she had a skin lesion removed in the office. This doesn't mean that your provider is doing anything wrong or trying to get away with something. It is simply the language of insurer-provider communications.
- Total charge or billed amount: This is the provider's standard charge for the service.
- Allowed amount: This is the amount the insurance plan will pay under its contract with your parent's healthcare provider.
- PPO discount: This is the amount that is "adjusted" off of the bill due to your parent's insurance plan's contract with the provider.
- Not covered amount: This is the amount your parent's plan does not cover. Sometimes, this refers to any charge that is above the allowed amount or the "reasonable and customary" charge, and other times this refers to services that are not covered under the plan.
- Copay, coinsurance, deductible: These are the amounts that are the subscriber's responsibility under the terms of your parent's insurance plan.
- Patient/subscriber responsibility: This is the total dollar amount that your parent may be billed directly for the date and services reviewed on the EOB and may include amounts that he or she has already paid at the time of service. Typically, the amount is paid directly to the provider.
- Remarks/remark code/message code: This is the method by which the insurance company communicates with both your parent and their provider to explain how the claim was processed. Most often, the codes will be several letters or numbers next to the particular service. Elsewhere on the EOB you will find the "key" to these codes, which might read something like, "Duplicate charge" or "Not covered on the same date of service as the related charge" or "Not covered due to lack of timely filing". There are many, many codes and they vary by insurance company, but this is where you will learn what your parent or their provider might need to do to have the claim processed and paid correctly. You or your parent MUST review this and take the appropriate action in a timely fashion.
- Payment assigned to provider: This means that whatever payment is being made by the insurance plan is going directly to the provider because he or she is a participating provider in your parent's plan and your parent signed authorization with the physician to submit the claim on his or her behalf and receive direct payment. Where this is not the case, as when your parent uses an out-of-network provider, the check may come directly to your parent and he or she is responsible for paying the provider.
If you are confused or overwhelmed by medical paperwork, a medical billing advocate might be helpful to you. These professionals are well versed in the ins and outs of medical billing, as well as financial challenges caregivers face. They can help get problems with your parent's claims resolved quickly and efficiently.
Sheri Samotin is a Certified Professional Daily Money Manager, Certified Professional Coach and founder of LifeBridge Solutions, a one-stop shop for family transition coaching, caregiver coaching, medical billing advocacy, money management, household transition services, and estate administration support.