Thinking About Health: Explaining the ‘Explanation of Benefits’

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

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

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

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

The name of the provider. Again, if you don’t recognize the provider, you may the victim of fraud and should follow up accordingly.

A description of the services provided. This may be the most important detail on the EOB. If you feel the service billed does not match what was actually done, you should follow up first with your provider and then your insurance company. An incorrect description can cause all manner of grief. Insurance companies match 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 chiropractic visits or mental health treatment. If the wrong service is billed, you could exhaust your benefits without realizing it.

The fee that your health care provider charged the insurance company. If your provider is “in network,” they have a contracted rate with your insurance company. The provider can list whatever charge they want, but the insurance company will cover only the negotiated rate. You are not responsible for the difference. If your provider is “out of network,” then there is no contracted rate, and you are responsible for whatever your insurance doesn’t cover. That means it is always important to check with your insurance company about your health care provider’s network status.

What you owe. This usually refers to a deductible — the amount you pay per year before your insurance kicks in — or a co-pay — the percentage of each charge that your plan says you must pay. This 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, there is usually a section that reads “You Owe This Amount” or some variation. Remember that the EOB does not list what you may already have paid your provider.

A “reason” code. If your claim was denied, in part or in full, this code tells you why. The service may not be covered under your plan or may have been deemed not medically necessary, or you may have reached your annual plan limits.

You should keep all EOBs for the duration of your plan year. Find a safe place to store them. When you do decide to dispose of them, they should be treated just like bank or credit card statements, and shredded. Many insurance companies offer the option of paperless EOBs that you can receive by email for an added layer of protection.

And be sure to contact your 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. Prior to 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.” You can contact him at gordon.fjn@gmail.com.