Medical Care Expense - Understanding Your EOB (Explanation of Benefits)

Medical Care Expense - Understanding Your EOB (Explanation of Benefits)

The format varies widely between insurance companies, but at a minimum an EOB should indicate the: provider, service date, actual billed amount, network discount, allowed amount, insurance portion, patient responsibility and deductible amount. I'll discuss each of these terms. It is important to remember that an EOB is NOT a bill. Usually, almost all EOBs state "THIS IS NOT A BILL" in big bold letters, to minimize confusion.

Every EOB you contains information about services you received from that specific provider during a particular visit. A provider is anyone who supplies healthcare and/or other medically related services and products. A provider may be a physician, dentist, clinic, hospital, pharmacy, lab, physical therapists or other health care professional. Looking at your EOB, you should see the name of the provider or facility that filed the claim for reimbursement listed. A service is a procedure or product rendered by a provider to a patient. A service could range from a basic physician visit to radiology services to surgical care or medical equipment. The date on which you received services from a provider is called the service date.

Billed Amount

This represents the cost of the services you received and the amount the provider sent to your insurance company. It should be the largest figure on your EOB.

Network Discount

This is the amount by which a providers bill is adjusted as a result of a negotiated rate agreed upon between the provider and the insurer, and is not always listed on an EOB. This only applies to in-network providers.

Allowed Amount/Covered Amount

The allowed amount is the amount of payment a provider has agreed to accept for the service, treatment or product under the terms of a negotiated contract with an insurance company. This applies only to in-network providers. The allowed amount may also be the maximum amount the insurance company will allow for a specific service.

Insurance Amount/Paid

As you may have already guessed, this is the amount that your insurance company pays on a claim.

Deductible Amount

Your deductible indicates the portion of expenses that count toward your plan deductible and you are responsible to pay.

Patient Responsibility

This is the portion of the provider charges to be paid by the patient after the network discount, allowed amount, insurance portion and deductible amount have been taken into account. Basically, this is what you are expected to pay out-of-pocket for the services your received.

The Math

The key to understanding comes down to identifying four numbers: the provider charges (amount billed from doctor, hospital, etc.), the discount (which is based on the negotiated rate of your individual plan coverage), what insurance paid and patient responsibility.

The amount the provider sent to your insurance company as their "charge" or "billed amount" should be the largest figure on the EOB. Next, find and subtract the "discount" to arrive at the allowed amount, which is the amount your insurance company and your provider agree is the fair amount to be paid. If you do not have a discount amount displayed, simply locate the allowed amount on your EOB.

Now look at the amount your insurance paid. It can be anywhere from $0 to the full allowed amount. Subtract what the insurer paid from the allowed amount. What's left is the patient responsibility. To double check the math, add together the amount the insurance paid and the patient responsibility, it should equal the allowed amount, sometimes referred to as the negotiated rate.

Remember, the patient responsibility may NOT be the balance owed to your provider, depending on if the insurance company reflects your payments already to the provider (such as co-pays, pre-payments and any other payments you have submitted). If payments you have previously made are NOT reflected on the EOB, you will need to subtract your payments from the patient responsibility amount to figure out the balance owed to the provider.

EXAMPLE:

Billed Office visit $155.00

Allowed Amount $ 93.03 (Network Discount $61.97)

Plan Pays $83.73 (Insurance Paid)

Patient Responsibility $ 9.30

Visit http://MedicalBillConsultants.com for more information and learn how they can advocate in your behalf with you medical providers.

Rich Davis is a partner with Medical Bill Consultants, Tarzana, Ca. Medical Bill Consultants provides medical bill review service to consumers of medical service who question the high bills they receive. Medical Bill Consultants works on a flat fee rather then a high contingency providing money back guarantee. Visit their site http://DiscountMyMedicalBill.com for more information.

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