medical expenses

What is an Explanation of Benefits (EOB)?

March 21, 2016 by Frank West

After visiting the doctor, most people receive an explanation of benefits, or EOB, from their insurance company. But what is it? Usually it’s labeled “not a bill,” but it looks like one. If you’ve received an EOB and your initial reaction was confusion, you’re not alone. Here’s a breakdown of a typical EOB.

Information at the top of your EOB

The top of the EOB includes the address and customer-service phone number of your insurance company, so you can call them with questions. Also near the top is your name, the name of the primary policyholder and your patient identification (ID) number. If you are the primary policyholder, your name might be there twice.

The other part at the top is your health care provider’s information. In many cases, this will be your doctor, but if you had imaging or lab work done, it could be the name of the facility. This section will also have a process date and a claim number. The claim number isn’t your ID number or your policy number, since each service billed to your insurance has a different claim number. The process date is the day your insurance finalizes its decision on the claim.

Information in the body of your EOB

Below the identifying information, your insurance company usually includes a short statement, or a table, summarizing the claim. The table is confusing, so let’s go over it in detail. Keep in mind that insurance companies don’t organize their EOB tables the same way, so the columns you see might be in a different order than they are here.

Date of service: Each line usually starts with the date of service — the day you saw the doctor or when the procedure was performed. If your EOB is for an outpatient procedure, each line will have the same date. But if you were admitted to the hospital and stayed overnight, or if you had a complex series of services, there could be more than one date listed.

Medical billing codes: Each service you receive is identified by a code, which determines how you are billed. There are four kinds of codes that could show up on your EOB.

HCPCS Codes: Five numbers that identify supplies and drugs used during an outpatient visit. HCPCS is the Healthcare Common Procedure Coding System.
CPT Codes: Five numbers used to identify procedures or tests performed by a provider. CPT stands for Current Procedural Terminology. CPT codes are part of the HCPCS.
ICD-9 Codes: System of codes assigned to every diagnosis and procedure. ICD-9 codes are from the International Classification of Diseases, Ninth Revision.
Revenue Codes: System to identify the location of an inpatient procedure or service and the dollar amount associated with the procedure. Revenue codes are attached to the other three codes and help group similar charges.

It’s important to note that not every EOB will have all four codes. If your EOB is for an inpatient claim, it will have ICD-9 Procedure Codes, ICD-9 Diagnosis Codes and Revenue Codes. If the EOB is for outpatient services, it will have HCPCS, CPT and ICD-9 Diagnosis codes only.

Place of service: This code identifies the facility you visited. Your insurance company may not cover certain procedures unless they’re performed in a specific setting, such as a hospital or urgent care facility.

Charge amount: This is the amount that your provider billed your insurance company. This is what you would have been charged if you didn’t have health insurance.

Allowed amount: If the provider is in your insurance network, this is the amount for each service that has been agreed to by your insurance company and health care provider. If a line is blank for this column, your insurance probably doesn’t cover this service.

Not covered amount: This is the amount that your insurance won’t pay for a service. If it is equal to the charge, your insurance probably doesn’t cover this service.

Reason code: This code explains why a service wasn’t covered or how a claim was processed. Reason codes are usually on a separate page or after the EOB table.

Copayment or Copay: The fixed amount that you pay upfront for each service. For many services, this is the only amount you’re responsible for, and you probably paid it when you received the service. The copayment doesn’t count toward your deductible.

Deductible: The amount that you pay before your plan covers the service. The deductible may not apply to each service. Some services may be covered and you’ll be responsible only for a copayment. You’ll be responsible for services that aren’t covered by your health plan, and those payments don’t go toward your deductible.

Benefit amount or percent covered: This is the percentage your insurance covers for a network provider. Not all EOBs have this column, since it is usually fixed for in-network providers and explained in your summary of benefits.

Due from patient: The amount that you are responsible for paying to the provider. If the amount is equal to the copayment and you already paid it, the costs have been covered for this service by you and your insurance company. If it is more than the copayment, or you haven’t already paid a copay to the provider, you should expect a bill from the provider.

The 5 Best Ways to Avoid a Large Medical Bill.

March 16, 2016 by Frank West

The 5 Best Ways to Avoid a Large Medical Bill

Just the thought of opening a medical bill is enough to make many people anxious, and for good reason. Medical bills are usually unplanned, and there’s no telling how much you’ll be charged for most services. That’s not just a turn of phrase, either. Medical centers can charge whatever they want, and prices for similar services can be wildly different in cities just an hour away from one another, or even in the same city. Because of this, medical debt is the No. 1 contributor to personal bankruptcy in America.

When you’re facing a planned medical procedure, you have some time to shop around to get the best price, but there are also things you can do to prepare in case of an emergency. If “shopping around” for medical services sounds a little strange, don’t worry. With the recent focus on health care price transparency in the U.S., this is a new but sorely needed option for consumers. Large medical bills can usually be lowered through negotiation and error checks, but the best place to start is at the beginning—before the bills even come in. Here’s how you can help prevent those big bills before the time comes for medical care.

1. Mind your health

Future medical bills may or may not be preventable, and unless you have a crystal ball it’s likely you won’t know for sure which is the case. What’s more certain, however, is which behaviors and conditions cost the most to treat and cause the most complications. Nonsmokers with a healthy weight not only tend to have the fewest medical problems, but also tend to have the fewest complications during procedures. And more complications mean an overall higher bill, especially when it comes to surgeries. With this in mind, the best medicine really is prevention: Get regular checkups, eat healthy, stay active, and avoid tobacco.

2. Shop around and know what’s in your area

Whether you know you need something like an MRI, or just want a plan in case of emergency, it’s best to know what’s available in your area. You may be surprised to learn that the cheapest procedures often come from the higher-rated facilities. If you reside in a large metropolitan area, you’ll have lots of options—there are independent clinics, imaging centers, and hospitals dotting the maps of most big cities. If you live in a rural or small-town community, choices may be limited, but towns within driving distance are also worth checking out.

To save time, you can use a cost comparison tool that uses recently released pricing information. Pay special attention to places like imaging and birthing centers, or other facilities that offer focused services, because they are often cheaper than large hospitals. Also check out the emergency care prices of hospitals close to you, if possible. If there are two hospitals nearby and the average charge for something like an asthma attack or a broken bone are twice as high in one of them, you’ll want to know that for quick future decision-making.

3. Use in-network providers

If you’re looking for a new doc, make sure that the ones you consider are in your insurance network. A health insurance network is a group of doctors and medical providers that have met your insurance company’s quality standards and mutually-agreed-upon prices. If you choose a doctor outside of your network, your health insurance may cover very little or none of the charges. This is why it’s best to start with your network when choosing providers, rather than picking someone based on proximity or a friend’s recommendation. You can usually get a complete listing of the doctors in your network by calling your health insurance customer service line, or simply checking their website. When your doctor is in your network, so too are the clinics and hospitals the doctor has privileges at, in most cases.

4. Get prior authorization

Since many drugs and procedures are costly or risky, your insurance plan may require prior authorization before covering them. Prior authorization is usually obtained when your doctor’s office sends medical records showing the reason for the service. If that fails, the doctor may send a personal letter explaining his or her professional opinion. If the reasoning for the procedure or drug is sound and its use will improve your health, the insurance company usually agrees to pay for it in the interest of avoiding costlier problems later.

In the case of a procedure, prior authorization is required by some insurance policies when medical necessity or benefit is in question. This is a precaution taken by insurance companies in the case of a prescription drug because there may be a cheaper alternative available. The insurance company wants proof that the more expensive version is necessary and that they, and you, aren’t overpaying needlessly. Whenever a medical professional wants to order a costly drug or procedure, ask him or her to obtain prior authorization or verify the service is covered by your insurance in your summary of benefits.

5. Negotiate in advance

So you’ve been told you need an imaging or diagnostic procedure by your doctor, you’ve found the best-priced facility in your area, and you’ve made sure it’s covered by your insurance. Congratulations, you’re a diligent and savvy consumer! Now, time for extra credit—in the form of even more cash saved. Call up the billing department where the procedure will take place and ask them to verify the price and whether or not they offer a discount for cash payments or a billing plan, and simply ask for a lower rate. They will often appreciate your awareness and intent to pay before the procedure is even completed, and may let you in on other ways you can save at their facility.

If that big bill still comes

No matter how prepared or healthy you are, medical surprises happen. If you’ve done what you can to keep costs low and still find a big bill in the mail, there is still help. With the help of a medical billing advocate, you may be able to get those charges down to something more affordable. Medical billing advocates find billing errors and negotiate with hospitals and insurance companies on your behalf for lower rates.