In the healthcare industry, EOB stands for Explanation of Benefits. An Explanation of Benefits is a document health insurance companies provide to policyholders. It explains the costs and charges of a particular medical service or treatment.
When an individual receives medical care and submits a claim to their insurance company, the insurer reviews it. It determines the amount they will cover and the amount the policyholder is responsible for paying. The Explanation of Benefits, or EOB in medical billing, outlines this information, including the date of service, the provider’s name, the procedures performed, the allowed amount, the insurance company’s payment, and any remaining balance.
EOBs are essential for both the insurance company and the policyholder. They help the insurance company communicate how they processed the claim and what portion of the expenses they covered. For policyholders, EOBs provide transparency and help them understand the costs associated with their healthcare services and any outstanding balances they may owe to healthcare providers.
Many times people misrelate the explanation of benefits with a medical bill. But it is not. An EOB is a concise view representing a summary of the payments that an insurance company made with respect to providing treatment and the list of payments that a patient needs to pay out of pocket.
If there’s a balance of payment from the provider’s end, the billing team may send a separate bill to the patient to pay the outstanding amount.
What does an EOB in Medical Billing look like?
Every insurance company or healthcare organization may use a different format for their bills and statements. For the question of how an EOB in medical billing looks alike, the answer depends on the use of the format that an insurance company uses.
However, some common factors are there that give an EOB statement a comprehensive read. They include;
Information at the header; At the top of the EOB statement, there should be the names of an insurance company, contact information, and the policy name. The name of the policyholder and the policy number is other important thing that should be on the EOB statement that notifies the details of the insurer and the insured person.
Claim summary; With an EO, you can expect an overview of your medical claims. The number of times the treatment was taken, the service date, healthcare provider information, the history of the provided treatment, and the details and information about the providers and healthcare members involved in the procedure.
Charges covered; The charges covered section in the EOB provides details about billed services and treatment provided.
The amount allowed; With an EOB statement, it can be easily identified what services are rendered and what services are considered billable during the stay in the hospital or the provision of the treatment. This section is often crafted based on the rates preapproved between the insurer and the medical provider.
Insurance Payment: The EOB will indicate the portion of the allowed amount that the insurance company will cover. It may show the insurance payment for each specific service or procedure and any adjustments or discounts applied.
Patient Responsibility: This section details the amount the policyholder is responsible for paying out-of-pocket. It typically includes deductibles, copayments, coinsurance, or any non-covered charges.
Applied Deductible: If the policy has a deductible, the EOB will show how much of the deductible has been applied to the claim.
Coinsurance/Copayment: If the policy includes coinsurance or copayment, the EOB will specify the percentage or fixed amount the policyholder must pay.
Non-Covered Charges: If the insurance policy does not cover services or procedures, the EOB will highlight these charges and indicate that the policyholder is responsible for the full payment.
Provider’s Balance: The EOB may include a section indicating the remaining balance the healthcare provider may bill the patient directly.
Contact Information: The EOB will provide contact information for the insurance company’s customer service department, where the policyholder can seek clarification or ask questions about the EOB or the claim.
Reviewing EOB statements carefully is essential to understanding the coverage, payments, and outstanding balances. If there are any discrepancies or questions, it’s advisable to contact the insurance company or the healthcare provider for clarification.
How do you read an EOB?
Reading an Explanation of Benefits (EOB) can initially seem daunting due to the various details and terminology involved. However, by following a systematic approach, you can navigate through an EOB and clearly understand the information provided. Here’s a step-by-step guide on how to read an EOB:
Firstly, start by reviewing the header information on the EOB. It’s important to ensure that your personal details, such as your name and policy number, are accurately reflected to avoid any confusion.
Next, focus on understanding the summary of the claim. Look for the date of service, the name of the healthcare provider, and a brief description of the services or procedures performed. This information helps you identify the specific visit or treatment the EOB refers to, enabling better comprehension of the subsequent details.
After that, examine the covered charges section. Here, you’ll find the total charges billed by the healthcare provider for the services rendered. This gives you an idea of the initial cost before insurance coverage. Comparing these charges with the subsequent amounts provided on the EOB is helpful.
One crucial element to note is the allowed amount, which represents the portion that the insurance company considers reasonable for the services provided. Compare this amount with the covered charges to see if any adjustments or discounts were applied. Understanding the allowed amount helps you gauge the insurer’s evaluation of the billed charges.
Moving forward, identify the insurance payment section on the EOB. This portion indicates the amount that the insurance company will cover. It may be broken down into specific services or procedures. Take the time to ensure that the insurance payment aligns with the coverage terms outlined in your policy.
Simultaneously, pay attention to the responsibility you bear as the policyholder. This section details the amount you are responsible for paying out-of-pocket, which may include deductibles, copayments, coinsurance, or non-covered charges. Carefully note the specific amounts or percentages mentioned, as they directly affect your financial obligations.
If your policy includes a deductible, the EOB will indicate how much of the deductible has been applied to the claim. This aspect helps you track your progress toward meeting the deductible threshold. Similarly, if your policy includes coinsurance or copayment, calculate the applicable percentage or fixed amount you must pay.
Furthermore, it’s essential to identify any non-covered charges mentioned in the EOB. These are the charges that your insurance company does not cover; you may need to report them to your secondary insurance or have to pay on your own. Once you are aware of the charges you need to pay, you’ll be aware of the scope of the financial obligation you incur.
In case you have any questions, discrepancies, or concerns about the EOB or the claim, the EOB typically provides contact information for the insurance company’s customer service department. Utilize this information to reach out to them and seek clarification. They can assist you in understanding the details and addressing any issues that may arise.
By carefully reviewing each section of the EOB and comparing it with your records, you can navigate through the document effectively, ensure accuracy, and promptly address any discrepancies. This understanding empowers you to make informed decisions about your healthcare expenses and manage your financial responsibilities effectively.
What is the difference between EOB and Medical Billing?
The main difference between an Explanation of Benefits (EOB) and medical billing lies in their purpose and the entities involved. Here’s the main definition and purpose for using EOB (explanation of benefits) and medical billing in their own rules.
Explanation of Benefits (EOB): An EOB is a document health insurance companies provide to policyholders. It summarizes the insurance company’s payment and the policyholder’s financial responsibility for a particular medical service or treatment. The EOB explains the costs and charges associated with the healthcare services received, outlines the insurance company’s coverage and payments, and clarifies the remaining balance the policyholder may owe the healthcare provider. The EOB is primarily for informational purposes and helps policyholders understand the insurance company’s processing of their claims.
Medical Billing: Medical billing refers to the process of submitting and generating invoices for healthcare services rendered by healthcare providers. It involves the healthcare provider creating a detailed bill, often referred to as a medical claim or healthcare invoice, which includes the specific services provided, corresponding charges, and applicable codes (such as diagnosis and procedure codes). The medical billing process may also involve verifying insurance coverage, gathering the necessary documentation, and submitting the claim to the insurance company for payment.
Healthcare providers or their billing departments typically handle medical billing. They submit the claims to insurance companies for reimbursement of the services provided to patients. The billing process ensures that the healthcare provider receives payment for their services, either from the insurance company or directly from the patient.
Take away
To conclude, EOB is the financial summary provided to the policyholders by the insurance companies, where they list the financial obligations related to medical treatment that the policyholder incurred. On the other hand, EOB and medical billing are often interrelated with each other. Medical bill, on the other hand, has totally different approach to receiving payments from insurance and patients after submitting claims and invoices to insurance companies.
