Paul Sanchez
Medical billing can be a confusing process, with 72% of American consumers reporting confusion over their medical bills, and 94% receiving bills they considered too expensive. One of the reasons for this is insurance adjustments, which are discounts that insurance companies have pre-negotiated with hospitals. These adjustments are reflected in the patient's bill, and can be based on deductible and copay features of the patient's insurance plan.
Characteristics and Values of Insurance Adjustments on Medical Bills
| Characteristics | Values |
|---|---|
| Definition | Refers to the portion of a bill that a hospital or doctor has agreed not to charge. |
| Who is involved? | The insurance company, the hospital or doctor, and the patient. |
| What does it show? | The true amount due from the patient (co-insurance). |
| What is the process? | The doctor's office submits a claim to the insurance company listing the services provided. The insurance company uses this information to pay the doctor. |
| What is sent to the patient? | The patient may receive an Explanation of Benefits (EOB) from the insurance company, which is not a bill. The patient may also receive a statement from the doctor's office showing the amount billed to the insurance company. |
| What to do if there are discrepancies? | If there are discrepancies between the EOB, billing statement, and other records, the patient should contact the doctor's office and insurance company for clarification. |
| How often is an EOB sent? | Not all insurance companies send EOBs, and not all doctors' offices send statements. |
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What You'll Learn
Adjustments refer to discounts
When the insurance company pays their portion, the discounted amount (adjustment) is subtracted to calculate the actual amount due from the patient (co-insurance). The insurance company may send the patient an Explanation of Benefits (EOB) report, detailing what they paid for and what they did not. It is important to note that not all insurance companies send EOBs, and patients should review their EOBs and billing statements carefully to understand their medical bills fully.
For example, consider a scenario where Dr. Ellis charges an insurance company $60 for an office visit, $10 for administering an immunization, $90 for the vaccine, and $25 for a blood draw. The insurance company might send an EOB showing a $55 payment and a negotiated savings (adjustment) of $15. The patient would then be responsible for paying the remaining balance of $100.
In summary, adjustments on medical bills refer to discounts negotiated by insurance companies with healthcare providers. These adjustments reduce the overall cost of medical services for patients, with the specific discount amount varying across different insurance companies.
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Discounts are specific to each insurance company
An "adjustment" on a medical bill refers to the portion of the bill that the hospital or doctor has agreed not to charge. Insurance companies pay hospital charges at a discounted rate, and the amount of the discount is specific to each insurance company.
When an insurance company pays their portion of a medical bill, the discounted amount (or adjustment) is subtracted to show the true amount owed by the patient (known as co-insurance). The amount of the discount depends on the insurance company and the specific plan that the patient has.
For example, some insurance companies may offer a discount on medical payments or personal injury protection coverage if the patient has safety equipment like anti-lock brakes, airbags, or daytime running lights in their car. These discounts can vary, with airbags potentially providing up to a 40% discount.
Additionally, state-mandated discounts may also apply. For example, in New York, insurance companies must offer a 10% discount on liability and collision coverage for three years if the insured completes a defensive driving course and submits a certificate of completion.
It's important to note that insurance companies also negotiate discounts with healthcare providers. As a result, plan members benefit from these discounted rates when using in-network providers. This means that even before meeting their deductible, insured individuals pay less for the same services compared to those without insurance coverage.
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Doctors submit a bill (claim) to insurance companies
Doctors submit a bill (also known as a claim) to insurance companies to receive payment for their services. The bill or claim outlines the costs of the medical services provided to the patient. The insurance company then reviews the claim and determines how much they will pay the doctor and how much the patient will need to pay. This is based on the patient's insurance plan and coverage.
If a patient receives a bill from a doctor or hospital, they should first check if it contains any indication that the doctor or hospital has already submitted the bill to the insurance company. If not, the patient should contact the doctor or hospital and request that they bill their insurance company. The patient can provide their insurance information to the doctor or hospital to facilitate this process.
In some cases, the doctor, provider, or supplier may not have filed a claim on the patient's behalf. In such cases, the patient should contact their doctor and request that they file a claim. If the doctor refuses or fails to file a claim, the patient may need to submit their own claim to the insurance company. This typically involves completing and submitting the necessary forms, along with supporting documentation, such as an itemized bill and medical records.
It is important to note that insurance companies often have specific time limits for filing claims. Therefore, patients should be proactive in following up with their doctors and insurance companies to ensure timely claim submission and payment. Additionally, patients should keep their explanation of benefits (EOBs) and statements organized to easily access them if any questions or discrepancies arise regarding their medical bills.
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Insurance companies send a report called an Explanation of Benefits (EOB)
When you visit a healthcare provider, you will receive something called an Explanation of Benefits (EOB) from your insurance company. This is not a bill, but rather a report that outlines what your insurance plan will cover based on the care you received and your specific health plan benefits. It is a breakdown of the benefits your insurance covers, what you must pay for, and the charges levied by your healthcare providers. The EOB will also include your personal details, such as your name, member number, and plan information, as well as information about your visit, including the dates of service, the name of your doctor or clinic, and the type of care you received.
The EOB is an important tool that helps you understand how your bill is divided between the medical service provider(s), your insurance, and your out-of-pocket expenses. It ensures that you are receiving the full benefits or discounts that you are entitled to under your insurance plan. It is worth noting that the format of an EOB may vary depending on the insurance company, but the basic information provided remains consistent.
You may receive multiple EOBs if you have received more than one type of service or treatment during the same visit or on different days. It is essential to keep and compare these EOBs with the bill you receive from your healthcare provider. If there are discrepancies between the amounts on your EOB and the bill, you should contact your healthcare provider to verify if your account has been updated with the payment from your insurance company. If you still need assistance, you can reach out to Member Services at your insurance company for clarification.
The EOB can also help you identify potential errors or issues with your bill. For example, you can use it to check if the "in-network" versus "out-of-network" prices are listed correctly or if there are any denied insurance claims that can be reconsidered by providing specific information. Additionally, the EOB can help you understand why your insurance claim may have been denied in the first place. Common reasons for denial include non-covered benefits, terminated insurance coverage, or receiving services before becoming eligible for insurance coverage.
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EOBs and billing statements should be carefully reviewed
An "adjustment" on a medical bill refers to the portion of the bill that the hospital or doctor has agreed not to charge. Insurance companies pay hospital charges at a discounted rate, and the amount of the discount is specific to each insurance company. This discount is reflected in the adjustment amount.
EOBs (Explanation of Benefits) and billing statements should be carefully reviewed to ensure accuracy and avoid overpaying. Here are several reasons why:
- Identifying Errors: Mistakes can occur in medical billing due to inaccurate coding, data entry errors, or incorrect plan information. By carefully reviewing the EOB and billing statement, you can identify and dispute any erroneous charges.
- Understanding Costs: EOBs provide a breakdown of charges, showing how much your insurance company paid and the amount you owe. Comparing the EOB with the billing statement helps you understand the costs of the services you received and ensures that you are not overcharged.
- Verifying Services: It is important to verify that the services listed on the EOB and billing statement are accurate and match the services you received. This includes checking the dates of service, descriptions of services, and the provider's information.
- Insurance Coverage: Reviewing the EOB helps you understand what your insurance plan covers and what you are responsible for paying. It outlines any deductibles, copays, or coinsurance amounts you may owe.
- Multiple Services or Treatments: If you received multiple services or treatments during the same visit or on different days, you may receive more than one EOB. Carefully reviewing each EOB and comparing them with the billing statement ensures that all charges are accounted for and correctly calculated.
- Prior Balances: Discrepancies between the EOB and billing statement amounts may be due to prior unpaid balances or charges for multiple dates of service. Reviewing the EOB and billing statement carefully can help identify any discrepancies and ensure accurate payment.
- Insurance Updates: It is important to check if your insurance information is up to date and provide any additional information required by your insurance company. This can impact your coverage and the amount you owe.
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Frequently asked questions
An insurance adjustment on a medical bill refers to the portion of your bill that your hospital or doctor has agreed not to charge. Insurance companies pay hospital charges at a discounted rate. This discount is specific to each insurance company.
EOB stands for Explanation of Benefits. Your insurance company may send you an EOB after your doctor's appointment. This report shows what your insurance company is paying for, what it's not paying for, and why. It is not a bill.
A statement, sent by your doctor's office, shows how much your insurance company was billed for the services you received. Not all insurance companies send EOBs, and not all doctors' offices send statements. You may receive one or the other, or both.
If the dates of service and description of services on your EOB and billing statement aren't the same, or if they don't match other records, contact your doctor's office first. If you have questions about why your insurance company did not cover something or about the amount you have to pay, contact your insurance company.
