The Anatomy Of An Insurance Bill: Unraveling The Mystery Of Medical Expenses

Understanding your insurance bill is important to make sure you're not being overcharged and to keep on top of your finances. After visiting your doctor, your doctor's office will submit a bill to your insurance company, listing the services provided. The insurance company will then pay your doctor for those services, and you may receive a report called an Explanation of Benefits (EOB). This is not a bill, but it will show you what the insurance company paid for, what it didn't, and why. You may also receive a statement from your doctor's office, which shows how much they charged your insurance company for the services you received. You may receive one or the other, or both. It's important to understand the codes and terms used by insurance companies and healthcare providers to determine whether a bill contains an error.

What is an Explanation of Benefits (EOB)

An Explanation of Benefits (EOB) is a statement from your health insurance provider that details the costs of medical care or products you've received. It is generated when your healthcare provider submits a claim for the services you received.

The EOB outlines the costs associated with your care but is not a bill. It is a valuable tool that helps you understand your insurance plan and the breakdown of your bill. It also shows you the savings your plan has helped you achieve.

The EOB includes general information about you and your health plan, such as your name, the date(s) of service, and a reference or claim number. It will also list the name of your healthcare provider and the services provided.

The EOB breaks down the costs as follows:

• Service Description: Details of the healthcare services you received, such as medical visits, lab tests, or screenings.
• Provider Charges: The amount your healthcare provider bills for your visit.
• Allowed Charges: The amount that your provider will be reimbursed, negotiated between the insurance carrier and the provider, which may differ from the Provider Charges.
• Paid by Insurer: The amount your insurance plan will pay to your provider.
• Payee: The person who will receive reimbursement for overpaying the claim.
• What You Owe: The amount you are responsible for paying after your insurer has paid. This may not include payments you have already made directly to your provider.
• Remark Code: A note from the insurance plan explaining the costs, charges, and paid amounts for your visit.

It is important to note that the EOB is not a bill, and you will receive a separate bill from your healthcare provider if you owe any additional payments.

How to read your EOB

An Explanation of Benefits (EOB) is a document sent by your insurance company after a claim has been submitted by a healthcare provider. It is not a bill but rather a summary of the costs of your medical care, and how these costs will be split between you and your insurer. It is important to be able to read and understand your EOB to know what your insurance company is paying for, what it's not paying for, and why.

Firstly, it is important to note that not all insurance companies send EOBs, and not all doctors' offices send statements. You may receive one or the other, or both. If you do receive an EOB, it will contain the following information:

• Personal details: Your name, member number, and plan information.
• Information about your visit: Date(s) of service, your doctor or clinic's name, and the type of care you received (e.g. preventive care or office visit).
• A breakdown of the charges for the service(s) received: How much your insurance company paid, and the amount you owe.

Secondly, you should check that the services you received and the dates you received them are accurate. Then look for the plan-paid amount, which is how much your insurance plan covered and paid to your doctor. If your plan has a deductible, copay, or coinsurance (a set percentage you must pay), this will be factored into the equation. What's left over is the amount you owe, which is listed in the Member Responsibility section of the EOB.

Thirdly, if your Explanation of Benefits and bill from your doctor's office don't match, there are a few things that might be going on:

• A prior balance has been carried over for unpaid medical expenses at your doctor's office, or your bill includes charges for more than one date of service.
• A payment was made at the time of service or another point between when the EOB and bill were sent.
• A hospital or clinic sent you a bill before your insurance company had the opportunity to pay. In this case, wait until your insurance company processes the claim, and then you may be reissued an updated bill.

Finally, you should keep your EOBs and statements organized (for example, filed by date). This way, you can access them easily if any questions arise.

How the billing cycle works

The billing cycle is the time between a company issuing an invoice and the due date for payment. In the healthcare industry, the billing cycle is often determined by the insurance provider. Here is a step-by-step guide on how the billing cycle works:

Contact a Healthcare Provider:

Before scheduling an appointment, it is important to ask the healthcare provider about the services and supplies you will receive and the upcoming charges. If you are unclear about what insurance will cover, ask for the procedure codes and contact your insurance company.

Pre-register and Provide Basic Information:

When scheduling an appointment, you will need to provide basic information such as identification and insurance information.

Insurance Verification:

The healthcare provider will then contact your insurance company to verify coverage. This includes checking for preauthorization, which some insurance companies require before covering a medical service or medication. The insurance company will also determine the patient's out-of-pocket expenses, known as co-pay.

Appointment Day:

On the day of the appointment, you will complete any additional registration paperwork, including supplying your insurance card, a valid ID, the policyholder's name, and your insurance group number. The registration process helps healthcare providers update your medical records, provide you with privacy policy information, and gain your consent for certain procedures.

Medical Coding:

After receiving services, medical coders identify all services, prescriptions, and supplies received and update your records with the corresponding service codes.

Insurance Claim Submission:

The healthcare provider creates an insurance claim using the codes from the medical coder and submits it to your insurance company. This is typically done through an 837 file, a standard file format set by the Health Insurance Portability and Accountability Act (HIPAA).

Claim Processing:

A claims processor from your insurance provider reviews the insurance claim and verifies that the treatments received fall under your coverage benefits. They may contact you or your healthcare provider for additional information. The claims processor then decides to accept or reject the claim.

Claim Status Notification:

The insurance claims processor notifies your healthcare provider of the claim status. If the claim is valid, the insurance company reimburses the healthcare provider by paying for some or all of the services. If rejected, the claims processor provides a detailed description of why the services are not covered.

Patient Billing:

The healthcare provider bills you for any remaining balance not covered by insurance. This may include co-pays or deductibles.

Payment Collection:

The final phase of the billing cycle is ensuring that the bills are paid. Billers are responsible for mailing out timely and accurate medical bills and following up with patients regarding delinquent payments.

It is important to note that the billing cycle can vary depending on the industry and the type of billing, such as monthly, quarterly, or annual cycles. Additionally, the billing cycle helps guide companies on when to charge customers and estimate revenue, while helping customers regulate their payment expectations and budget responsibly.

What to do if your EOB and bill don't match

Billing mistakes can happen, and it's important to know what to do if your EOB and bill don't match. Here are the steps you can take to address the discrepancy:

• Collect all the paperwork: Gather all the relevant documents, including your EOB and the bill from your healthcare provider. Sometimes, multiple EOBs can apply to a single bill, so ensure you have all the necessary paperwork.
• Compare codes and descriptions of services: Carefully compare the codes and descriptions of the services listed on your EOB and medical bill. Ensure they match and look out for duplicate charges.
• Review the services received: Check that only the services you actually received are listed on the bill and that the amount you owe aligns with your health insurance benefits.
• Verify your information: Double-check that your name and policy number are correct on both the EOB and the bill. This step is crucial to ensure you aren't billed for someone else's healthcare services.
• Contact your healthcare provider: Reach out to your healthcare provider's office or the business department of the hospital/medical facility. Ask them to review the bill with you and confirm that it includes only the services ordered and received. If there is an error, inquire about the process to correct the billing.
• Request an itemized bill: Request an itemized bill from your healthcare provider or facility. This bill will provide a detailed breakdown of each charge, allowing you to cross-reference it with your EOB to identify any discrepancies or errors.
• Contact your insurance company: Get in touch with your health insurance company to discuss the differences between the bill and the EOB. You may be able to visit your insurance plan's customer service department in person and receive assistance in resolving the issue.
• Keep a record of your communications: Make sure to take notes on whom you spoke with, the dates of your conversations, and any actions that need to be taken. Follow up if you don't receive a corrected bill or if corrections were supposed to be made.

By following these steps, you can proactively address any discrepancies between your EOB and your bill, ensuring that you are not overcharged and that any billing errors are corrected.

Other key insurance terms

• Copay (short for copayment): A copay is a fixed dollar amount that you pay each time you receive medical care. For example, if your copay is $20, you will need to pay $20 to the provider's office every time you go in for a doctor's appointment. Many plans have different copay amounts for different services. So your copay may be $20 for a checkup but $50 for a visit to an urgent care centre.
• Deductible: A deductible is a fixed dollar amount that you need to pay within a defined period of time (such as one calendar or plan year) before your insurer will start to cover some of the costs for covered medical services. For example, if you have a $500 deductible, you will have to pay for your medical costs for non-preventative care until you have paid a total of $500. Once you reach that $500 limit, the insurance company will begin to cover some of your medical costs for the rest of the year.
• Coinsurance: Coinsurance is another way you may be required to share costs with your insurance provider. With coinsurance, instead of paying a fixed amount each time you receive medical care, you may be required to pay a percentage of the total costs. For example, your insurance company may pay 80% of the cost, and you may be responsible for paying the remaining 20% of the bill.
• Maximum out-of-pocket (MOOP) expense: The maximum out-of-pocket expense is the most you'll have to pay for your medical costs in a given time period, usually one calendar year or one plan year. For example, if you have an insurance plan with a $4,000 MOOP, and you've paid $4,000 in copays, deductibles, and coinsurance, your insurance company will cover 100% of your medical expenses for the remainder of the plan year.

Frequently asked questions