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Please see this article for more on EOBs.
Medical billing and health insurance are confusing. So confusing, in fact, that just opening an explanation of benefits or insurance statement causes an uptick in stress. Even though an EOB looks like a bill, it’s not — and it should actually be used to examine your corresponding bill for medical services. The fact is that knowing how to compare them is a skill that can save you thousands on an expensive medical bill. Here’s how to get started.
Know the difference
Most of the time when you receive medical services, the hospital, clinic or doctor’s office bills your health insurance before it bills you. Your insurance company then analyzes the bill, agrees to pay a portion based on your insurance benefits and its contract with the provider, and then sends you an EOB. Keep in mind that timing may be different, but around this time you will also get a bill from your provider for the portion of the bill you are responsible for paying (known as “patient liability”). The EOB is meant to be a tool to explain why you’re responsible for the remaining costs and where you’re at with your deductible.
How to compare
Each year, medical billing errors cost millions of dollars in the form of overpayments by insurers and patients. What’s worse is that seemingly insignificant errors like incorrect name spellings or policy number misprints can cause an initial rejection of your claim. In this case, you may receive a bill for the entire cost of your medical services, but don’t worry just yet. Calling the hospital and insurance company to correct the errors usually fixes this error. If all your identifying information is correct, it’s time to compare.
The first rule of medical bill awareness is obtaining an itemized bill before you start. If you open your envelope from the hospital and all that’s inside is a statement and a lump sum, stop right there and call the billing department. Many care providers will only provide an itemized bill if the total for services is $10,000 or more, so this is more common than you might think. However, an itemized version is almost always available upon request, so you can compare your bill to your EOB.
The easiest place to start is to check the codes against one another. You don’t have to know what the billing codes mean to do this — just compare them line for line and see that they match. While you’re doing this, check the bill and EOB for duplicate charges, a common billing error. Some procedures may be done more than once, but many are not. Additionally, your insurance provider may reject certain codes that appear more than once, so note how duplicate codes on the EOB are approved for payment.
Finally, scrutinize the EOB for any charges that the insurance didn’t pay and do your best to examine them. Are there services you know you didn’t receive that you’re being billed for? Are any unpaid charges strikingly similar to paid charges? Sometimes procedures are bundled, but a common billing error is listing bundled and unbundled charges together on the same statement.
If everything checks out, you’re ready to pay your medical bill, but what if you’re not sure?
If you’ve done everything you can (short of going to school for medical billing) and you’re still lost, that’s okay. In recent years, a new type of help has sprung up to help people combat costly medical billing errors, in the form of medical billing advocates. An advocate is there to look over your bill to make sure you’re not being unnecessarily overcharged. An advocate may also lobby the care provider, hospital and your insurance company on your behalf to lower medical costs. Some billing advocates charge by the hour, but many charge a fee as a percentage of savings they find — typically 30%-50%. If you’d like to know more about what medical billing advocates can help you with, head over to NerdWallet’s Ask An Advisor forum.
Couple looking at bill image via Shutterstock.