What's in an EOB?

EXPLAINING THE 'EXPLANATION OF BENEFITS'

To separate what you legitimately owe on a medical bill from what may be erroneously claimed, you'll have to carefully review your EOBs — the "explanation of benefits" statements your insurance company sends out after you've been to the doctor or hospital. Here's a quick guide.

• Date of Service. Should reflect the date you actually received the test, procedure, or physician's service.
• Place of Service/Service Provider. Name of the provider, which could be a hospital, lab, doctor, or other medical service provider (home oxygen service, physical therapy clinic, pharmacy, medical equipment provider, etc.).
• Service Provided. Typically filled in with code numbers or abbreviations. Some EOBs list a key to this code on the bottom or back of the page, but you may need to refer to your policy or the insurance company's Web site. In any case, if you don't understand these designations, you can always call the company's customer service number, usually listed on the EOB and your insurance ID card, and ask for clarification.
• Claim/Charge Amount. The price the provider charges for this service.
• Allowed Amount. The amount your insurance plan has approved for the service — in other words, what the company has agreed, under the terms of a contract, to pay the provider for that particular treatment or level of care. If you used an in-network provider, this space will reflect the reduced rate your insurance company negotiated with the provider; if you chose an out-of-network provider, the cost will be higher than the in-network rate as stated in your insurance plan. If your plan does not pay for out-of-network providers, you will be responsible for the full amount the out-of-network provider charges.
• Patient Responsibility. How much you are expected to pay out-of-pocket. The insurance company pays the difference between the patient responsibility and the allowed amount.

Although the forms and codes vary from one insurance company to another, the basic info on an EOB remains the same. In addition to the above, you might see items such as Deductible Amount, Copay, and Benefit Amount (usually a percentage).

Patients who believe their claims were denied in error have the right to appeal the insurer's decision. In some cases, the company may not have had enough information to decide whether to cover a treatment or service, and the appeals process gives you the opportunity to provide that information.

Remember that you may be entitled to have an outside party review your claim, and you can always contact your state insurance commissioner's office for assistance in resolving a claims dispute with your insurance company. (See www.naic.org/state_web_map.htm for a list of state insurance departments.) If the EOB is missing information on the company's appeals process, or to find out more about it, including any time restrictions, visit the health plan's Web site or call the toll-free number on your ID card.

One final tip: EOBs are handy at tax time, as you can easily add up what you paid out-of-pocket over the year and sometimes deduct that sum on your federal income taxes. Check with your accountant — most people can only take the deduction if they've spent more than 7.5 percent of their adjusted gross income on specific healthcare expenses during a given year.

Pam Baker writes frequently on business and technology issues. She lives in Columbus, Ga.

SUMMARY

Determining whether your healthcare provider charged you correctly can be difficult enough without having to wade through paperwork that seems written in secret code. And although the statement is clearly marked "Not a Bill," you know there's a tab to be paid in there somewhere and would just like it all laid out clearly.

Oddly, that's exactly what your insurance company is trying to do — spell out your medical costs in an itemized fashion so that everyone, patients and doctors alike, gets the picture. Within the hyphenated numbers and codes peppered across the explanation of benefits (EOB), also known as a claims statement, is a description of who did what medical procedure and for how much money. The EOB is essentially a map of how much you owe and to whom — once you understand how to decipher it, you'll find it a useful tool in managing your healthcare costs.

That's not to say, however, that you should take for granted that the EOB is accurate. Review it like you would a credit card statement, and pay close attention to whether claims were paid according to the terms of your plan.