How to Read an Insurance EOB (Explanation of Benefits)

Learn about the different parts of an insurance EOB (Explanation of Benefits), including how to read one...

Once you start working in the medical billing industry you'll quickly have to understand the intricacies of the insurance EOB.

The EOB, otherwise know as the Explanation of Benefits, Explanation of Payment (EOP), or Remittance Advice (RA), is the document that the insurance company sends a provider after the have adjudicated a claim.

This document explains how the claim was processed, how much was paid and why, and what the patient's estimated financial responsibility is for the claim.

When the insurance company pays a claim the check is always accompanied by an EOB. This tells the biller how to apply the payment of the claim.

Learn more about the claims adjudication process, which is how insurance companies determine whether or not to pay a claim.

The top part of an EOB

Explanation of Benefits

There are many important parts of an Explanation of Benefits. The top part of the page usually has important demographic and contact information for the insurance company, the provider, and the patient.

The very top of the page has the insurance company's claims processing address and contact number. If you have to appeal a denied claim or call the insurance company for an explanation of the EOB, this is the mailing address and phone number that you'll use.

Under the insurance company's information is usually the provider's information.

This is important to note: if your claim was processed incorrectly, it may be because it was processed as a different provider. If this is the case you can easily tell just by looking at the top of the page.

On many EOBs the patient's information will also be at the top of the document.

But this information varies a lot. It can include everything from the patient's insurance ID number, date of service and address, to their policy information. Usually, the EOB will at least list the patient's name, patient account number (which is like the claim number), and the date of service.

These 3 things will allow you to locate the claim in order to enter the payment or adjudication information.

Main part of the insurance EOB

The main part of the Explanation of Benefits tells you how the claim was processed.

This includes the payment amount, if any, the estimated patient's responsibility, and the write-off amount. If you have multiple patients with the same insurance, the EOB will usually group these payments together, so more than one claim adjudication information will be included on the EOB. This can sometimes make the EOBs many pages long.

Individual claims usually look something like the following:

Date of service Procedure Charge Non-covered Non-allowable Deductible Co-insurance Co-payment Total payment Pt Resp
09/01/2011 99213-office visit 75.00 0.00 25.00 0.00 0.00 20.00 30.00 20.00
09/01/2011 81003-urinalysis 20.00 0.00 15.00 0.00 0.00 0.00 5.00 0.00
Total non-allowed $40.00
Total pmt by ins $35.00
Total pt balance $20.00

This information tells you:

  • how much the insurance company has paid you
  • how much money the patient is required to pay
  • and the amount of money that you have to write off the non-allowable amount, per your contract with the insurance company.

The write-off amount is determined by the prenegotiated allowable amount, between your office and the insurance company.

This allowable amount should remain the same for each patient that has that exact insurance company, as long as you're billing with the same provider's office.

The main part of the Explanation of Benefits tells you how the claim was processed

The amount of non-allowable money must be written off by your office, as you have agreed to accept this amount of payment from the insurance company per your provider contract. It is illegal to bill the patient for this amount.

This differs from the non-covered amount, however.

The non-covered amount is the amount that your office charged for a service that wasn't covered by the patient's insurance company.

Your office may choose to bill the patient for the entire non-covered amount, decide to discount the amount, or decide to write off the amount completely. It's up to your office.

Types of patient balances

You'll also notice on the above Explanation of Benefits that there are 3 different types of patient balances.

These 3 categories will depend on the patient's insurance policy and whether or not they have to meet a deductible, pay a copay, or are responsible for a coinsurance amount.

  • Deductibles are specific amounts of money, set by your insurance company and depending on your policy, which you have to meet before your insurance will pay for anything else on the claim.

    If your patient has already met their deductible but their insurance is still applying services towards it, you have a basis for an appeal of the claim.

  • Coinsurance is a specified percentage of patient responsibility which they have to meet after they have paid their deductible or co-payment amounts.

    This is usually set at something like 10/90, which means that the patient pays 10% of the allowable amount of the charges while the insurance company pays for 90% of the allowable amount.

  • There are 3 types of patient balances on an EoB Co-payments are specified amounts of money that patients have to pay at the doctor's office before their office visit. They can range anywhere from $5 to $50, but are generally somewhere around $25.

These categories of patient responsibility can all be on the same claim, or there may not be any patient responsibility on a claim.

The way patient's claims are processed all depend on the patient's benefits policy and the services that were performed on the date of service.

Understanding these parts of an EOB is very important. If the insurance company doesn't pay the claim in full then the patient has to pay for the rest.

If you don't understand the types of patient responsibility and how they are applied on the claim it may result in you underbilling your patients, meaning less money for your practice.

The bottom line

The bottom line of the EOB usually contains total payment information and directions for appeal.

If you have questions, or if something just doesn't match up and you can't figure it out, you always have the right to call the insurance company, ask for more information on how the claim was processed, or begin an appeal of the claim.

The EOB, or Explanation of Benefits, really is an explanation of how the claim was processed. It is by no means the last say in the adjudication of a claim, as all insurance companies must give you time to enter the claim and resend a correction or appeal.

Ultimately, reading an insurance EOB is difficult and very detailed. Even after a decade of experience, some EOBs are so confusing that it may take more than one person to read it correctly.

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