I recently received a bill from my doctor, incorrectly charging me over $200. The only reason I knew it was incorrect is because I'd read the Explanation of Benefits my health insurance company sent me. Unfortunately, very few people I know really understand what it is and why they need it. So today I'm going to explain why it is so important to read your bill carefully and compare it to the statement your health insurance company provides, called an explanation of benefits (EOB). Why reading your explanation of benefits (EOB) matters.
What is an Explanation of Benefits?
When you see a doctor, they bill your insurance company who then (hopefully) pays at least part of the charge. Once the claim is processed, your health insurance company sends you a statement called an Explanation of Benefits (EOB). This statement tells you:
The services provided to you that the doctor or hospital billed your insurance for
The charges and amount the insurance company paid
The amount you need to pay the doctor or hospital
How Do I Read My EOB?
While each insurance company uses their own EOB format, they all contain the same basic information:
The date of the appointment and what the doctor did. It’s important to verify this against the itemized bill from the doctor or hospital. Did you actually have an appointment that day, and is that the service you received? One type of insurance fraud includes billing the insurance company for services not provided, so reading your EOB carefully is an important step in preventing fraud. Since fraud leads to higher insurance costs, everyone benefits from preventing it.
The amount your doctor billed the insurance company. You can also verify that this information matches the itemized bill from the doctor to help correct billing errors, or potential fraud.
How much of that bill your insurance will not allow (also called the “disallow amount”). This is very important. Your insurance company has a contract with the doctor or hospital, and they will only pay a certain amount for each procedure. No matter how much the doctor or hospital charges for that procedure, insurance will only pay the contracted amount. The “disallow amount” is stricken off the bill. You do not owe and cannot be billed for the disallow amount.
How much (if anything) your insurance company paid. It’s easier to understand how much you owe if you also know how much of the bill your insurance has paid.
How much you owe the doctor now that the claim has been processed. This is extremely important. You do not owe any more than this amount.
Protect Yourself and Your Family
I have a background in benefits administration, and I worked with health insurance companies for years. But I worry about the people who don't have the benefit of this experience. For example, I am confident that my husband would simply pay any bill from the hospital or doctor without a second thought. Because that’s what we are conditioned to do – when a bill comes, we pay it without question. And let me be clear: I am NOT telling anyone to skip out on their bills. But I’m very concerned about how many Americans could be paying medical bills they don’t owe (and very possibly can’t afford), simply because they haven’t verified it against their EOB.
It is important to read every Explanation of Benefits from the insurance company. If you have kids or chronic health problems, I know this can be a lot because each visit generates an EOB. And sometimes the insurance company sends several pages in one envelope, which can seem overwhelming in our busy lives. But, with practice, you will be able to scan them quickly and then move on with the rest of your day. At the very least, save the EOBs and read them before you pay a medical bill, just to be sure that bill is accurate. And if you have elderly parents/family members, please help them before they pay costly medical bills. In my own case, finding and correcting a billing error recently saved my family $218. I would much rather spend that money on groceries or a family outing.
What if My Bill Looks Wrong?
If you receive a medical bill for an amount that is different from what your EOB says you owe, that is most likely a billing error and you need to contact the doctor’s billing department. If they still insist that you owe that amount, despite what your EOB says, then contact your insurance company. This is what they do, and they will clarify exactly what you owe and what is not your responsibility. If necessary, they can also intervene on your behalf with your doctor or hospital billing office.
Most people believe the medical bill is always correct, and they don’t think (or are afraid) to question it. While many medical bills are accurate, some may contain costly errors or even misinformation. If you see that your doctor billed the insurance company for a procedure or service you didn’t receive, that could potentially be fraud. Letting your insurance company know about the error or misinformation can save thousands of dollars, which could help stabilize insurance costs. We must all advocate for ourselves and our loved ones, especially with something as important as medical costs. My hope is that this information can prevent people from inadvertently paying more than they owe.
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