After visiting a doctor or receiving treatment in a hospital, a patient may joke that dealing with the bill for the experience will be more painful than the actual medical procedures he or she underwent. Fortunately, many people have health insurance so they do not have to pay the full cost for medical services and treatments that they receive. However, medical bills are often difficult to decipher and can make patients feel stressed, confused, and frustrated.

It is important for a patient to understand his or her medical bills, though, because doing so can help the patient recognize mistakes and detect fraud. Knowing what an Explanation of Benefits (EOB) is and what to look for in medical bills can help a patient achieve this understanding.

Explanation of Benefits (EOB)

After a patient has a doctor’s appointment or receives treatment at a clinic or a hospital, the doctor’s office, clinic, or hospital submits a bill (or a claim) to the patient’s insurance company. (If a patient visits a doctor that does not have a contract with his or her insurance company, then the doctor’s office may send the bill to the patient. In that case, the patient can submit the claim to his or her insurance provider.) The claim contains a list of all the services that the doctor or hospital provided for the patient. The insurance company determines what it should pay the doctor or hospital for those services based on the information in the claim.

Different insurance companies and different insurance plans have different arrangements with doctors and hospitals regarding which services they will cover and what percentage of the costs of those services they will pay. When an insurance company pays a doctor or hospital, it may send the patient and the doctor or hospital a report called an Explanation of Benefits (EOB).

An EOB is a description of the benefits that the patient is eligible for based on his or her insurance plan. An EOB contains information about the patient, the services that he or she received, and the amount that the health care provider charged for those services. The EOB also details which services the insurance company will and will not pay for and how much money the insurance company will pay for the services that it is covering. Finally, the EOB may list the amount that the patient is responsible for paying to the doctor or hospital as well.

Although an EOB may say how much a patient owes a doctor or hospital for treatment, it is not a bill. If a patient’s insurance plan does not cover all of the services and treatments that he or she received, the doctor’s office or hospital will send a billing statement (or medical bill) to him or her.

Within the medical bill, a patient should check that all of his or her personal information is correct (ex. name, address, person whose name the insurance coverage is listed under, etc). Additionally, the patient should check for the date and location of services and a description of the services he or she received.

The patient should also look to see how much of the service and treatment costs were covered by insurance and how much money he or she still owes according to the medical bill.

The amount that the insurance company will pay for the health care provider’s services and the amount that a patient owes should be clearly laid out in both the EOB and the medical bill. Within the EOB, there should also be an explanation for why the insurance company is not paying for certain services.

Sometimes, a patient receives the medical bill before the insurance company has paid the doctor or hospital, though. In this case, he or she does not need to pay the full amount listed for the services. Instead, the patient should wait to pay the doctor or hospital until after the insurance company pays its part so that he or she only pays the amount that the insurance company is not covering. If the insurance company has not paid the bill within 60 days of the patient’s visit to the doctor or hospital, the patient should contact the insurance company.

Every insurance company and plan is different, but often, patients are responsible for paying deductibles and co-payments, and they may see these terms on their EOBs and medical bills. Under some plans and circumstances (ex. for major hospitalizations and treatments), a patient needs to pay a certain amount of money (which is pre-determined by his or her insurance plan) before the insurance company will pay for any services or treatments. This payment is called a deductible. For more minor services and treatments, a patient may be responsible for paying a co-payment. A co-payment is part of a patient’s payment toward a medical bill and is typically paid at the time when a patient receives services or treatment.

Since insurance plans differ greatly in terms of which services they cover and what percentage of the costs of those services they pay, the payment process can be confusing for patients to understand. If patients are confused by the information in their EOBs, they can ask their insurance companies for a description of what services are covered at what percentages in their specific plans. If patients have questions about why they are responsible for certain costs, they can contact their insurance companies as well. If an insurance policy is through the patient’s work, the HR department or insurance broker can answers questions and advocate for the patient in billing disputes. Patients can also contact their doctors’ offices and hospitals if they are confused about what costs they are responsible for on their medical bills.

Additionally, it is important for the patient to make sure that all of the information matches between the EOB, the medical bill, and his or her records. If the information between the EOB, the medical bill, and the patient’s records does not match, the patient should contact his or her doctor’s office or hospital first to double check that there is not just a mistake on the bill. If the doctor’s office or hospital does not think that there is an error in the bill but the patient still does, he or she should contact the insurance company. If the insurance company believes that the bill was paid correctly, but the patient disagrees, he or she can file an appeal with the insurance company to have his or her claim reviewed in more detail.

Since billions of health insurance claims are processed every year in the United States alone, there will be mistakes in some of these forms. Some of these mistakes are unintentional and others are fraudulent, but all of these mistakes can have a negative impact because they drive up health care costs. In fact, the National Health Care Anti-Fraud Association, a group of health insurers and state and federal law-enforcement officials, conservatively estimates that three percent of all U.S. health-care spending (or about $68 billion annually) is lost due to health care fraud.

The following tips can help patients catch these costly errors:

• A patient should protect his or her insurance card (ex. avoid showing it to people unless those people work at the doctors’ offices and hospitals where the patient is being treated).

• A patient should be informed about his or her insurance plan and should carefully read the EOB and any explanation from his or her insurance company regarding the types of services that are and are not covered.

• A patient can call doctors’ offices and hospitals (if possible) after scheduling appointments and procedures to verify what they charge and how they will “code” those procedures for the insurance companies. Then, the patient can call his or her insurance company to ask which procedures it will cover and how much of the costs it will pay. When a patient receives his or her medical bill, he or she can compare the actual costs to the costs he or she was given beforehand.

• A patient can keep a record of every test, treatment, and medication that he or she receives. (If a patient is not well enough to do this, someone who is with the patient can keep this log.) Asking for a doctor’s notes can also help a patient determine exactly which tests and treatments he or she received. Then once the bill comes, the patient can make sure that he or she is not being billed for tests or treatments that he or she did not receive. Sometimes, medical bills arrive with charges for broad categories of procedures. A patient can ask the doctor’s office or hospital for an itemized bill to make it easier to compare to his or her treatment log.

• A patient should avoid signing blank insurance claim forms. Also, a patient should not give authorization to medical providers to bill for services without letting him or her know exactly what those services were first. This allows the patient to double check that he or she is being billed for the services that were actually performed.

• A patient should review all medical bills for the following errors because they are common in cases of fraud:

• Incorrect information (ex. wrong patient name, date of services, insurance plan name, etc)

• Duplicate charges or charges for tests or procedures that were not performed (ex. because the procedures were cancelled)

• Unbundled fees (when certain tests are performed in the same day, they should be billed together for a lower fee, but sometimes providers split these tests out to charge a higher fee for each test)

• Upcoding (when a patient’s diagnosis is recorded as something more serious than it really is to justify billing for more costly procedures)

• Upselling, or needlessly inflating a charge (For example, a patient may be given a more expensive, brand-name drug without his or her consent when the doctor originally prescribed a generic medication)

• A patient should ask questions about his or her medical bills if he or she is confused or disagrees with anything. Patients can ask their questions of doctors’ offices or hospitals and insurance companies.

• A patient should report any suspicions of fraud to his or her insurance company so that the insurance company can begin reviewing the disputed claim(s) and correcting them if there is in fact a mistake or fraudulent activity.

Summary

The medical billing process can be confusing and frustrating for patients. Different insurance companies and insurance plans cover different treatments at different percentages of the cost. Additionally, there can be mistakes in patients’ medical bills (either unintentional or fraudulent) that make the bills even more difficult to comprehend.

However, understanding how to read an Explanation of Benefits (EOB) and knowing what to look for in their medical bills can make dealing with these documents less of a hassle for patients. An EOB is a report from a patient’s insurance company describing which treatments, tests, and procedures the insurance company will and will not pay for and why. The payment information in the EOB should match the payment information that patients receive in their medical bills.

If the information does not match, or if patients have other questions, they can contact their insurance companies or health care providers. Verifying that their EOBs and medical bills contain accurate information and asking questions when they do not understand their medical bills can help patients catch errors. Identifying these mistakes is important because then they can be reviewed and corrected before they contribute to increasing health care costs.