Here you are opening mail to find that your insurance sent a letter which is apparently not a bill, yet it says you owe money for your recent doctor’s visit. Once we translate this letter into English, you’ll have nothing to worry about.
This letter I’m talking about usually arrives in the coming weeks after any given medical visit or service. This document states, in bold lettering, that it’s not a bill, yet the number of dollar figures on there raises your blood pressure anyway. This letter is an explanation of benefits (EOB). It’s supposed to show how your insurance is covering or not covering medical care. If there are times in life where you need to keep your expectations low, reading your EOB is one of those times. Before we dive in, there are two main reasons why you should take a glance at your EOB: 1) to check if you will owe any medical bills later and 2) to make sure your provider billed you correctly. Soon you’ll be able to take care of these two goals no problem. This is how we’ll dip our toes in the muddy water that is American health insurance so we can get more comfortable with time.
Even though there are probably more EOB formats than flavors of vanilla ice cream, the core pieces stay the same. Usually, there is a table with various numbers. The top left or top right of that same page would have the patient and insured person’s name, claim and policy numbers, and the medical provider’s info. The real star of the show is the table, so for now we will focus on how to read that in particular. I will have an example diagram in this post and on my newsletter’s home page at rushinagalla.substack.com if you want to follow along. Even if there are more than ten columns on an EOB table, three major categories should stand out to you. 1) The medical care, 2) the charges/what you are billed, and 3) the money you actually owe after insurance coverage (or lack thereof).
In terms of the medical care, you should be seeing a brief one-line description for the actual service you got done in one of the left-most columns whether that be something like an office visit, lab draw, or a surgical procedure. That written description gets paired with a five-digit number called a CPT code, which I will talk about later, but you should make sure a date is there along with that code. That “date of service” should match with your own record of when you were at the clinic.
Now for the charges. The largest dollar number on that table is likely the full amount billed or claimed by your provider. This is where your insurance company begins to cut that number down with things like allowables and discounts. Most providers negotiate with your insurance to get pre-approved rates for every visit and procedure. Let’s say your doctor bills you $100 for a typical office visit. Your insurance might say the doctor can only bill $90 for the appointment and on top of that, the insurance applies another $30 discount because you saw that doctor within the health plan’s preferred list of physicians. Suddenly the balance so far is $60 (= $100-($100-$90)-$30 insurance discount), which is the final amount the provider should be paid. Now we’re at the moment of truth to see if your insurance feels like paying that leftover $60. If you’re lucky enough to have bulletproof coverage, then your insurance pays that $60 to the clinic and you can now enjoy the rest of the day with whatever you do after five o’clock. However, that $60 is also the point where your deductible, copay, and coinsurance may apply. I will spend much more time on those concepts in the next episode, but for the purposes of this example, let’s just keep things simple.
Say your copay is $40 and you spent that amount already when you went to the clinic. A copay is just a fixed payment you give to the office on the same day you get seen. Now your EOB’s final column might state that you now owe $0 from that $60 balance which means, after your copay, the insurance covered the other $20 (= $60 balance -$40 copay).
Whenever you owe any more money to the doctor’s office, your EOB will highlight that amount as “patient responsibility” which is a fancy way of saying that you should be happy when paying up. I have yet to meet someone who enjoys paying their doctor more than necessary. Overall, I would suggest that you keep all your EOBs saved in one place so you can easily check how effective (or not) your coverage is over time.
A couple quick side notes before we move on: the EOB will have a little footnote or other number in the table called a remark code, which you should make sure to check, because those comments might explain why parts of your visit charges were adjusted or denied. Also: every time you get official, on-the-record healthcare visit or service, you should get an EOB even if you do not have a bill to pay. If you don’t receive an EOB statement that you’re expecting, go ahead and contact your insurance company or medical office ASAP (some health plans may just give you a copay receipt instead of an EOB). If one of your parents or your spouse is the primary insurance holder, that person should receive the EOB first.
I realize that I’ve thrown a lot of stuff at you so far but now we can talk about the big picture on how to check if your medical charges and coverage are kosher. The first two things you should check for accuracy on your EOB besides your basic info are the date of service and the procedure code for that service. That five-digit procedure or visit code is shorthand for any kind of medical care you receive. Most providers use the CPT code system when sending a claim. You don’t need to be a coding expert to know if your EOB is proper. Just take the CPT number on your EOB (e.g. 99213, 11102) and Google “that number + AAPC.” That acronym (AAPC) is for the American Academy of Professional Coders which is by far the best resource for defining any of the services you get. That page is another link I’ll have on my Substack. If that code you looked up from your EOB does not match with the actual experience of what you had at the clinic, like if you went for a visit but the letter shows you had a surgical procedure instead, something is definitely wrong. At this point you should call the doctor’s office to check why they coded the visit incorrectly and if they possibly overcharged you.
With all that done we’ve accomplished the two basic goals for how to read your EOB and get your beak wet for understanding the link between your medical care and insurance. Now you can see how much you owe for medical care and get an idea of the clinic billing you appropriately for corresponding services. Even though I’ve seen and written my own fair share of medical claims, my head still explodes when I talk about insurance too much, so we’ll save our discussion about major concepts like deductibles, coinsurance, and copays for the next podcast.
Stay tuned and subscribe to Friendly Neighborhood Patient for more healthcare tips and tricks. I’ll catch you at the next episode.
