Remember: An EOB is not a bill.
Working in the healthcare field, you know that acronyms are a part of your daily life. From the Health Insurance Portability and Accountability Act (HIPAA); to local coverage determinations (LCDs); to relative value units (RVUs) — as a coder, you are constantly bombarded by acronyms.
It’s common for one such acronym, explanation of benefits (EOB), to cause confusion among patients. Read on to learn more about EOBs, as well as remittance advice (RA).
Delve Into How EOBs Work
Insurance companies send EOBs to patients two to three weeks after their initial appointment.
“EOBs are insurers way of explaining their reimbursement, based on the CPT® codes and ICD-10 codes submitted,” says Catherine Brink, BS, CMM, CPC, president of Healthcare Resource Management in Spring Lake, New Jersey. “EOBs usually list the service provided was approved or not approved, the amount a provider charged, the amount approved by the insurer, the amount paid by the insurer, the amount you may be billed, then a code that indicates how the claim was paid, denied, or partially paid based on the patient’s policy. This is explained in detail on the EOB.”
Don’t miss: Although patients often mistake an EOB for a bill, an EOB is not a bill.
“Most patients do not understand EOBs or the definition of the acronym ‘explanation of benefits,’ which means what the insurer will pay based on your particular policy,” Brink says.
Check out this example from Brink: A participating provider charges $200 for a service. Medicare’s approved amount for this service is $160. Medicare pays 80 percent of $160-$128. The 20 percent difference, $32, is the patient’s responsibility to pay. If the patient has a Medigap insurance plan, then that $32 is usually paid by insurer depending on the insurance plan. The $40 difference from what the par provider charged and the Medicare approved amount must be written off by the par provider since it is part of the par contract with Medicare. Biller and coders must understand this and adjudicate the remittance advise, which is sent to the provider, correctly.
Note: An EOB is sent to the patient and an RA is sent to the provider. The patient needs to understand the EOB since he is responsible for the 20 percent.
Helpful tip: When asked how practices can help ease the confusion patients often have about EOBs, Brink says practices should explain to patients what the EOB will tell them and try to help them interpret it.
Practices could let their patients bring in EOBs and explain them. Practices could post this on their websites as a helpful service they provide, Brink adds.
Some practices offer education classes for patients to teach them about EOBs, and the patients like these classes, Brink says. “I see this in bigger practices who have the personnel to do this, for instance, education sessions, such as breakfast seminars.”
Practices Should Utilize RAs to Ensure Maximum Reimbursement
While an EOB is sent to the patient, a RA is sent to the provider who billed the service, according to Melanie Witt, RN, MA, an independent coding expert based in Guadalupita, New Mexico.
“Both types of statements provide an explanation of benefits, however,” Witt says. “The content of the RA and the EOB is nearly identical with the exception of a few minor items.”
Both RAs and EOBs contain the following information, according to Witt:
- Information regarding the patient
- The service provider
- Any adjustments made to the claim
- The type of procedure performed
- The date the procedure was performed
- The cost of the procedure
- An explanation if the payment was denied
“Additional information regarding the patient’s benefits is often included as well, including the particulars of the plan, such as co-payments and deductibles,” Witt adds.
The major difference between RAs and EOBs is that an EOB contains a disclaimer stating the EOB is not a bill, according to Witt.
Example: For example, at the top of an EOB for Cigna, you will find the statement: “THIS IS NOT A BILL. Your health care professional may bill you directly for any amount you owe.”
Practices should utilize their RAs to streamline their processes.
“All billing staff should spend time studying the reasons cited for adjustments or denials from the RA they received,” Witt says. “Each RA message should be tracked to ensure that any patterns of inappropriate adjustments (incorrect use of a modifier, bundling issue, reduction for secondary procedure, etc.) or denials (code not covered, code bundled, demographics incorrect, not medically necessary, etc.) are addressed to ensure maximum reimbursement.”
Billers should also use RAs to compare what was paid to the published fee schedule from the insurer, Witt adds.
-originally posted from TCI Supercoder June 26, 2018