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How to decode your health insurer's Explanation of Benefits

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As loyal Impatient readers know, we're a month into #PriceCheck, a collaboration with KQED and ClearHealthCosts.com. Through this project, we're building a robust database of certain health care prices in California. We started by crowd-sourcing the cost of mammograms, and now we're focusing on all types of back MRI's.

We've invited you to participate in the project. To do this, you need to enter a couple pieces of information from your explanation of benefits, or EOB: The charged price, what insurance paid, and what you paid.

Widespread confusion

We know that navigating your EOB is not easy; in fact, it can be downright frustrating.  (Side note: That's just another reason why we're so thankful to everyone who has participated in the project so far!)

That frustration bubbled up last night during a Twitter chat focused on health costs transparency, co-hosted by our partner ClearHealthCosts.com.

https://twitter.com/MightyCasey/status/491373901998735361

https://twitter.com/chcosts/status/491375729687666688

https://twitter.com/coffeemommy/status/491376569357991938

Decoding the EOB

Luckily, our friends at KQED's State of Health blog asked Pat Palmer, founder and CEO of Medical Billing Advocates of America, to walk them through an EOB.

On State of Health, Lynne Shallcross writes:

"The information included on an EOB isn't consistent from one health care insurance company to the next, Palmer says, and they often include abbreviations and other language difficult for the average consumer to understand."

Below is an average EOB, which KQED marked up for clarity. Here's a glossary of some of the common terms on the EOB:

  1. Paid amount: The amount your insurance company pays your provider.
  2. Total billed: The amount your provider bills your insurance company for each procedure.
  3. Patient savings: The difference between what your provider charged, and what your insurance company agrees to pay.
  4. Applied to deductible: The amount applied toward your deductible (the amount you must pay before insurance kicks in).
  5. Coinsurance, copayment amount: Depending on your insurance, you may have to pay a flat amount for each doctor's visit (copay) or a percentage of the cost of the service (coinsurance).
  6. Claims payment: The same as "Paid amount:" What your insurance company ends up paying the provider.
  7. "It is not your responsibility to pay…" A restatement of the "Patient savings." 

Head over to State of Health for a deeper explanation of the explanation of benefits!

 

Scouring the EOB

In past years, I threw out my EOBs. I'm not responsible for these costs, I'd think to myself. But Palmer, of Medical Billing Advocates of America, recommends scouring EOBs for errors and, when necessary, ensuring any mistakes are fixed.

Shallcross writes:

Finding and correcting an error on an EOB may mean that you, as the individual member, aren't overcharged, Palmer says. But it also may mean that the insurance company isn't overcharged by the provider. While our natural instinct may not be to save a health insurance company some money, Palmer says that insurance companies will make profits regardless – so expensive errors only translate to higher premiums passed on to members down the road.

Now that you're an EOB expert, grab your bill from your latest MRI, and head over to PriceCheck

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