Monday, May 16, 2011

Understanding Insurance

What is an EOB? And More importantly, is it contagious?

Acronyms run freely about in the medical world.  We have them for conditions, for procedures, for just about everything.  So let’s throw one out there for discussion…

EOB… what is it?  No, it is not a disease, body part or even some strange procedure with 30 letters if you were to write it out fully.  EOB stands for Explanation of Benefits.  It is simply a form you receive from your insurance company showing how they are processing a claim that your doctor submitted for the billing of your visit.  It may also be referred to as EOMB.  

What does it do?  Simply put, an EOB takes the various codes used that tell what was done (procedure or visit) and the reason it was done (diagnosis) explains based on the benefits of your particular insurance policy what was paid by the insurance company, what part will be written off (or discounted) due to an agreement between the insurance company and physician, and what part the patient will be responsible to pay.  Here are some terms you may see on an EOB.

What is a co-pay?  A co-pay is usually a smaller payment that is paid at the time of service for office visits or tests by the patient.  It is based on the insurance plan you select.  The doctor is not able to waive or change the co-pay.

What is a deductible?  A deductible is also part of the insurance plan agreement which a patient agrees to pay when they accept the plan.  Deductibles are usually, but not always, the first amount to be paid.  For instance, if the insurance processed $1000 in charges for a patient and the patient had a $500 deductible, the patient would pay the first $500 to fulfill their agreement of the deductible.  More recently, there are some plans that allow for a certain amount of visits before the deductible is processed and expected to be paid.

What is co-insurance?  Some plans have a certain percentage that when you accept that plan you are agreeing to pay that percentage as a patient.  These percentages can vary from as much as 50% to 10%.  They can also differ based on types of services, such as was it a skin biopsy or visit for a cold.  Co-insurance is the amount the insurance sees as the patient’s portion of responsibility for that bill.

What is out of pocket?  Most insurance plans have a maximum limit to the amount that a patient and/or family will pay each year.  Every plan varies on what applies to that limit, but most typically it is the co-insurance amounts.  For instance, when a patient’s coinsurance amounts for the year reach $10,000, the insurance plan will then pay the remaining bills at 100%.

What is an allowable?  The allowable is the amount your insurance will pay for a visit or procedure.  The physician services are billed off a fee schedule that is set for their office.  The allowable amount for the insurance is typically lower than this amount as it is a discounted rate that the contract agreement between the physician and insurance plan .  Per their contract, the physician will deduct the difference between the amount they billed and the allowable.

What are contractual adjustments?  These are based on the allowable.  Physicians are often in contract with insurance companies or networks and they agree to provide certain discounts to patients who are part of those plans.  The contractual adjustments or discounts represent the amount of those discounts.

What is in network and out of network ?  An In Network provider / facility is contracted with your health insurance.  If you see someone NOT contracted, then they are Out of Network.  Some insurance plans will allow you to see providers out of network but usually there is a higher portion that the patient is responsible to pay, in other words, you pay more co-insurance and/or deductible.  Some plans, however, do not cover out of network providers.  If you are unsure if a provider is in or out of network, check with the potential provider, or with your insurance plan.

What if something is denied or not covered? Contact your insurance company to find out why if it is not clear on the EOB.  Typically they have a code that explains why.  Sometimes the company is just waiting for a form or some additional information so they can process it.  If that is not the case, you can always contact the physician’s office to see if they can assist you with it.  There are some things that certain plans truly do not cover (these are called exclusions and can be found in your benefit booklet) and other times where is information that is needed.  The physician’s office may be able to supply additional clinical information that will assist in seeing that you get the full coverage from your insurance that you are entitled to.

Denied for lack of prior authorization?  What is prior authorization and why do I need one?   A prior authorization is simply an approval from your insurance company to proceed with getting a certain test or procedure done before you get it done.  A prior authorization must be obtained before certain services are covered to ensure medical necessity ( a fancy term that means according to the insurance plan guidelines they view the test and/or procedure as appropriate and needed  for the symptoms and diagnosis that you have).  If a service  is performed without prior authorization, it may not be paid by your insurance plan.  Common tests that usually require prior authorization are CT, MRI, Nuclear diagnostic studies and even some medications.  Your physician’s office will take care of getting the prior authorization processed for you if they ordered the test,  but you may have to wait to schedule your test.  However, if you were referred to a specialist, make sure to clarify which physician (the specialist or your primary care doctor) will be obtain authorization and communicate with that office regarding the authorization.

So you have a received an EOB from your insurance company.  What is next? 
First, the EOB is not a bill.  It is simply a statement showing how the insurance applied your plan to the bill.  Your physician’s office will either send a statement if you owe a balance or you can contact them to pay any difference if you do not want to wait for the bill.  Secondly, if something does not appear correct or make sense, call your physician’s office to get further explanation, or if you have a visit bring in a copy to review with someone. 

Always check to see which provider the EOB is referring to.  For instance, if you have an office visit where your blood is drawn, you will have an EOB from your medical doctor, and one from the lab.  Your doctor cannot correct or modify the information on the EOB from the lab.  If you have a question regarding your account with the lab, you should call them first.

Dr. Frank Marinkovich owns and operates Eastside Family Health Center in Kirkland, WA. Serving Kirkland and the Eastside, Seattle, Bellevue, Renton and the surrounding local communities. Specializing in Primary Care, Automobile Accidents and FAA physicals. Visit them online at Eastside Family Health Center or call them at (425) 899-2525.
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