Shortly after you receive medical care from a service provider using your insurance coverage, you'll receive an Explanation of Benefits (EOB) statement in the mail. It's not a bill (and typically says something to that effect in bold letters at the top of the document). The EOB is a summary statement sent from your insurance company, that includes a list of claims processed since the last EOB was sent, as well as a summary of year-to-date costs in the plan, including deductible, coverage, total out-of- pocket costs and drug costs.
TUTORIAL: Intro To Insurance
While your typical habit may be to toss the EOB in the garbage, it contains valuable information that could save you money in the future, and assure that you're not overpaying for medical services in the present. Here are five reasons to check your EOB statement every time you receive it. (For more information on insurance, check out Health Insurance: Paying For Pre-Existing Conditions.)
1. Data/Coding Errors
According to Medical Billing Advocates of America (MBAA), 8 out of 10 hospital bills contain errors. Check every EOB for simple data accuracy like your name and the insurance group number, compared to the information on your insurance card. Simple data inaccuracies like one incorrect digit in the group insurance plan number can lead to serious billing issues that could take months to resolve. Further, because the plan indicated by the wrong digit could have different coverage for service and providers than your own, you could unknowingly be paying far more for medical services than you should be.
2. Unnecessary Materials
Review each EOB carefully to ensure that the services and supplies that are reflected actually occurred, and make sure that no tests that may have been ordered and then cancelled or deemed unnecessary by your doctor appear.
Consumer Reports also recommends checking the EOB for words like "kit," "tray" or "room fees," particularly if you were recently treated at a hospital. These bundled services often include a grouping of supplies needed for a specific service or treatment, for a more cost-efficient way of dispensing patient materials. (For example, aftercare kits for mothers who just gave birth will include supplies needed for sanitary care, topical pain relief, and basic postnatal hygiene). While the kits are intended to be more efficient for both the medical industry and patient, itemized charges in addition to bundled fees are often indication of duplicate charges that could be grouped into the "bundle" to lower the bill. Inquire with your insurance provider if line item charges seem suspect.
If your statement shows grouped charges under broad categories, making it difficult to tell what charges are contributing to total costs, contact the biller for specific charges. Under the American Hospital Association's Patient's Bill of Rights, hospital billing departments must send you a free, detailed bill upon request. (To help you find the right policy, read Buying Private Health Insurance.)
3. Prescription Drug Plan Changes
If you or a covered family member takes prescription medication regularly, the EOB will track drug plan costs to indicate the remaining amount that must be paid in the current drug payment stage, before it will progress to the next level. It will also announce changes to the prescription drug plan that might impact current coverage, resulting in higher out-of-pocket costs. Some EOB's provide a list of "like" medications for the patient to consider in the case of such an event. Take the EOB to your medical provider, who can confirm whether the suggested medications may be an appropriate alternative to medication that is no longer covered.
4. Understand Jargon
If there are any charges on your EOB that you don't understand or don't recall, contact your insurance provider for assistance. If they cannot provide a satisfactory explanation, request the doctor's notes and your patient chart to compare what was ordered in your treatment to charges billed. The Patient's Bill of Rights also ensures that "the patient has the right to review the records pertaining to his/her medical care and to have the information explained or interpreted as necessary, except when restricted by law."
While some errors are honest mistakes, fraud does occur; it is your right as a patient to understand the language of the medical industry. MBAA gives examples of bogus charges hidden by medical jargon, like a "disposable mucus recovery system." The term referred to a pack of tissues, and was billed for $11!
5. Tax Purposes
The EOB serves as formal documentation of family care services and medical expenses that you paid during the year. Although you do not need to submit the physical EOB with your taxes, retain it as documentation for tax purposes and to support and substantiate healthcare spending account reimbursements and transactions.
The Bottom Line
EOB statements can be tempting to toss into the garbage, but failing to review them could result in lost opportunities to double-check billing accuracy, and potentially spend less money on healthcare. If you find an error, call your provider and take detailed notes of the conversations until the matter is resolved. (For more on health care, check out How To Choose A Healthcare Plan.)