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February 3, 2012

Your explanation of benefits

You pay your insurance carrier to provide health insurance.  This is a contract between you and your carrier. Your plan will have deductibles, copayments, and coinsurance that are specific to your plan. Each plan also will have certain benefits.

• A deductible is the amount of allowed fees that you need to pay before the insurance pays anything.
•  If you have copayments for provider visits, you will pay these for every visit.
• A co-insurance is a percentage of the allowed amount that you will have to pay for each service.
• Allowed amount is the contract price that the carrier has assigned to the service provided. This may not equal the price that was charged.
• Benefits are what the plan will pay for and where you can go to get those services. Some benefit plans require you to go to one supplier for medical equipment, therapy services, or pharmacies.

Physicians, therapists, and other health professionals are paid by the insurance carriers. These providers can PARTICIPATE or PAR with an insurance. This means that the provider and carrier created a contract that specifies what fees will be paid for services. The provider who participates with an insurance plan will accept these ALLOWED amounts according to the contract. If the insurance carrier says your benefits do not cover a service you received, you will be responsible to pay the provider the full amount.

Not all providers participate with every insurance plan. If the provider is NOT PARTICIPATING or NON PAR, you will be responsible for the difference between what the carrier pays and what the provider charged.

You will receive an EXPLANATION OF BENEFITS or EOB from your insurance carrier after any service is received. This will tell you the charges, allowed amount, deductible, copay, or coinsurance amount. It will typically show what was paid by the insurance to the provider and what you still owe to the provider. If anything is denied, there will be a comment code with letters and/or numbers next to that line in the EOB. The key to the codes with an explanation of what it means will be listed on the bottom or the back of the EOB.

If you do not understand what the EOB is telling you- call your insurance carrier and ask them to walk you through the different services.

In this example, Dr. Smith saw the patient on 1/4/12 and charged $100.00.

• The contract that Dr. Smith has with the insurance carrier says they will only allow $80.00 and he will accept that amount. Comment code N222 tells you this information too.
• The patient still has $20.00 left for his yearly deductible.
• The patient has a $20.00 copayment (which he probably already paid at the office!)
• The insurance carrier adds $20+$20 to equal $40.00. This is what the patient is responsible for.
• The insurance carrier subtracts the patient responsibility from the allowed amount

                $85-$40= $45 and this is what the carrier pays to Dr. Smith.

• Dr. Smith’s office will send the patient a bill for either $40 or $20 depending on whether the patient paid the copay already.

Dr. Jones saw the patient on 1/8/12 and charged $50.00.

• The benefit plan for the patients insurance does not cover this service so the allowed amount is $0. Comment code M45 tells you this information.
• The patient is responsible for the full $50.00
• Dr. Jones’s office will send the patient a bill for $50.00

Again, if you do not understand a denial or charge on your EOB, contact your insurance carrier or your HR department at your work for clarification.

Insurance paperwork can be very confusing. Taking the time to review your explanation of benefits can help you to understand your financial responsibility.