A broken arm recovers in three months but medical claims and billing will last much longer.

As insurance advisors we review medical claims for clients every day.  Today my family has claims of our own.

A Saturday evening basketball game recently brought us to the emergency room after our 13 year-old took a bad spill and broke his arm on the court.  Six hours, and the-still-yet-to-be-determined number of dollars later, we had our young man home adjusting to his newly fitted full-arm cast.  Three weeks and a handful of x-rays later he’s doing just fine.   That was the easy part.

Now we have to deal with the medical bills.  Making sense of medical billing is difficult for most people.  We have a $2400 family deductible, so we’re responsible for payments up to this amount before our insurance begins to pay.   This means we’ll receive bills from many different providers for many different values for treatment rendered at several different points of service.  We’ll see statements from the hospital for the emergency room, the office of the orthopedic surgeon, anesthesiology, radiology, pharmacy, and at least half a dozen follow up visits, many of these with even more radiology.  We’ll even see a bill for the ambulance ride.

In addition to the mounds of bills from the various providers we’ll also receive explanations of benefits from the insurance company.  Our insurance company calls these statements EOBs.  Other carriers use the term explanation of coverage, or EOC.  Explanations are provided to members to illustrate how the insurance company processes a claim.  And the calculations can be confusing.

Understand the amount a doctor or facility charges isn’t normally the amount an insurance carrier agrees to pay for a particular service.  Insurance plans usually have contracts with providers to pay lower pre-agreed upon rates.  The EOB shows the provider’s actual charge, the fee reduction, the member’s responsibility, and the total amount the provider is allowed to collect from the member.  Ideally the bill the doctor sends should match the member responsibility amount shown on the EOB.  Members should always review and compare both the EOB and the doctor’s bill for consistency.

Unfortunately this isn’t always quite so simple.  Often the carrier denies certain fees outright and explains the reason by listing an adjustment code.  The adjustment code is usually found elsewhere in the EOB.  For example, a claim may have been submitted by the doctor for a service that should have been charged as part of a different service.  Think about a doctor’s office charging for an evaluation where the overall office visit should have included an evaluation.  In this case the carrier would deny the duplicate fee and code the line item as such.  A member may at first glance see only the denied fee and mistakenly believe a charge remains due.  Only if the member carefully reviews the coding and member responsibility amount will it be determined the fee is unallowable.  The member should then scrutinize the bill eventually received by the doctor to be sure the unallowable fee described by the EOB is waived.

Further complicating the EOB and billing process is that many plans only pay benefits (or pay higher benefits) when members seek services from network, or participating providers.  Network providers have agreed to the fee schedule on which the carrier bases its payments.  When a member seeks care from a non-participating provider the EOB will describe and code the charges as unallowable or reduced.  In this case all or some of the charges are payable by the member and the doctor will send a bill.  Still, even in this case the EOB will indicate the total member responsibility and the doctor’s bill should match.

Examples of other typical adjustments can include denials or reductions in coverage amounts for failure to obtain pre-authorizations or seeking care without proper referrals.  There are many reasons for adjustments and all are coded and explained within EOB.

It’s been about three weeks since our youngster broke his arm.  We’ll begin to see EOBs within the next week or so.  Doctor and facility bills will begin to follow.  Ultimately we’ll see dozens of EOBs and billing statements over the next couple of months for just this one event.

In our case, we’re responsible for the first $2400 in charges, the total of which accumulates as each EOB arrives.  If we’re diligent, then we’ll maintain all records in a single place, and we’ll carefully match each EOB with each bill received.  If we identify a mismatch we’ll contact the insurance carrier for further explanation.  If it’s determined the insurance carrier made a calculation or coding error, then we’ll work to get that corrected.   If we determine a provider’s bill to be incorrect, then we’ll contact the doctor’s office or facility to straighten it out.

Once we’ve satisfied our deductible requirement the EOBs will illustrate lower payment responsibilities in the form of copays and/or coinsurance.  We’ll have to match these new amounts with future bills we receive, all the while maintaining the same careful review.

Billing is largely electronic these days, and members have a great deal of online access to view claims and provider payments.  But the bureaucracy and number of providers involved, a general misunderstanding by members of the claims process, and the shear amount of paper in the form of EOBs and doctor bills remains a sure recipe for confusion.   To simply pay bills and ignore the EOBs doesn’t allow a member to track the deductible, nor does it allow the member to verify the accuracy of payments to providers.  Plan members should review and compare every EOB and every provider bill.

We know our young man will be back on the court in a couple of months, but we’ll still be thumbing through mounds of bills and EOBs, hoping to eventually put the confusion behind us…until the next time.