Reading Medical Bills

A visit to a medical provider typically results in the patient receiving several documents. Some may be medical bills; the others contain information needed to understand the medical bills. The most common documents a patient receives are a list of services provided, a medical statement or bill, and an explanation of benefits (EOB) for each medical provider.

Knowing how to read and understand these documents will help a person who has received medical services understand the charges, how the patient’s health insurance provider determined its adjustments, and what money is due to the medical providers, as well as ensure that the charges are accurate.

Background

When a person receives medical services, the medical provider may provide a list of services provided at the end of the visit. This list includes all services provided during the visit, such as a physician exam or physical therapy; diagnostic tests; and all supplies provided, including medication.

The medical provider will also send the patient a medical statement or bill following the visit. This statement may include an itemized list of all services provided and their charges, or it may simply include a summary of those services and charges. One medical visit may result in multiple medical statements, one from each provider who performed a service, even if the patient did not meet the provider. For example, a visit to a doctor’s office may result in one bill from the examining physician and another bill from a laboratory that tested blood specimens drawn in the doctor’s office.

A medical provider may send one or two medical statements for the same services. The first statement will show the initial charges for the services, and the second will show the remaining charges after they has been adjusted by the insurance company and the insurance payment has been received. If the person receiving medical services has insurance, the medical provider will send a claim for the medical charges to the insurance company. The insurance company will process the claim and send the patient an EOB that shows how it processed the claim for the provided services. It will also send payment for any charges for which it is responsible.

Once the final medical bill has been received, it should be compared against the EOB and the list of services provided to verify that the charges are accurate and to understand what portion of the charges the patient or insured is responsible for paying.

Overview

If a person does not have insurance, or if the medical provider’s services are not covered by the patient’s insurance plan, reading the medical bill is a relatively straightforward process. The bill should be compared against the list of services provided to check that the dates and services match. The statement will show the charges for each item and the total amount due.

If a person has insurance, the medical provider will submit the charges to the insurance company. It may also send the patient a medical statement that shows the charges it is submitting. These charges should not be paid, and the statement may include the words "Do not pay" or "This is not a bill." The insurance company will process the claim according to either negotiations or a preexisting contract with the medical provider. It will pay only for those services that it covers and only at the agreed-upon rate.

Once the insurance company has processed the claim, the medical provider will send the patient a new medical bill or statement, and the insurance company will send the patient an EOB. The adjusted medical bill will show the charges negotiated with the insurance company, the amount paid by the insurance company, and any remaining charges that are the responsibility of the patient. The EOB will detail how the insurance company processed the claim.

The top section of the EOB includes identifying information about the insured person, the patient, and the medical provider. The insured person is the "member," or the person who holds the policy with the insurance company. The patient is the person who received the medical services and may or may not be the same as the insured person. The medical provider may be listed by name or may be identified only by a provider number. The member identification number is the number the insured company has assigned to the policyholder. This may be labeled as the "member number," "subscriber number," "participant number," or something similar. The patient identification number is the number assigned to the person who received the medical services. The plan number identifies the particular insurance plan in which the member is enrolled. The group number identifies the organization through which the insurance is provided, typically an employer. The claim number is the number assigned to the set of charges submitted by the medical provider. Depending on the insurance company and the organization or service through which the insurance is provided, the EOB may not list the group number or the plan number. However, it should always include the member number, the patient number, and the claim number.

The remainder of the EOB shows the specific charges submitted by the medical provider and how they were processed by the insurance company. Each item should include the date of service, a procedure code that identifies the service, the total amount charged by the medical provider, and what portion was covered by insurance.

While there is no standardized EOB form, most insurance companies use the following terms or similar ones to explain what they will pay and what adjustments, if any, they have made to the provider’s charges. The column marked "negotiated savings" or "discount amount" shows the amount that was deducted from the original charge for the service due to an agreement between the insurance company and medical provider. The column labeled "ineligible," "not covered," or "not payable by plan" shows the amount of the total charge that is not covered by the insurance company. The "deductible," "copay," and "coinsurance" columns show the amount that is payable by the insured person per the terms of the insurance policy. The "payment amount" or "claims payment" column shows the total amount that will be paid by the insurance company. It is determined by taking the total amount charged by the provider and subtracting the discount or negotiated savings, any amounts not covered, and any amounts the member is responsible for paying. If any charges are not covered by insurance, the EOB will give a code that explains why. For example, a service may have been provided by a physician who is outside the insurance network, or the fee charged for the service may have exceeded the fee allowable by the insurance plan.

After the medical provider receives the insurance payment, it will send the patient a new medical bill showing the adjustments to the original bill and the final balance due. The adjusted medical bill should be compared against the list of services and the EOB to verify that the dates and services provided match.

Bibliography

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