Explanation of Benefits
Encyclopedia
An explanation of benefits (commonly referred to as an EOB form) is a statement sent by a health insurance company to covered individuals explaining what medical treatment and/or services were paid for on their behalf.
An EOB typically describes:
There normally also will be at least a brief explanation of any claims that were denied, along with a point to start an appeal.
There are a minimum of three parties involved in a covered service (the health insurance company or "payer", the doctor or hospital or "provider", and the patient), and they may refer to things differently. For example, the payer may provide an EOB for one service that's provided by multiple doctors who bill separately, resulting in amounts that don't seem to correlate.
Insurers are trying to achieve many goals in EOBs. There is the intent to clarify and confirm which service was performed. There is the intent to convey both what the provider charged for the service, and how much the insurer "allowed" to be charged under the terms of its agreement with the provider (one part of the coverage benefit for the insured patient). There is the legal requirement for the insurer to indicate why it is denying part or all of a claim, and how to appeal. There is the intent to explain how much the insurer is paying toward the allowed cost (the other part of the coverage benefit). There is the intent to inform the patient how much they are responsible for.
Moreover, EOB forms and terminology are not standardized, so different insurers may use the same words to mean different things.
has for years sent an EOB form to beneficiaries advising them of payments made to medical providers on the beneficiaries behalf. The explanation not only informs the beneficiary of amounts paid, but also the name of the medical provider and the dates that medical treatment and/or services were provided. This benefit notice, has over the years, saved billions of Medicare dollars. However, California
workers' compensation
laws and procedures has never required that this simple solution to a huge fraud problem be used. An attempt in 2009 to pass Senate Bill 156 (sponsored by Senator Wright) was withdrawn in a Senate Committee. Some self-insured employers, such as the Walt Disney Company, has instituted such a procedure without Legislative mandate.
The O'Brien form is named after its chief champion, David W. O'Brien, a retired administrative law judge for the California Workers' Compensation Appeals Board. O'Brien is still a strong advocate for reform of the system.
On November 19, 2009, the Commission on Insurance for the County of Los Angeles met with Judge David W. O'Brien and discussed the use of an EOB form. At that meeting he "stressed the need for transparency in the claims process for the injured worker to keep them informed by raising awareness and knowledge of services provided on their behalf and to promote communication between the injured worker and claims administrator and recognizing possible provider billing mistakes, billing mischief or fraud." The need for an EOB was evident after L.A. Times wrote an article on June 16, 2009, entitled "Ex-Cedars Worker Gets 4 years in Case" where they reported James Allen Wilson pleaded guilty to stealing patient information to defraud insurance firms of $354,000. Disneyland Resort, Sempra Energy, Cities of Anaheim, Torrance and Huntington Beach are in partnership with Judge O’Brien and the Employers’ Task Force and will begin to send statements of workers compensation medical benefits paid for medical services rendered.
An EOB typically describes:
- the service performed—the date of the service, the description and/or insurer's code for the service, the name of the person or place that provided the service, and the name of the patient
- the doctor's fee, and what the insurer allows—the amount initially claimed by the doctor or hospital, minus any reductions applied by the insurer
- the amount the patient is responsible for.
There normally also will be at least a brief explanation of any claims that were denied, along with a point to start an appeal.
Potential for confusion
Some of the reasons that EOBs are confusing for many patients include: there are several parties involved; the insurer issuing the EOB is trying to achieve multiple agendas in a single document; there is little overall standardization. Furthermore, the EOB a patient receives for a hospital visit may look different than the EOB received for physician charges, dental, or medication services.There are a minimum of three parties involved in a covered service (the health insurance company or "payer", the doctor or hospital or "provider", and the patient), and they may refer to things differently. For example, the payer may provide an EOB for one service that's provided by multiple doctors who bill separately, resulting in amounts that don't seem to correlate.
Insurers are trying to achieve many goals in EOBs. There is the intent to clarify and confirm which service was performed. There is the intent to convey both what the provider charged for the service, and how much the insurer "allowed" to be charged under the terms of its agreement with the provider (one part of the coverage benefit for the insured patient). There is the legal requirement for the insurer to indicate why it is denying part or all of a claim, and how to appeal. There is the intent to explain how much the insurer is paying toward the allowed cost (the other part of the coverage benefit). There is the intent to inform the patient how much they are responsible for.
Moreover, EOB forms and terminology are not standardized, so different insurers may use the same words to mean different things.
O'Brien form
On August 28, 2007, Judge David W. O'Brien announced, with significant input from the California Department of Insurance, District Attorneys and the Employers' Fraud Task Force, The O'Brien Form. MedicareMedicare (United States)
Medicare is a social insurance program administered by the United States government, providing health insurance coverage to people who are aged 65 and over; to those who are under 65 and are permanently physically disabled or who have a congenital physical disability; or to those who meet other...
has for years sent an EOB form to beneficiaries advising them of payments made to medical providers on the beneficiaries behalf. The explanation not only informs the beneficiary of amounts paid, but also the name of the medical provider and the dates that medical treatment and/or services were provided. This benefit notice, has over the years, saved billions of Medicare dollars. However, California
California
California is a state located on the West Coast of the United States. It is by far the most populous U.S. state, and the third-largest by land area...
workers' compensation
Workers' compensation
Workers' compensation is a form of insurance providing wage replacement and medical benefits to employees injured in the course of employment in exchange for mandatory relinquishment of the employee's right to sue his or her employer for the tort of negligence...
laws and procedures has never required that this simple solution to a huge fraud problem be used. An attempt in 2009 to pass Senate Bill 156 (sponsored by Senator Wright) was withdrawn in a Senate Committee. Some self-insured employers, such as the Walt Disney Company, has instituted such a procedure without Legislative mandate.
The O'Brien form is named after its chief champion, David W. O'Brien, a retired administrative law judge for the California Workers' Compensation Appeals Board. O'Brien is still a strong advocate for reform of the system.
On November 19, 2009, the Commission on Insurance for the County of Los Angeles met with Judge David W. O'Brien and discussed the use of an EOB form. At that meeting he "stressed the need for transparency in the claims process for the injured worker to keep them informed by raising awareness and knowledge of services provided on their behalf and to promote communication between the injured worker and claims administrator and recognizing possible provider billing mistakes, billing mischief or fraud." The need for an EOB was evident after L.A. Times wrote an article on June 16, 2009, entitled "Ex-Cedars Worker Gets 4 years in Case" where they reported James Allen Wilson pleaded guilty to stealing patient information to defraud insurance firms of $354,000. Disneyland Resort, Sempra Energy, Cities of Anaheim, Torrance and Huntington Beach are in partnership with Judge O’Brien and the Employers’ Task Force and will begin to send statements of workers compensation medical benefits paid for medical services rendered.