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Medical Billing: What is an Explanation of Benefits?

After a claim processes in medical billing, payment follows. Each payment is accompanied by an explanation of benefits, or EOB. The EOB is sent to the patient and the provider to show how the claim processed. It also lets the provider know whether any remaining balance is due by the patient. As a biller/coder, you want to review this documentation to verify that the claim has processed and paid correctly.

An EOB generally contains the details explaining how the claim was processed, although some payer EOBs show only the total claim amount, along with the total provider write off, and the total allowance. When this happens, it is up to the payment poster, or designee, to break the payment out to show the detail by line.

On the EOB, payments are posted by line item. If a claim has four CPT codes on it, then the payment is allocated among the payable four lines to show how much reimbursement was received for each procedure.

Here are the kinds of postings you see on the EOB for every CPT code listed:

  • Amount of the procedure before any discounts are applied

  • Amount that the patient is responsible for

  • How much the contract allows for the procedure

  • The type and amount of any discounts that apply

  • The final amount of the reimbursement after all discounts, deductibles, and so on are applied

As a coder, you need to pay attention to the details on this form to make sure the provider received the reimbursement to which she was entitled. Here are some things to look for:

  • That the right payment allowances were applied

  • That discounts were applied appropriately

  • That no procedures were improperly denied

  • If no payment was received, whether it was due to the entire amount being applied to the patient’s deductible, the claim being denied, or some other reason

If anything is amiss — the payment allowances aren’t correct, for example, or a procedure that should have approved was denied — then you need to appeal the claim and provide medical records and other necessary documentation to support your claim.

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