What is EOB?
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 treatments and/or services were paid for on their behalf. The EOB is commonly attached to a check or statement of electronic payment.
In most cases your physician has signed a contract with an insurance company to apply discounted rates for services provided. This discounted rate is the dis-allowance, or the difference between the actual amount of the procedure and the amount agreed upon by the insurance company and the physician.
Completing this type of contract will give the physician “in network” status. If you visit a physician that is “in network”, the amount you will be responsible for paying will generally be less than if you go to an out-of-network physician. In some case the insurance company will either pay less or not pay anything for services you receive from non-network physicians.
Disallowed Amounts:
The term “disallowed” might set your heart racing and bring visions of steep medical bills, but while these are the amounts that the insurance company has refused to pay, there’s no need to panic. A disallowed amount is simply the difference between what has been billed by the health care provider and what the insurance company has paid. These amounts are not billed to the patient; instead, they are written off by the health care provider.
What It All Means?
The EOB’s detail of the back and forth negotiations between your health care provider and your insurance company allows you to keep an eye on what is being billed and what it is meant to cover. Read each EOB carefully and make sure that you understand any codes printed next to the items listed — your insurance company provides an index of their meanings. By taking the time to read this information, you’ll gain a much better understanding of what your insurance company is doing (or not) on your behalf.