Reaping rewards from your EOB (explanation of benefits) document

By Christine Taxin

More billing. Better collections. Patients who understand their insurance benefits and accept treatment. These are just some of the rewards your office can reap by reading insurance Explanation of Benefits (EOB) documents.

Not reading EOBs means thousands of dollars per year due to your office may go uncollected. And if dental teams don’t read and understand EOBs, who’s going to teach patients how to interpret them, and by extension, understand their benefit plans?

You may ask, why should this be our job? The simple answer is because patients expect it from you. Sure, there is an 800 number on the back of the insurance card if patients are inclined to call their benefit companies for explanations. But in reality, patients are much more likely to put the brakes on a dental visit, sometimes even in mid-treatment, to ask about an EOB they received months ago. Then they may ask for an explanation of their entire benefit plan.

Patients have said many things to me, including, “You charge too much,” to “I can’t believe you don’t get paid much at all.” I can interpret this need to educate patients about EOBs in one of two ways. One, that it’s a waste of my time, or two, these conversations give me more face-to-face time with patients. I believe these conversations are valuable — that if I explain EOBs in detail to patients and they understand the challenges that our office face on a daily basis with insurance, they will be more apt to do what we suggest for their dental health.

The biggest misconception about EOBs is that patients believe what we charge for procedures is what we receive, and that they don’t want to waste any insurance money. I have patients who have primary and secondary insurance with no deductibles. Even in these cases, patients say, “I’m not paying for that,” when discussing a test. Ironically, they probably haven’t paid a penny out of pocket for years for any of their medical care!

To help offices understand EOBs and pass helpful information on to patients, I have put together some important EOB definitions. You can provide these to your patients. Please refer to your provider manual and your carrier in your state or region for a more complete definition. These are to serve as a guide only!

Treatment dates: This represents the date that the treatment was performed.

Charged amount: This is the dollar amount charged by the service provider (dentist). In other words, it is the total charged value of the claim. A billed amount is provided for each specific procedure code performed. These amounts vary from provider to provider and may depend on the state and region where the office is located.

PPO discount or allowed amount: This is the discounted amount providers receive from the preferred provider network. These amounts are not typically the responsibility of the patient. This term also refers to the maximum reimbursement that the member’s insurance allows for a specific procedure, which is usually contracted with the provider. This amount may vary due to:
• Fees that are negotiated with participating providers
• An allowance established by law
• An amount set on a Fee Schedule of Allowance

For example, if the billed amount is $120 and the insurance plan allows $85, then the allowed amount is $85. The participating dental provider must write off the $35 balance.

Paid amount: This is the amount paid after the excluded amount and/or discount amount is subtracted from the charged amount. This is the amount that the insurance pays to the claim. It is the balance of the allowed amount minus the copay/coinsurance minus the patient’s plan deductible (see below). The paid amount may be full or partial payment, i.e., the full allowed amount is paid, or a percentage of the allowed amount is paid.

For example, if the billed amount is $100, and the insurance allowed is $80, but the payment amount is $60. Here, $60 is the actual amount paid for the claim. The difference of the allowed amount (here $20) will usually be the responsibility of the patient. It is best to collect this amount at the time of service. A bill can also be sent to patients once their claims are paid by insurance carriers.

Deductible and copay: The deductible is a predetermined amount, on an annual basis, that is paid by the insured prior to the insurance company paying any part of the insured dental services. The copay is the fixed dollar amount that patients are required to pay, out of pocket, when a service is rendered. This is paid at the time of the visit. Copays typically range from $5 to $25. The copay amount is specified on the insurance card.

Coinsurance: Coinsurance is the portion of the cost of the covered services to be paid by either the insurance carrier or the patient. After the primary insurance makes its payment, the balance of the covered cost will be the responsibility of the coinsurance, if the patient has it. This is sometimes referred to as secondary insurance. At times when a claim is sent electronically, the secondary is notified at the same time as the primary and will be aware of the claim to be paid.

For example, if the billed amount is $100, and the insurance allows 80% of the fee, the payment is $60, and the remaining $20 is the coinsurance amount.

This is a small portion of the information you need to understand EOBs. My intent is to help you in making the most out of the confusion and shed a little light in the darkness of the insurance world.

Christine Taxin has more than 20 years as a practice-management professional. Her passion for communication, team training, vision, and goal setting has helped many practices meet their potential and increase their profitability. She helps each team member and doctor develop latent strengths to improve performance and effectiveness. Contact her by email at [email protected] or visit her website at www.Links2success.biz.