When you receive a medical bill or other paperwork from your insurance company, you might be overwhelmed and confused by the terminology that you see. The following explains some of the most commonly used medical billing terms so you can have a better understanding of what you’ve been charged and whether you’ve received an excessive medical bill.
Explanation of Benefits (EOB)
It’s important to understand that an EOB is not a bill from your provider — this is a document provided to you by the insurance company that explains how a claim that was submitted to them by a medical provider was processed in relation to the benefits of your specific policy. It contains a list of all services submitted by the provider for payment by codes that identify those procedures. It describes the costs that were covered by your insurance plan as well as those costs that are your responsibility to pay.
CPT (Current Procedural Terminology) Codes
CPT codes identify the medical services or procedures performed.
ICD-10 Codes (International Classification of Diseases Code)
ICD-10 codes indicate why a billed procedure was performed. Combined, the ICD-10 and CPT codes indicate to the insurance company the actual medical services provided, which enable the insurance company to determine the fees allowed and to be paid for those procedures.
Billed and Allowed Amounts
When a provider submits a claim, he/she bills it with the fee for that service. That fee is the billed amount for the service. If that provider is in network with your insurance plan, the billed amount is often higher than what the insurance company is contracted to pay the provider. The fee that the insurance company is contracted to pay is called the allowed amount.
If you have been treated by an in-network provider, you only need to be concerned with the allowed amounts — these would be the most you would be responsible to pay for a given service. If you’re a self-pay patient, you will need to be concerned with the entire billed amount since there are no contracts between insurers and out-of-network providers and therefore, there are no discounts that reduce your financial responsibility.
The deductible is the finite dollar amount that you’re responsible to pay before insurance pays for any medical service in any given policy year.
A copay is a fixed fee that you are responsible for paying for a medical service. Copays are usually applied to medical encounters but can also be applied to tests, urgent care visits, and emergency room visits, among other services.
Coinsurance comes into play once you have satisfied your deductible. It refers to the percentage of the allowed amount you’re responsible for paying for any service provided.
Cost-sharing is a general term used to describe any fee you’re responsible for paying per your insurance policy. It consists of coinsurance, deductibles, and copays.
The out-of-pocket maximum is the maximum amount you must pay for covered medical services in any policy year. Once you meet your out-of-pocket maximum, your insurance policy pays 100% of all allowed amounts for any covered service you receive for the remainder of your policy year. It’s essential to keep track of your payments to ensure the insurance company picks up the full cost after you’ve reached the maximum.
Ineligible services refer to those that aren’t covered by your policy for some particular reason. A service may not be covered because (1) your plan excludes it, (2) it gets bundled with something else, or (3) it is out-of-network.
Every procedure performed has a particular code. Together, all of the procedure codes billed add up to what the provider gets paid in total. Some billing codes get paid together — i.e., they are bundled — and are treated as though they are one code. In these instances, you might see on an EOB something that is not being paid separately because it is considered to be part of a service that was already paid.
Bundling occurs regularly in cases of surgeries or when doctors don’t use modifiers that qualify the procedure code as a separate and distinct service. You cannot be responsible for any particular line item if the services are bundled.
Experimental or Investigational Service
Sometimes, an insurance company may deny a service due to its classification as experimental or investigational. This means that the medication or services rendered are not yet generally recognized in the medical community as acceptable treatments for the condition, or FDA approved.
An insurance company issues a denial based on medical necessity when it does not agree with your provider’s decision to render the services for your particular medical condition. In these cases, it is generally up to your provider to demonstrate the necessity for such treatment.
Coordination of Benefits (COB)
Coordination of benefits refers to the process insurance companies undertake to determine the order of responsibility for paying medical claims. This applies when you have more than one health insurance policy and it determines which policy is primary, secondary, etc.
How Systemedic Can Help With Your Medical Bill Dispute
If you’ve received an excessive medical bill, an experienced medical bill dispute advocate can help. Systemedic has been providing help with medical bills for over 30 years and knows what it takes to quickly and effectively negotiate even the most complicated medical bills.
Offering a fee-based service for those looking to dispute their medical bills, our medical bill dispute advocates are skilled in navigating the insurance maze and will not take “no” for an answer. Contact us for a consultation.