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How do I read my Explanation of Benefits, and how can I identify unreasonable charges that should be challenged or negotiated?

Let’s first look for flags that may tell you a charge should be challenged or negotiated.   Examine all of your EOB’s carefully; even those that indicate you have zero out of pocket expenses due to the provider.

Flags to look for:

Confirm the provider and the date of service; were you actually there that day? If found, call the provider and straighten it out.

Look for duplicate bills; either being billed for one visit two or more times, or being billed for one service/procedure more than once. If found, call the provider and straighten it out, but be prepared to stand your ground, especially when the description of services is vague. The right question to ask is ‘please give me the CPT codes and the number of units for each code on that day of service’. That will be your best chance at determining whether a service described as ‘Lab Test’ but billed twice, for example, is actually two different tests (which would be legitimate, but very poor descriptors on the part of the provider or insurance company – so you should pay) or the same test billed twice (a mistake on somebody’s part, but not yours – don’t pay).   See the Cigna EOB below for an example of this.

Look for bills from out of network providers, or for line items that your plan considers excluded benefits; has your insurance plan included info on a reasonable and customary fee (ie their Allowed Amount with other providers for the same service)? If not, and you have only the Provider Charge, this is almost certain to be an inflated fee from the Charge Master.   If this happens, prepare to call the provider and negotiate (see negotiating tips in ‘What should I do if I choose a provider who is out of network for my insurance plan?’ above).

Let’s first look for flags that may tell you a charge should be challenged or negotiated.   Examine all of your EOB’s carefully; even those that indicate you have zero out of pocket expenses due to the provider.


Example EOB from Aetna

In this example from Aetna, patient John Doe (field 7) visited Dr. Ellen Smith (field 2) on January 8th, 2005 (field 21). It indicates that three services were rendered and billed by Dr. Smith, as described in the Service Code section (field 23). Here Aetna has chosen to use CPT codes and modifiers to describe the services, which is not uncommon. The first five digits are the CPT code and the two digits to the right of the dash are modifiers. If we use the AMA CPT Code Lookup Table, we’d see that;

  • 99213 is an outpatient office visit for the evaluation and management of an existing patient;
  • 86021 is a test to identify leukocyte antibodies; and …
  • 82541 is a gas chromatography/mass spectrometry (GC/MS) test.

The Provider Charges are called Submitted Charges by Aetna (field 25), and the Allowed Amounts (from the fee schedule Dr. Smith and Aetna agreed upon) are considerably lower (field 26). We can see that Doe’s Aetna plan has both a co-pay (field 27) and co-insurance (field 31). We can also tell that the GC/MS test was not paid by Aetna, with the remark (field 36) seeming to indicate that Aetna has a limit on the number of GC/MS tests per year under that plan, and Doe has already exceeded that limit, so he’ll have to pay for this one out of pocket (field 28). So all things considered, for the total bill of $360 that Dr. Smith submitted (field 25), Aetna is going to pay Dr. Smith a total of $150 (field 33, 35, and 39), and John is responsible for paying Dr. Smith $126.67 (field 32 and 38). That means once Dr. Smith has received both payments, she’ll write off the difference between the sum of both payments and her total Provider Charges; in this case, $84.33.

Now let’s look at an example from Cigna. You can immediately see that they’re formatted much differently from Aetna …

Example EOB Summary Page from Cigna

In this example from Cigna, patient Amy Anywhere visited Dr. John Wellbeing on January 17th, 2009. The Provider Charges are called the Amount Billed, and Cigna is taking great pains to emphasize what a great plan they are by showing you the considerable Discount they’ve negotiated ($333.78). Since we understand now that Dr. Wellbeing’s Amount Billed is based on his Charge Master, and isn’t really reflective of normal and customary fees, we shouldn’t be all that impressed by the 51% discount.

After the discount, Cigna paid out $65.77 to Dr. Wellbeing, and transferred a total of $298.22 from Amy’s Health Reimbursement Account and Flexible Spending Account (HRA and FSA, respectively), which Cigna is evidently administering. These are accounts that Amy (and possibly her employer) had been making pre-tax contributions to. Finally, the ‘What I owe’ number ($0) emphasizes that Amy has no other out of pocket amount due to Dr. Wellbeing.


Example EOB Details Page from Cigna

On the Details Page, Cigna indicates that five services were rendered and billed by Dr. Wellbeing, as described in the Type of Service section. Here Cigna has chosen to use short descriptions of the services (X-Ray, Emergency Room, a Laboratory test, a second Lab test, and a Physician fee), which are easier for us to understand at first glance, but much harder to differentiate for price comparison purposes. Notice the Amount Not Covered section, which included the second of the two lab tests. This appears to indicate that Cigna rejected Dr. Wellbeing’s claim for the second lab test, which isn’t surprising since having two non-specific lab tests with exactly the same price probably means either a billing error on Dr. Wellbeing’s part, or a re-run of the same test, which Cigna should rightfully disallow.

Next we’ll look at a pretty simple example from Blue Cross Blue Shield …


Example EOB from BCBS

In this example from BCBS, a patient visited the Williamson County Medical Center on July 3rd, 2013. The ‘Services Included’ description is extremely vague – ‘Hospital Outpatient Services’, which would make it difficult to assess the reasonableness of the associated pricing. The Provider Charges are called Submitted Charges by BCBS, and instead of specifying the Allowed Amount, BCBS specified the Network Savings, which would be the difference between the Allowed Amount from the fee schedule Williamson Co Med Ctr and BCBS agreed upon, and the Provider Charges). Once again, we can see the dramatic discount this represents – in this case, 75%. We can see that this patient had not yet met their annual deductible, so the remaining balance of $231.83 would be paid from the patient to WCMC, and BCBS would pay nothing.



Next:  Take a peek at our final topic on taming the Cost Beast – protecting your privacy.


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