What is “EOB” In Medical Billing?

November 27, 2022

doctor sitting at desk holding clipboard and reading

After patients receive medical care preparing an accurate medical invoice can be challenging. It is common to encounter problems with the provider’s office regarding medical invoices. An explanation of benefits, or EOB, provides an in-depth analysis of services rendered and information regarding the services covered under the patient’s health plan. This makes an EOB a critical document you may refer to in order to confirm the particulars of treatment and each party’s share of a payment obligation.

The EOB provides the details of medical services received by the patient while under the care of a physician. Please keep in mind that the EOB is not a bill—it outlines which services are covered and which are not. In contrast, a medical bill breaks down the cost of each service.

Components of an EOB

All EOBs adhere to a basic mathematical formula to calculate proper payment. There are two results. The first is the billed charges after insurance adjustments. And the second result provides the total that the patient is responsible for. The components of an EOB are detailed below.

Information about the provider and the services rendered: The EOB will provide the name of the healthcare facility where the patient received the service. You must check this information to ensure that the correct EOB corresponds to the right healthcare facility. The services listed should also be what the provider rendered on that particular day. Look for any duplication of services to avoid any future issues.

Charged amount: The insurer will also state the cost charged by the medical care facility in the explanation of benefits (EOB). This breakdown will include associated fees and any patient deductibles. In addition, the insurer may also mail a check to the beneficiary/patients in certain situations. It is then the patient’s responsibility to pay the medical care facility.

Approved amount: The approved amount is also mentioned in the EOB with details of the cost breakdown. This is calculated after patient deductibles and co-pays. 

clipboard and calculator on desk with doctor working on laptop in background

Why the EOB Is Important to Providers

Medical billing EOBs are crucial for healthcare practitioners because they explain why the patient’s insurer did not cover a particular service. For example, a doctor billed $300 for a consultation but received only $140 from the insurance carrier and $40 from the patient. Patients are responsible for certain amounts depending on their health insurance plans. The EOB will explain the discrepancy and provide a standardized code to match it. A doctor can contact the insurer and discuss the matter if they believe the insurance company miscalculated. Consequently, doctors can bill more accurately and efficiently.

The bottom line: EOBs help providers manage their billing by streamlining processes and improving efficiency. It also allows you to keep track of all the financial information in one place, which makes it easier to stay organized and improve revenue.

Why the EOB Is Important to Your Medical Billing

The EOB can assist you in tracking healthcare spending and historical patterns affecting the health practitioner. It will also help you verify the charges and services listed are accurate. It breaks down how the benefits were applied in that particular situation. EOBs help you to ensure dates and services align with each other and spot discrepancies like double billing, typos, canceled work, phantom services, and up-coding. This will provide maximum service levels to patients, keeping them satisfied and happy.

In addition to the EOB, you should also have an electronic medical record (EMR) system that allows for easy access to data. The EMR should be able to store all of the information from the EOB and any additional information that the provider or the patient may have added. Electronic remittance advice, or ERA, is an invaluable companion to the EOB, which offer substantial benefits.

The Next Step

Knowing what EOBs are and how they are used in medical billing allows you to improve the quality of your documentation. The next step is to identify areas of your practice that can be improved to reduce expenses and increase your revenue.

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About the author 

Gene Hooks

Gene Hooks is a content marketer who's a writer during the day and a reader at night with a passion for researching and finding the best medical companies that lead to patients having a better experience and doctors achieving better results.

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