An EOB usually includes:

1. Identification of service rendered*
2. Date of service (DOS)
3. Name and address of subscriber
4. Name of patient
5. Name of healthcare provider who rendered service
6. Provider’s tax identification number
7. Provider’s charge/ total billed services
8. Allowed amount
9. Total patient responsibility amount
10. Total payment made and to whom
11. The amount payable (in dollars or percentage of total) after deductibles, co-payment, and any other reduction have been made
12. An explanation of for any reason for not providing full reimbursement for the amount claimed
13. Point of contact (telephone number or address) by which an enrollee may inquire regarding payment
14. Information on the appeal process of a denial of benefits and timeline of the process

The first item, identification of service provided (marked with *) is the most important item on an EOB.  It is the reason for receiving healthcare and should be communicated via ICD (diagnosis) or CPT (procedure) codes. If you receive an EOB that is missing this, call your insurance company and ask for this information.  Keep track of the code – it represents what you received and why you received it.  Imagine that your EOB is a receipt from a store and that the ICD and CPT codes are the items you purchased.  Wouldn’t you want to know what you bought?

Unfortunately, EOBs are not standardized and can be difficult to read, especially after switching insurance providers.  In addition, an EOB is sent to both the provider and the patient, and it attempts to convey different information to each recipient.  This often produces a very confusing document.

When reading an EOB, don’t be hesitant to look for guidance.  Your insurance company may have an example EOB and accompanying information on their website.  And, of course, be sure to look at our Healthcare How To: Read an Explanation of Benefits (EOB).

Other Resources:
http://www.healthlink.com/tech_tip_eob.asp
http://www.ins.state.ny.us/website1/inshelp/c_eob.htm
http://www.cigna.com/customer_care/member/forms/explanationofbenefits.html

The term “prior approval law” refers to legislation that grants the officials of a state the power to review and approve health insurance premium increases before they take effect. These laws are passed at the state level and usually give the authority to the State Insurance Department. Without prior approval laws, states are restricted in their ability to regulate premium increases and, de facto or de jure, the insurance industry self-regulates.

Prior approval laws have gained attention as a result of the recent healthcare reform, which affords the federal government limited power to curtail premium increases. Although the federal reform includes provisions such as that which requires insurers to justify “unreasonable” rate increases, much of the power necessary for premium moderation has been left outside the reach of the national government.

Regulating premiums has traditionally been the responsibility of the states, and now, as we continue to see double digit premium increases during this economic crisis, it is more important than ever for states to fulfill this responsibility. It is the disappointing truth that only 19 states currently have prior approval legislation on the books. Of those 19, however, some states are making great progress by enforcing these laws. For example, Oregon officials have modified or dismissed 20 of 71 proffered premium increases in the individual and small group markets since April 2009.

Some consumer advocates and politicians support granting prior approval authority to all states. Doing so would likely end many current lawsuits between insurance companies and states. But the effectiveness of such legislation in suppressing premium increases would depend on politicians’ willingness to resist the influence of the insurance industry.

It is well known that the healthcare insurance industry aggressively lobbies federal officials and helped pen much of the recent healthcare reform. Few realize, however, that the industry exerts significant pressure at the state level as well. Much of that pressure comes from over $42 million in contributions since 2003. Jim Duffett, executive director of the Illinois-based Campaign for Better Health Care, describes the result of excessive lobbying: “State government here has basically been a wholly owned subsidiary of the insurance industry.”

Apparently, insurance companies already know what many of us are just learning; as Washington State Insurance Commissioner Mike Kreidler warns, “The battle has shifted to the states.”

Look for more on this and other healthcare legislation in future posts.

Sources:
EconomicCollapseBlog
L.A. Times
N.Y. State Government

Large employers are projecting a healthcare cost hike of 8.9 percent in 2011, a significant leap from the previously projected 7 percent increase for 2010. Healthcare reform was partly, although not entirely, credited with the increase.

The new regulation, which takes effect September 23rd, will affect costs in accordance with each company’s current healthcare practices. About 70 percent of the companies currently have “lifetime cap” or total dollar limits that they will have to eliminate. Around 25 percent will have to end annual limits on benefits. And 13 percent will now have to extend coverage to children suffering from expensive preexisting medical conditions to whom they had previously denied coverage. Many employers reported that they intend to cover these increases by requiring greater employee contribution.

Although the changes might be seen in different places, most employees will be affected by them. 63 percent of employers indicated that they planned to increase employee contribution to premiums. 46 percent of employers intend to increase employee out-of-pocket contributions.

Some companies also report that they plan to reduce costs through other means. Company-directed wellness programs have become more popular. Also on the rise are consumer-directed health plans, which allow employees more say in how they spend their healthcare dollars.

Employers and consultants are hinting –if not warning- that employees should be prepared to pay more for their health insurance in coming years. In fact, employers indicate that they intend to encourage employees to restrict healthcare spending in order to slow these rising costs.

If this is true for big businesses, are small businesses or the self-employed doing any better? As it turns out, no. No one, it seems, is able to dodge the increasing cost of health insurance. New legislation has raised costs to insurance companies who are ready and willing to pass those costs onto consumers via huge increases (sometimes 50%!) in premiums. Although some states are fighting back, the federal government and most states are helpless to perturb premium increases. Look for a future post about the changing healthcare costs that are being felt by those employed at small companies and the self-employed. Until then, look here for further reading.

The National Business Group on Health represents large employers’ health policy interests. The NBGH surveyed 72 companies, each with over 5,000 employees. These companies provide their own health insurance and hire a health insurer to administer the coverage.

Sources:
businessgrouphealth.org
theeconomiccollapseblog.com
ibnlive.in.com
kiplinger.com
msnbc.msn.com

This introduction illustrates one of the very first critical “cost shifting” market movements. What does cost shifting mean? It is when the cost of certain activities is shifted to another party. The question is, to whom? Private payers profited by removing high-risk individuals from their plans – they were growing at a rapid rate because during WWII a wage hold was put into place. Employers started to realize that benefit plans could be seen as a non-wage form of compensation. The tax code encouraged employers to view benefit plans as a cost of doing business, and employees never had to claim their benefits as income.

The benefit plan offering generated a significant amount of cash in the healthcare system. During the 1940s and going forward, teaching hospitals were also recipients of large amounts of cash infusion by the government’s investment in research and technology. The flow of cash from both areas generated a significant offering of healthcare diagnostics and treatment options. By 1946, the healthcare market had increased cash flow for hospital coverage. This resulted in increased utilization of hospital services. The amounts of insurance payments and premium programs went up. Hospitals expanded because of the available cash. The market had a significant buildup of resources. The amount of technology was growing at an accelerated rate. This fueled additional use and sale of insurance. The gap between the haves and have-nots exploded. From 1930 to 1965, there was the first big cost shift of high-risk individuals to uninsured status. Who were these people? They were the elderly, the unemployed, the self-employed, the retired and the disabled. With the aggressive advancements in healthcare, the disproportionate offerings between the haves and the have-nots became obvious.

The political arena debated the concept of compulsory insurance or a nationalized health plan. Instead, in 1965 Medicare was born to serve the have-nots. Medicare takes a social insurance approach, and its members are referred to as beneficiaries. Medicaid was also established; it is managed at the state level. Medicaid, however, uses a welfare approach, and its members are referred to as recipients. The market at the time believed that employer-linked insurance would eventually serve as a form of nationalized health insurance. Medicare Part A was created to pay hospital services, and Medicare Part B was created to serve the professional component. To devise a nationalized healthcare program was not necessary. The market, it was thought, would take care of itself.

Excerpt from Healthcare Fraud Auditing & Detection Guide by Rebecca Busch