EOB (Explanation Of Benefits)

After a claim processes in medical billing, payment follows. Each payment is accompanied by an explanation of benefits, or EOB. The EOB is sent to the patient and the provider to show how the claim processed. It also lets the provider know whether any remaining balance is due by the patient. An explanation of benefits (EOB) statement often arrives via mail. As a biller/coder, we want to review this documentation to verify that the claim has processed and paid correctly.

An EOB generally contains the details explaining how the claim was processed, although some payer EOBs show only the total claim amount, along with the total provider write off, and the total allowance. 

On the EOB, payments are posted by line item. If a claim has four CPT codes on it, then the payment is allocated among the payable four lines to show how much reimbursement was received for each procedure.

Here are the kinds of postings you see on the EOB for every CPT code listed:

• Amount of the procedure before any discounts are applied
• Amount that the patient is responsible for
• How much the contract allows for the procedure
• The type and amount of any discounts that apply
• The final amount of the reimbursement after all discounts, deductibles, and so on are applied
• That the right payment allowances were applied
• That discounts were applied appropriately
• That no procedures were improperly denied
• If no payment was received, whether it was due to the entire amount being applied to the patient’s deductible, the claim being denied, or some other reason

Difference Between the Explanation of Benefits and Electronic Remittance Advice

The explanation of benefits and the remittance advice are similar statements that only vary slightly.

An ERA is a standardized electronic version of a paper explanation of benefits (EOB).

The ERA eliminates the need to handle paper, open mail and file papers, as well as the risk of misplaced EOBs

Recipient : The major difference between a remittance advice and an explanation of benefits is in who receives the statements. Both types of statements provide an explanation of benefits, but the remittance advice is provided directly to the health-care provider, whereas the explanation of benefits statement is sent to insured patients.

Electronic filing:  the statements are printed and mailed within a specified time frame, the turn-around time on many medical claims can take a significant amount of time. Many health-care and insurance providers are moving toward the use of electronic filing, which will make the traditional remittance advice obsolete.