Explanation of Benefits

A statement from an insurance payer sent to the member after a claim is processed, detailing the services billed, the amount covered, the provider's allowed amount, and the member's financial responsibility.

An Explanation of Benefits is the document a payer sends to both you and the patient after they process a claim. It is not a bill. It is an explanation of what was billed, what was covered, what the payer paid, and what the patient owes. The EOB contains critical information: the date of service, the procedure codes billed, the billed amount, the allowed amount (what the payer considers the reasonable charge), the amount paid by the payer, any adjustments or write-offs, and the patient's responsibility broken down into deductible, copay, and coinsurance amounts. Reading EOBs carefully is essential for your billing operations. If a claim was denied or paid less than expected, the EOB will contain a reason code that tells you why. Common reason codes include: patient not eligible on the date of service, prior authorization not obtained, service not covered under the member's plan, duplicate claim, and timely filing limit exceeded. For credentialing, EOBs become relevant when there is a discrepancy between your expected reimbursement and what you are actually receiving. If you notice your EOBs consistently show payments below your contracted rate, it could indicate a fee schedule error, a network loading issue, or a contract term you misunderstood. Comparing EOBs against your contracted fee schedule on a regular basis is a basic financial management practice that every practice should do. Patients often call with questions about their EOBs because they are confusing. Having staff who can explain EOBs clearly builds trust and reduces the billing-related friction that drives patients away.