This is the third in a series of posts about the insurance claim filing process. The process can be daunting and seem confusing, but the basic components are fairly easy to understand if you break them down individually. The goal is to help our patients, and everyone else, understand what is actually happening “behind the scenes” when you use your health insurance. You can read the rest of the series by clicking on the link headers at the bottom of the post.
Determining Patient Responsibility
After covering the broader details of the Explanation of Benefits (EOB) letter here, this post will go into more detail regarding the most important piece of information to the patient – the amount of money they owe in out-of-pocket expenses. The rest of the information on the EOB is useful and helpful for various things, but most people can get away with ignoring that information and focusing strictly on the bottom line. In the insurance claim process, the “Patient Responsibility” portion of your EOB represents the “bottom line” financial responsibility of the patient in the claim process.
There are generally four ways a charge from your medical provider could become classified as Patient Responsibility and result in out-of-pocket expenses owed by the patient.
- Patient owes co-payment. This is most common for standard insurance plans that have a set dollar amount listed on the patient’s insurance card. Co-payments are usually tiered to have higher amounts owed for higher level of services, so the actual amounts could vary significantly by the provider and facility you used. For example, your card could say you owe $20 for a primary care visit or $50 for specialist visit. If you visit that type of provider, you can expect to owe at least your co-payment amount for most services. Depending on the type of service provided (eg. Surgeries, EKGs, Lab Services, etc.), the patient could be potentially responsible for both a co-payment and one of the following other possibilities, so do not assume that the co-payment is always the most you will pay for a certain provider.
- Patient owes deductible. The concept of a deductible will eventually be its own post in this series to allow me to go into more detail on one of the most complicated features of health insurance plans, but the basic idea is this – the patient owes the full amount of their deductible before their insurance will start to pay for any of their healthcare expenses. If you have not met your deductible yet, you will probably owe the entire Allowed Amount of the insurance claim until you have met your deductible. You can track your progress towards meeting your deductible by referencing the Plan Summary section of your EOB, as well. There are plenty of exceptions to that rule that I will cover later, so make sure you understand your plan and the way your benefits are applied for certain types of services.
- Patient owes co-insurance. This is basically the same as the concept of a co-payment, except a set dollar value is replaced by a percentage of the Allowed Amount. For example, instead of having a set $20 co-payment for a primary care visit, your plan could require you to pay 20% of the total charges from the visit. There are usually capped annual co-insurance maximums, as well, just like the deductible, that limit the amount of out-of-pocket expenses to a set maximum each year. Most commonly, co-insurances are added on top of co-payment plans and only applied to certain facility-level charges, like lab work or radiology expenses. It is very common for a plan to have both a co-payment and a co-insurance structure, so be sure to check how and when that might apply to your charges. Since the Allowable Amounts of certain services can vary significantly, this could be a good or bad thing for the patient.Here is a table with comparison between two common structures, a tiered co-payment plan and a standard co-insurance plan, and how a sampling of average charges for certain services results in different levels out-of-pocket expenses:
|Total Allowed Amount Of Claim||Amount Owed With Standard Co-Payment||Amount Owed With 20% Co-Insurance|
Primary Care Visit
|Hospital (ER) Visit||$5,000||$250||
- A line item on the claim was denied. This is pretty much the worst thing that could happen to your insurance claim and the only real possibility you have to get your total Patient Responsibility reduced. If your claim says that you owe your co-payment, deductible, or co-insurance, your plan benefits were likely applied correctly and within the structure of your contract with your insurer. Basically, you signed up for a plan that said you would pay this much, so now you have to pay it. However, situations where certain line items were denied, non-covered, or listed as having “other” reasons for Patient Responsibility are the real chances you have to potentially make corrections and reduce the amount you owe. Since the process for handling denials and filing appeals is pretty lengthy, those two topics will be covered separately at the end of this series.
Here is an example from our sample EOB from the last post.
In this example, John Doe ultimately became responsible for $750 worth of medical expenses for his visit with Dr. John Smith. His plan showed he had a $700 deductible (as shown in the Plan Summary section of his full EOB), so if this was the first claim Mr. Doe had towards his deductible on the year, the claim was processed correctly and Mr. Doe became responsible for full payment of the first $700 in his health expenses for the year. If Mr. Doe went back to Dr. Smith and had the same services later on in the benefit year, he could then likely expect his insurance to cover those services “after deductible” since he has now met his annual deductible.
The remaining $50, however, is questionable – it is labeled as Supplies, so it could have been something deemed Not Medically Necessary by his insurer. The denial code stated that the reason for denial was due to a non-covered diagnosis code. Mr. Doe could potentially see if there is a possibility for re-filing with an alternate code or see if there was a mistake in how his benefits were handled for that line item, but more information about what the Supplies actually were would be needed to make that determination. While there is a path to potentially appealing denied line items, the $700 owed for the deductible is unlikely to be reduced by any subsequent actions by Mr. Doe (with plenty of possible exceptions, of course). That is probably where he should start when trying to reduce his Patient Responsibility for this claim.
This was a basic summary of situations where medical expenses could potentially be deemed Patient Responsibility. This is the third post in a series on understanding the insurance claim process. There will be more details regarding the topics I only summarized, such as deductible balances, claim denials, and claim appeals, later on in this series. In the rest of the blog posts in this series, I will explain the specifics involved in your EOB, including detailed information on the following topics:
- What is an Explanation of Benefits Letter?
- Basic EOB Terminology
- Determining Patient Responsibility
- Determining Plan Details
- Accessing Online EOBs
- Understanding Denials and Denial Codes
- How To File an Appeal
If you have any specific questions or topics you would like us to discuss, please mention them in the comments below and we will address them in future posts. If you are a patient at Family Care and have any questions about EOBs you received for claims from our office, please let us know by filling out our contact form. Thank you!