The Language of Hospitals, Health Insurance Claims & More

Part 1: The Basic Tools, Chapter 2: Understanding the Language of Health Insurance Page 3

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The first thing consumers may notice when they look at a letter from an insurance company is that doctors, laboratories, testing centers, and hospitals are now generally referred to in the health insurance field as providers, medical providers, or providers of service. If the providers are part of an insurance company's network-doctors, laboratories, hospitals, and testing centers that have agreed to follow specific insurance company rules-they are generally referred to as network providers or plan providers.

In addition, insurance companies now generally request documentation rather than statements of explanation to support a claim. Documentation might include a letter from a doctor explaining the medical necessity -- the medical need or purpose -- of a particular treatment or procedure (sometimes referred to as a Letter of Medical Necessity) or an operative report (a detailed description of the procedures followed dur ing an operation, usually written by the physician who per formed the surgery). Documentation might also include a de tailed or itemized bill from a hospital, doctor, testing center, or laboratory.

Furthermore, insurance companies no longer send letters of explanation to consumers to explain their determination of the amount of reimbursement provided in relation to a claim. Instead, they send an EOBS (Explanation of Benefits State ment) after a claim has been processed.

There is no universal Explanation of Benefits Statement form, and the placement of particular information may vary from insurer to insurer. However, all Explanation of Benefits Statements generally contain the name of the policyholder -- the person who is insured -- the patient's name if the patient is different than the policyholder, the policyholder's identification number, the name of the provider, the date of service or treat ment, the amount of the bill, and the amount of reimbursement provided by the insurer. An Explanation of Benefits Statement may also include an explanation of the way reimbursement was determined. In addition, there may be specific notes on any charges that were excluded (See Table 3).

Table 3 represents an Explanation of Benefits Statement in a situation involving an office visit to a doctor. The entire $100 charge was considered eligible for payment. Since the deductible had been previously satisfied in the case illustrated in Table 3, and since the policy provided for payment at the 80% rate, $80 of the bill was paid by the insurer.

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