Going Solo? Understand the EOB.

EOB stands for explanation of benefits and is the perhaps the most important aspect pertaining to the financial health of your practice, perhaps more important even than the amount printed on the disbursement (reimbursement) check. Understanding the EOB will allow you to develop an appreciation of how much you get paid per service--per encounter--and can serve as a gauge for how effective you--or your team--are as billers. Here are several EOBs that I recently recieved that I find illustrative.

• EOB 1: The Check amout was for $160. Not bad. Now lets look at the EOB. Oh, I see that this check represents payment for 3 encounters. Encounter 1 was a level 4 visit. I was payed $36, and I see here that the patient had no copay. Therefore from this particular plan, I get $36 for a new patient consult. Shabby! Encounter 2, on this same EOB, is also for a new patient visit, for which I recieved $120 and the patient had a $15 copay. Therefore, my contracted amount, the amount I get per encounter on patients with this exact plan is $135. Interesting, the patient from encounter 1 and 2 had the same insurance company, but different plans within the plan. Encounter 3 was for a urine analysis, an 81000 in CPT talk, for which I got $3.70. Not bad for a UA.
• EOB 2: Check amount was for $28. Looking at the EOB, it was for 1 encounter. The patient paid $20 in copay. Therefore for an extablished visit, I got $48.
• EOB 3: Check amount was for $0.00. Looking at the EOB, this was a denial because the claim occured during a global period for a 52000, a vasectomy.
• EOB 4: The check amount was for $38. It is for 1 encounter, an established office visit. The patient paid $15, and the insurance paid $38 + $3.70 for a UA. Therefore, from this carier, on this particular patients sub-plan, within the plan, within the plan, I get ~$50 for an established patient level 3 visit.
• EOB 5: The check was for $240. By examining the EOB (often more complex than examining the patient), I can determine that the payment was for a 52000, a vasectomy. So now I know that from this insurer, at least on this patients subplan within the plan within the plan, I "contracted" to recieve $240 for a vasectomy. In addition, the carrier did not pay me for a visit on the same day as the vasectomy.

So there you have it. If you add up the total devided by the number of encounters, you can get an analysis of dollar/encounter, which as an important number to know. In this case, I made, on average, $99 per encounter. So as you can see, it takes a lot of encounters to make just overhead, not to mention take home a salary.

Good luck!