When it comes to finding and getting rid of old medical debt that you find on your credit, the process is similar, although somewhat different, that getting rid of old debt altogether. Medical billing companies and their collection agencies not only have to comply with the federal credit laws – the Fair Credit Reporting Act (FCRA), the Fair and Accurate Credit Transactions Act (FACTA), and the Fair Debt Collection Practices Act (FDCPA), mainly – but they also must be in full compliance with another very important federal law, known as the Health Insurance and Portability and Accountability Act, or HIPAA. This law is very strict in how medical providers store, share and transmit sensitive patient information, known legally as protected health information (PHI). Because of this, whenever you go to the doctor or have any medical service performed and this information is submitted to your health insurance company, the insurer issues a very detailed accounting of the information presented, the portion of the charges that was paid versus the charges submitted, and a detailed explanation for any charges that were not paid. The form that this information is reported on is sent to both the patient and the medical provider’s office and is called an Explanation of Medical Benefits, or EOMB.
The EOMB will include the provider’s name, the patient’s information and policy number, the service date, the services performed, the amounts billed, the amounts paid, any amount that was rejected, as well as coded reasons for any rejection that occurs. When it comes to your credit, the EOMB can be a vital source of information for disputing information that is incorrectly reported on your credit file. For a complete breakdown, along with a very detailed analysis of what is included on an EOMB, take a look at this amazing article from VerywellHealth, written by Dr. Michael Bihari.
As part of the contract that your insurer holds with your doctor, only allowable charges are paid. However, this does not mean that everything not paid by your insurer becomes your responsibility. As a matter of fact, a good portion of the time, the remaining balance owed on a medical bill is contractually prohibited from being billed to the patient, but this does not stop medical collections agencies from trying to collect. This is where it becomes important to understand what is on your EOMB and whether rejected services can be billed to you or not.
Of note, if you are a Medicare patient, your EOMB will be known simply as an Explanation of Benefits, or EOB. An EOMB and an EOB from Medicare are one in the same. For an infographic showing exactly what your Medicare EOB will look like, check out this file from the Centers for Medicare and Medicaid Services.
Let’s look into some of the most common rejection reasons that you will find on an EOMB as well as whether or not balances left on your account after such rejections are your responsibility or must be written off by the medical provider.
1. No coverage at the time of service.
This is a very common rejection code seen on EOMBs, and it means exactly what it says – that you did not have coverage with that insurance company on the date that services were rendered. If you receive an EOMB with this rejection reason, take a look at the dates of services that the doctor billed for. Many times, a data entry error can result in the wrong date going through on the claim, resulting in this error. If an error has been made, call the doctor’s billing office and tell them that they need to resubmit the claim with the correct date of service. However, if you went to the doctor during a time that you did not have coverage, and the staff did not collect a self-pay fee from you but billed your old insurer, you would be responsible for these charges. However, if you find yourself with charges of this type placed with collections and on your credit report, you should still examine your EOMB for errors versus what the collection agency is reported, because if inaccurate information has been reported, chances are good that you can force the credit bureau to delete the item.
2. Claim not filed within timely filing limits.
This rejection means that the medical claim was not submitted to your insurance company within the time limits allowed by the contract between the insurer and the physician’s office for submitting claims. Many times, this will be 180 days from the date of service. This is a very common rejection, and many times, medical collections agencies will attempt to recover past due amounts from patients who had claims denied for this reason. However, because the fault here lies with the provider and not the patient, you are not responsible for charges denied for this reason. This is especially true if you are insured through a government insurer, such as Medicare or Medicaid. Because of this, any time you see medical bills on your credit report, you should always request the original EOMB as part of your dispute for validity. If you see this rejection code, yet you are billed anyway for the balance, work with your credit repair company to file a factual dispute based on the debt not being your responsibility. Once you have made the credit bureaus and collection agency aware of this, they have no choice but to remove it in total.
3. Exceeds allowable amount by contract.
Doctor’s offices are allowed to bill whatever they want for their services, within certain limitations. However, as part of their contract with your insurance company, they agree to accept a negotiated “allowable amount” as payment in full for any number of services that they render to policyholders of any particular insurance company. The amount left over after this allowable amount cannot be billed to the patient and must be written off as a contractual adjustment. In other words, if your doctor normally charges $200.00 for a certain type of office visit, but your insurance company only pays $145.00 for that same type of office visit, then the remaining $55.00 is not your responsibility. It is supposed to simply be written off as an adjustment. However, many times, mistakes happen during the posting of payments from insurance companies, and the balance may not get written off but instead billed to you as a past due amount. Keep in mind, also, that your insurance company may only pay 80% or a covered service with you responsible for the other 20%. In the scenario above, that would mean that your insurer would pay 80% of the $145.00 allowable amount, which would leave you owing $29.00. The $55.00 still gets written off, as it is over the allowable amount. In cases like this, it is very important to get a copy of your EOMB when investigating medical bills on your credit. You may find that you are being told you owe not only the $29.00, but the $55.00 also. Erroneous information such as this can lead to the entire collections account being deleted from your credit file in order to satisfy the FCRA requirements for accuracy, so long as you understand the way to initiate such deletions through disputes or have a dedicated team of professionals standing beside you along the way.
4. Service not covered under the policy.
This is a rejection that is not quite as cut and dry in terms of responsibility at first glance. If the physician notified you that the service was likely not to be covered, and you opted to have it performed anyway, there is a chance that it could be your responsibility. However, if you were not given this information, and the insurer rejected it as a noncovered service, then it would likely be the responsibility of the medical provider to write it off with no bill being sent to you. Because of these multiple scenarios, what is included on your EOMB and the accompanying medical files can be of tantamount importance in determining whether or not you can have any outstanding balance removed from your credit report. In this case, your credit repair specialist should be able to request any financial waiver that you signed as a part of your medical file. If you never signed such a waiver, it is probable that the debt can be written off with no problem at all. However, even if such a waiver is included, the EOMB can serve as a point of comparison when determining if there are any inaccuracy in the information reported.
While this is not anywhere near a comprehensive list of the reasons on an EOMB for an insurer to deny payment of services, the above explanations are by far the most common that you will see. Whenever you visit the doctor, you will receive an EOMB usually no more than 6 months after that date of service. You will be able to tell an EOMB apart from the bill itself because it will be from the insurance company and will always state “this is not a bill” on the top of the page. When the EOMB arrives, make sure to file it away in an easy-to-find place. Then, the next time you are checking your credit, if you see any medical bills, you can use the EOMBs as a point of reference for analyzing for inaccuracies. If you have old medical bills on your credit, make sure that you insist on a copy of the EOMB when disputing these, and if they cannot provide these to you, it will be very simple to have these balances deleted from your credit report.
- Bihari, M.D., M. (2018). VerywellHealth. How to Understand your Explanation of Medical Benefits. Retrieved from https://www.verywellhealth.com/understanding-your-eob-1738641.
- Infographic, “Reading your Explanation of Benefits (EOB).” Centers for Medicare and Medicaid Services. Retrieved from https://marketplace.cms.gov/outreach-and-education/downloads/c2c-sample-explanation-of-benefits.pdf