Explanations of Benefits: Confusing and Tiresome but Important.

An Explanation of Benefit (sometimes called "Explanation of Medical Bill Payment" or "Explanation of Review") is the document that an insurance company is required to send you when it receives a bill from your health care provider.  The insurance company is required to tell you if it is going to pay the bill and if it is not, why not.  The forms are difficult to read but it is important to take the time the time to understand what the insurance company is saying because it might be screwing you.

If the insurance company is denying the bill, then it needs to explain the reason.  Frequently the company will reference a code in its explanation but doesn’t give you the codes.  If that happens, send a letter (USPS priority so you can track receipt) demanding the codes.  And keep a copy of that letter.

Read the reason for denial.   If the insurance company is wrong, then follow the procedure that the insurance company provides for appealing the decision.  Some insurance companies will spell out a particular procedure on the back side of the form and there will be deadlines.  Follow the procedure to the letter.

If your EOB doesn’t have a procedure, write to the insurance company and explain to it why it is wrong.  Again, keep a copy of the letter and track its delivery through USPS.

Sometimes, your automobile insurance company may deny payment of a bill because the bill was not coded as a motor vehicle accident.  Assuming that the bill is a legitimate cost of treating your motor vehicle accident injuries, then you need to call the billing department of your provider and explain to them the coding problem.  The billing department’s telephone number will be on the bill that they sent you.  They are generally very helpful and would be happy to do what is necessary to smooth out a problem.

Insurance companies are under an obligation to deal with you in good faith and there are several specific mandates that they are required to obey:  A person may not commit any of the following acts or practices:

  • (1) misrepresent facts or policy provisions relating to coverage of an insurance policy;
  • (2) fail to acknowledge and act promptly upon communications regarding a claim arising under an insurance policy;
  • (3) fail to adopt and implement reasonable standards for prompt investigation of claims;
  • (4) refuse to pay a claim without a reasonable investigation of all of the available information and an explanation of the basis for denial of the claim or for an offer of compromise settlement;
  • (5) fail to affirm or deny coverage of claims within a reasonable time of the completion of proof-of-loss statements;
  • (6) fail to attempt in good faith to make prompt and equitable settlement of claims in which liability is reasonably clear;
  • (7) engage in a pattern or practice of compelling insureds to litigate for recovery of amounts due under insurance policies by offering substantially less than the amounts ultimately recovered in actions brought by those insureds;
  • (8) compel an insured or third-party claimant in a case in which liability is clear to litigate for recovery of an amount due under an insurance policy by offering an amount that does not have an objectively reasonable basis in law and fact and that has not been documented in the insurer's file;
  • (9) attempt to make an unreasonably low settlement by reference to printed advertising matter accompanying or included in an application;
  • (10) attempt to settle a claim on the basis of an application that has been altered without the consent of the insured;
  • (11) make a claims payment without including a statement of the coverage under which the payment is made;
  • (12) make known to an insured or third-party claimant a policy of appealing from an arbitration award in favor of an insured or third-party claimant for the purpose of compelling the insured or third-party claimant to accept a settlement or compromise less than the amount awarded in arbitration;
  • (13) delay investigation or payment of claims by requiring submission of unnecessary or substantially repetitive claims reports and proof-of-loss forms;
  • (14) fail to promptly settle claims under one portion of a policy for the purpose of influencing settlements under other portions of the policy;
  • (15) fail to promptly provide a reasonable explanation of the basis in the insurance policy in relation to the facts or applicable law for denial of a claim or for the offer of a compromise settlement; or
  • (16) offer a form of settlement or pay a judgment in any manner prohibited by AS 21.96.030;
  • (17) violate a provision contained in AS 21.07.

AS 21.36.125(a).

If you’ve done everything that you can do to get the bill paid and the insurance company is wrongfully refusing to pay it, you can file a complaint with the Division of Insurance:  http://commerce.alaska.gov/ins/Insurance/filingAComplaint.html.