This guide offers key insights into healthcare reimbursement and strategies to enhance revenue, helping professionals effectively navigate financial challenges.
What is EOR in medical billing?
EOR in medical billing is used for the term Explanation of Review. It is a review document that insurance companies provide to healthcare providers after processing a medical claim. This document informs the healthcare workers about the amount approved, claims acceptance, charges denied, adjustments, and payment details regarding a particular claim. EORs are crucial for tracking patient responsibilities, reimbursement status, and the details about insurance payments. EORs offer transparency in reimbursement decisions.
Suppose there is a sudden increase in claim denials. The complex payer rules have made things even worse. In these challenging times, EOR in medical billing ensures accurate revenue projection. It reduces administrative burdens and accelerates payment processing. The medical claims denial ratio is relatively high and costs insurance providers a certain percentage of annual revenue. The explanation of review data helps in the identification of patterns and resolves recurrent errors. The main goal is to improve the efficiency of Revenue Cycle Management (RCM).
This blog will discuss EOR- Explanation of Review in the medical field.
Significance of EOR in Medical Billing
Explanation of Review (EOR) is crucial for the providers and the patients. It helps patients to understand what their insurance covers and what costs to avoid because their insurance does not cover those. It tells them how much they owe the service providers for a specific procedure. EOR also helps providers understand how much they will likely be paid for their services.
EOR in medical billing provides reasons for all those underpaid or denied claims. This helps the providers file appeals. It also helps in sending patient balance statements. Overall, the EOR has plenty of benefits for both the patients and the providers; thus, it is equally significant for both.
Major Components of an EOR in Medical Billing
The Explanation of Review has several components, all having equal importance. To get a better understanding of EOR, you must know about all these components. It would also help you spot mistakes and correct them before they incur a huge cost.
The following are major components of an EOR in medical billing
1. Patient Details
This section deals with the patient’s credentials. It states the patient’s name, treatment date, and policy number.
2. Provider Information
This section shares information about the hospital or the physician who dealt with the patient on their visit.
3. Claim Number
The claim number is a unique identifier that can track the claim anytime. It makes the process much easier because one tracking number refers to only one patient and a particular procedure performed by a healthcare worker on a specific date and time.
4. Billed Charges
Billed charges refer to the total cost of services and procedures rendered to a patient by a healthcare provider.
5. Allowed Amount
The allowed amount refers to the amount insurance has approved against a claim. This is the total amount the provider agrees to pay on behalf of the patient.
6. Adjustments
Adjustments refer to the reductions based directly on the insurance contracts. This amount is critically calculated to avoid any mistakes in the total amount that should be paid.
7. Paid Amount
The amount paid by the insurer on behalf of the patient is called the paid amount. It is calculated after considering the total amount and adjustments.
8. Patient Responsibility
The amount that the patient has to pay is called patient responsibility. It includes the amount that is co-paid by the patient or the uncovered charges.
9. Denial Codes
If a certain claim is denied, the Explanation of Reviews (EOR) lists the codes explaining the reason for the denial.
Reading EOR in Medical Billing
Understanding the patterns and the terms used in an Explanation of Review is very crucial. It helps you throughout the medical billing journey for a claim. To understand an EOR, follow these simple steps:
1. Patient and provider details
First, check for the accuracy of patient and provider details like name, policy, and claim number.
2. Billed and allowed amount
Search for the billed and allowed amount. The billed amount refers to the cost charged, and the allowed amount refers to what the insurance has allowed.
3. Adjustments and denials
Review whether the adjustment was calculated accurately and the reasons for the denial. Identifying contractual reductions and reasons for denial gives clarity and helps you reapply a claim if needed.
4. Insurance payment
With confirmation of insurance payment, verify if the final and total payment aligns with your expected reimbursement.
5. Patient responsibility
In the last part of the EOR, determine the patient’s outstanding balance. It helps identify the patient’s responsibility, which states the total cost and the amount the patient will pay.
The Process of EOR in Medical Billing
The EOR process starts with the submission of a claim. The insurers analyze the submitted claim against their policy guidelines. Whatever the results are, the insurer shares them through ERA – Electronic Remittance Advice or on paper. Each EOR includes all the essential components we have already discussed in the previous section ( claim status, payment details, payment adjustments, and reasons for denial). All these insights help the provider address coding errors, eligibility issues, and missing data, making the process error-free.
AI-driven tools automate the whole process. This minimizes the manual work and human errors caused by manual work. It also reduces delays and enhances the accuracy of healthcare reimbursement. This software revolutionizes the whole medical billing experience, resulting in faster cash flow, fewer audits, and much stronger medical billing compliance.
Common Reasons for Denial in EORs
A deeper understanding of denial codes can significantly help in resolving claim issues. It gives you intellectual authority to deal with unexpected outcomes.
Some common reasons for denial are as follows:
- Wrong procedure codes (CPT codes) can be the most concerning reason for claim denial.
- Duplicate claims (submission of more than one claim for a single procedure) can cause rejection and escalate to legal consequences if done on purpose.
- Lack of medical necessity is also one leading cause of claim rejection. The insurer deems the treatment unnecessary and denies the claim.
- Missing documents and incomplete records can cause claim denial due to ambiguity.
- Expired insurance and inactive policy are crucial reasons for claim denial.
Appeal for a Denied EOR in Medical Billing
A denied claim does not close all doors to getting reimbursement. One can always file an appeal for it. You have to thoroughly review the denied claim and identify the exact reason your claim was denied. After gathering all the supportive documents (medical records, physician notes, and corrected forms of claims), you can submit an appeal letter.
The appeal letter should clearly state why your claim should be reconsidered. You should also keep up with the insurance and track the status until it is resolved.
Wrap Up
The Explanation of Review: EOR in medical billing is a non-formal document that clarifies denials, insurance payments, patients’ responsibilities, adjustments, and other such terms. It helps to track reimbursement, speeds up payments, and reduces the chances of errors. EORs help us to appeal for a denied claim and manage accurate payments.
If you have any queries regarding the Explanation of Review (EOR), Contact I-Med Claims.
