Medical bills and the explanation of benefits

Medical billing is hard to follow at the best of times. After an injury it gets harder, because several payers may be involved and the numbers on the page rarely match what anyone actually pays. Here is how to line the documents up.

It is general information, not legal advice.

Four numbers on every bill

• Billed charge. The provider's list price. It is almost always far higher than what will be paid.
• Allowed amount. The rate the provider has agreed to accept from a given payer for that service.
• Write-off (adjustment). The difference between the billed charge and the allowed amount, which a contracted provider agrees to erase.
• Patient responsibility. What is left for you — deductible, copay, and coinsurance — after the payer pays its share.

Reading an explanation of benefits

An EOB is your health plan's accounting for a claim. Line by line it shows the date and service, the billed charge, the allowed amount, the write-off, the plan's payment, and your responsibility, plus remark codes explaining any denial or reduction. Match each EOB line to the provider's bill: the provider's "balance" should reflect the write-off and the plan's payment. If the provider is billing you for an amount the EOB shows as a write-off, that is usually an error or improper balance billing.

Two balance-billing situations are restricted by name. California bars a non-contracting professional who treats you at a contracting health facility from collecting more than the in-network cost sharing for non-emergency services; that section says in terms that it does not apply to emergency services (Health & Saf. Code, § 1371.9). Federal law covers both — emergency services, where a nonparticipating provider or emergency facility may not bill or hold you liable for more than the cost-sharing requirement (42 U.S.C. § 300gg-131), and non-emergency services by a nonparticipating provider at a participating facility, subject to a notice-and-consent exception that does not reach the listed ancillary services (42 U.S.C. § 300gg-132). Outside those, what you owe turns on your plan.

The codes

• CPT and HCPCS codes identify each procedure, visit, or item.
• ICD diagnosis codes identify the condition treated. In an injury claim these matter — a diagnosis code that does not mention the injury can be used to argue a visit was unrelated.
• Place-of-service and modifier codes add context, such as where the service happened or that a procedure was altered.

Statements, superbills, and itemized bills

• A statement is a summary of your account balance, not a detailed bill.
• An itemized bill lists every charge with its codes. Request this for the claim; the summary statement is not enough.
• A superbill is an itemized receipt a provider gives you to submit for reimbursement yourself, common with out-of-network care.

Billed, paid, and reasonable value

In a California injury claim, the past medical damages a plaintiff can recover are capped at the lesser of two things: the amount actually paid and accepted by the providers as payment in full, or the reasonable value of the services. When health insurance paid a negotiated rate, that paid-and-accepted amount is usually the ceiling, and the full billed ("chargemaster") amount is neither recoverable nor admissible to prove past medical damages.

Two situations change the analysis:

• Future medical care and non-economic damages. Even where past bills were paid at a discount, the full billed amounts are not admissible to prove the cost of future care or to support non-economic damages.
• An uninsured plaintiff, or one treating on a lien outside insurance. There is no negotiated-rate ceiling, so the claim is measured under the reasonable-value prong and the full billed amounts can be admissible, with the defense free to dispute what is reasonable.

One thing worth being clear about in that last situation: getting the bills in front of a jury is not the same as proving them. Admissible and sufficient are separate questions. The billed amounts come in as evidence of reasonable value, but reasonable value is a question of fact, and establishing it takes expert testimony. A stack of bills on its own does not carry that burden.

The billed-versus-paid distinction also drives what a health plan, Medi-Cal, or Medicare can recover from the settlement — see health insurance liens and Medi-Cal and Medicare liens.

Sources: Howell v. Hamilton Meats & Provisions, Inc. (2011) 52 Cal.4th 541 (past medical damages limited to the lesser of the amount paid and accepted as payment in full or the reasonable value of the services); Corenbaum v. Lampkin (2013) 215 Cal.App.4th 1308 (full billed amounts inadmissible as to future medical expenses and non-economic damages); Pebley v. Santa Clara Organics, LLC (2018) 22 Cal.App.5th 1266 (an uninsured plaintiff, or one who treats outside insurance on a lien, is evaluated under the reasonable-value prong and full billed amounts are admissible); Bermudez v. Ciolek (2015) 237 Cal.App.4th 1311 (reasonable value is a question of fact; for an uninsured plaintiff, damages are not fixed by amounts billed or paid, and admissibility of the billed amounts is not the same as sufficiency — expert testimony is needed to establish that they are reasonable); Health & Saf. Code, § 1371.9 (a non-contracting individual health professional at a contracting health facility may collect no more than the in-network cost sharing for non-emergency services; the section does not apply to emergency services as defined in § 1317.1); 42 U.S.C. § 300gg-131 (emergency services: a nonparticipating provider or emergency facility shall not bill or hold the patient liable for more than the cost-sharing requirement); 42 U.S.C. § 300gg-132 (non-emergency services by a nonparticipating provider at a participating facility, with the notice-and-consent exception and its ancillary-service carve-outs).

What to keep

• Every itemized bill and every EOB, sorted by provider and date.
• Proof of anything you paid out of pocket.
• Any financial-assistance application or approval.
• Letters putting a bill "on hold" pending the injury claim.

Common questions

What is the difference between a bill and an explanation of benefits?

A bill comes from the provider and shows what they charged. An explanation of benefits (EOB) comes from your health plan and shows what the plan allowed, what it paid, what was written off, and what it says you owe. The EOB is not a bill.

Why is the billed amount so much higher than what gets paid?

Providers set high "chargemaster" rates, then accept a much lower contracted rate from insurers. The difference is a contractual write-off. An uninsured patient may be billed the full rate unless they negotiate or qualify for financial assistance.

What is balance billing?

When a provider bills you for the difference between their charge and what your insurer allowed. Two situations are restricted by law: an out-of-network professional treating you at an in-network facility, and emergency care. In both you generally owe only the in-network cost sharing. Outside those, the protection depends on your plan and the circumstances.

Does it matter whether my claim uses the billed or the paid amount?

Yes. When health insurance paid your bills at a negotiated rate, your recoverable past medical damages are capped at the lesser of what was paid and accepted as full payment or the reasonable value of the care — not the full billed charge. If you were uninsured or treated on a lien outside insurance, the claim is measured by reasonable value and the billed amounts can be admissible. It also affects what a lienholder can claim.