From confusion to clarity: improving health insurance and EOB transparency

Christine Cooper: ©aequum LLC

Navigating health insurance can be a daunting task, not just for patients, but also for physicians, particularly primary care physicians. PCPs often bear the brunt of patient frustrations and administrative burdens associated with complex insurance processes.

The complexity and lack of transparency, particularly when understanding the Explanation of Benefits (EOBs) and the claims and appeals process often results in confusion and financial hardship for participants.

As the ERISA Advisory Council prepares to address these issues, it is essential to highlight the need for improved clarity in health insurance processes and EOBs.

Challenges in understanding health insurance claims and EOBs

Health insurance claims and appeals processes are fundamental components of the health care system, yet they are often criticized for their complexity and lack of transparency. A survey by the Kaiser Family Foundation found that 18% of insured adults experienced a denied claim in the past year, with those on private insurance plans being the most affected.

Physicians and their staff often need to spend significant time assisting patients with insurance queries and resolving issues related to denied claims, leading to an increased workload. This not only places a burden on the practice but also affects the physician-patient relationship, as patients' frustrations with unclear billing can erode trust. Additionally, opaque EOBs can cause delays in payments, adversely impacting the cash flow of medical practices, and often triggering unexpectedly higher out-of-pocket costs for patients. This confusion often stems from the intricate and technical language used in EOBs. EOBs are supposed to provide transparency by explaining what medical treatments and services were covered under a policy and what amounts the insurer paid.

However, they frequently fail to do so due to their complexity and use of medical and insurance jargon. According to ProPublica, many EOBs do not provide sufficient detail on why a claim was denied, leaving participants in the dark about the specifics of their coverage and the reasons behind claim denials. 

It should come as no surprise that Kaiser confirmed that ~70% of consumers who had denied claims didn’t know they had appeal rights, nor that the vast majority, 85%, do not file formal appeals.

The role of advanced EOBs and the No Surprises Act

The No Surprises Act mandates the use of Advanced Explanation of Benefits (AEOBs) to address some of these issues by requiring insurers to provide more detailed and timely information in advance of treatment.

AEOBs provide clearer, more comprehensive information upfront, allowing practices to better inform patients about potential costs and reduce the likelihood of unexpected medical bills. Most Americans live paycheck to paycheck and few are ready for any out-of-pocket medical expense – let alone unexpected costs. This transparency would benefit both patients (in setting expectations) and medical practices in managing their revenue cycle more effectively – while minimizing the administrative burden associated with disputed claims and billing inquiries.

AEOBs include critical information such as the network status of the provider or facility, a good-faith estimate of the amount the plan will pay, the amount the patient may owe and information on how to dispute charges if they differ from the estimates.

With better information provided by AEOBs, physicians can have more productive discussions with patients regarding their treatment options and the associated costs. This clarity enhances the physician-patient relationship, fostering trust and ensuring that patients are well-informed about their financial responsibilities before receiving care. Improved communication will often result in informed decisions, leading to higher patient satisfaction and better adherence to treatment plans.

EOB best practices

To improve the effectiveness of EOBs, claims payors should adopt several best practices. First, the use of plain language is essential to explain medical services and insurance decisions clearly. Avoiding technical language and providing clear definitions for necessary terms can help consumers better understand their coverage and any actions they need to take.

Additionally, providing detailed denial explanations is crucial. Clearly outlining the reasons for any claim denial, including specific references to policy terms or medical necessity criteria, helps participants understand the decision and what steps they can take to appeal.

Adopting standardized formats across the industry would ensure consistency and ease of understanding. This could involve industry-wide guidelines or standards. Incorporating visual aids, such as charts and graphs, can summarize key information and make complex information more accessible.

Lastly, providing enhanced digital access to EOBs through online portals and mobile apps can improve accessibility and convenience for participants. Ensuring that these digital versions are user-friendly and interactive, allowing participants to click through for more detailed explanations, can further enhance the clarity of EOBs.

Improving the appeals process

Once claims processing is complete, whenever there is an adverse benefit determination, citing the specific plan provision relied upon is essential, as is confirming what information was missing that is needed to perfect the claim, and confirming next steps and timing/deadlines in the claims and appeals processes.

Although ERISA aims to ensure a full and fair review, the appeals process is often seen as overly complex and inaccessible.

Incorporating examples and templates can help guide participants through the process.

Timely responses are crucial; processing all appeals within ERISA's set timelines can reduce frustration and increase the likelihood of successful outcomes. Additionally, offering supportive resources such as helplines, online chat support and informational brochures can help participants understand their rights and navigate the appeals process more effectively.

Keeping participants informed about their appeal's status and any additional information required can build trust and enhance the overall experience.

Advocating for policy changes that simplify the claims process and improve participant education and working with industry groups and regulatory bodies to promote best practices and regulatory reforms, can help create a more transparent and equitable system for all participants.

Pathways to clearer and more efficient health coverage processes

Improving clarity in health coverage processes and EOBs is essential for protecting both participants and health care providers. By simplifying language, providing detailed explanations, standardizing formats and enhancing digital access, insurers can make EOBs more transparent and accessible. For physicians, these improvements can lead to enhanced patient trust, reduced administrative burdens and better financial health for their practices.

Additionally, a streamlined appeals process and robust participant representation are crucial for minimizing financial and health-related hardships. As stakeholders in the health insurance industry, it is the collective responsibility to advocate for these changes and work towards a more transparent and equitable system for all participants.

The ERISA Advisory Council's focus on these issues this year presents a timely opportunity to advance these goals and improve the overall health insurance experience for participants.

The Advanced EOB was scheduled to become effective on Jan. 1, 2022. While delayed, note that the Department of Labor, Employee Benefits Security Administration, has again placed the Advanced EOB regulations on its priority guidance list – with the anticipated release of a Notice of Proposed Rulemaking in March 2025.

Christine M. Cooper is CEO of aequum LLC. A patent lawyer recruited to Koehler Fitzgerald LLC in 2016 because of her large law firm experience and IT skills, Christine was quickly elevated to a member of Koehler Fitzgerald LLC and leads the health care practice. Christine is the CEO of aequum and is dedicated to assisting and defending plans and patients.