Imagine you performed a comprehensive treatment for a procedure, but after a few days, the insurance payer sends the reimbursement check directly to the patient. While rare, this can happen. The reason? Failure to get a signed assignment of benefits from the patient.
In this guide, we have simplified what assignment of benefits in medical billing is, and why it is essential for healthcare providers, patients, and the insurance payers (government and commercial). Let’s start.
A Brief Description of AOB in Medical Billing
In simple terms, an assignment of benefits in medical billing is a legal agreement in which a patient authorizes the healthcare provider to receive payments from the insurance payer on their behalf.
The whole purpose of an AOB is to simplify the payment system. Without this agreement, insurance policies typically default to reimbursing the policyholder (usually the patient), who is then responsible for paying the provider. This process is time-consuming and causes payment delays for the healthcare provider. So, now most healthcare providers and insurance payers require an assignment of benefits before rendering any services.
Healthcare providers across the country are rushing to adopt this policy. In fact, data shows that approximately 98% of providers billing Medicare “accept assignment”.
Also, to fully understand the assignment of benefits, you must understand the concept of “participating” and “non-participating” providers. Participating providers have signed an agreement to accept assignment for all Medicare-covered services, meaning they acknowledge the Medicare-approved amount as payment in full. Non-participating providers have not signed this agreement and may choose to accept assignment on a claim-by-claim basis.
Importance of AOB in Medical Billing
Why does AOB in medical billing matter? Well, the assignment of benefits is more than just an agreement. It holds importance for all parties involved. Let’s see how:
For Patients
We all know that healthcare services are expensive. When we step into a hospital, there’s no limit to how much the treatment can cost. For the average patient, this is often not manageable. Without an AOB, a patient typically would have to pay the entire medical bill at the time of service. Although he would be paid later by the insurance company, it is hard to arrange money on short notice. An AOB eliminates this massive upfront financial burden for the patient. The healthcare provider covers this initial cost and is reimbursed later.
For Healthcare Providers
Healthcare practices survive on steady cash flow. An AOB makes this possible by making the reimbursement process faster. With an AOB, the insurer directly sends the payment to the provider electronically or via check, eliminating the need for the provider to wait until the patient cashes the check and then pays the office.
Plus, it is very time-consuming and laborious to chase patients for payment. AOB solves this by removing the patient from the payment processing equation.
For Insurers
Insurance payers also benefit from assignment of benefits. When payments are directly transferred to providers, it becomes easier to conduct audits. This helps in early fraud detection and service verification, which in turn results in faster reimbursements.
Elements of a Valid AOB
A signature on a napkin wouldn’t hold up in court, so what specific components must this document contain to withstand legal scrutiny and payer audits? For any AOB in medical billing to be valid, it must have the following important elements.
- Explicit Consent Language: The form must contain clear language stating that the patient is assigning their insurance benefits to the provider.
- Complete Insurance Details: The document must have the patient’s complete insurance data, such as insurance policy number, group number, and the name of the insurance carrier.
- Provider Information: The specific healthcare provider or practice entity must be identified, including the legal name, NPI number, and billing address.
- Scope of Services: The agreement should specify whether it covers a specific visit, a course of treatment, or all services rendered within a certain timeframe.
- Patient Signature and Date: A valid signature from the patient (or their legal guardian) and the date of signing.
- Revocation Terms: Valid agreements often outline how and when a patient can revoke the assignment, ensuring transparency.
Challenges of AOB in Medical Billing
The assignment of benefits in medical billing really simplifies the payment process for everyone. However, like everything, it has its fair share of challenges. Let’s discuss the major ones:
- Patient Confusion: From the patient’s point of view, misunderstanding is a big challenge. That’s simply because of a lack of knowledge. This happens because many patients sign intake forms at hospitals without reading them thoroughly. Later, when they receive an Explanation of Benefits (EOB) showing large payments to the provider, or conversely, receive a bill for a deductible they didn’t expect, they become confused. This leads to unnecessary conflicts and wasted resources.
- Out-of-Network Complexities: Things become trickier when out-of-network healthcare providers are involved. Sometimes insurance payers refuse to honor an assignment of benefits if the claims are from an out-of-network practitioner or hospital. Because of this, the provider tries to collect money from the patient, who already paid his premiums to the insurer. To break this impasse, the case is then submitted to a review committee or court.
Conclusion
Let’s conclude everything we have discussed so far. An assignment of benefits in medical billing is a written, formal, and legal document that authorizes a healthcare provider to receive payment from insurance payers on behalf of patients. An AOB in medical billing simplifies and speeds up the reimbursement process by cutting down the routes of payment.
However, it also comes with challenges. To overcome them, it is imperative to establish clear communication between the patient and healthcare providers. For healthcare providers, the best solution is to get professional medical billing services from companies like MediBillMD, as specialists employed by these companies are pro at front-desk communication.
