Understanding Explanation of Benefits Statements
An Explanation of Benefits (EOB) can be hard to read. This guide helps you work through an EOB so you can apply the correct payment, contractual write-off and patient responsibility.
Below is a sample EOB based on the standard Medicare Remittance Notice. Most payers have their own formats and terms, so we also provide a table that matches other payers’ terms to the ones on the sample.
Sample Medicare Remittance Notice
The sample is a Medicare Remittance Notice from Palmetto GBA to a provider named Best Medicine in Reno, Nevada, dated 10/15/2012, check/EFT number 881815057, page 1 of 1.
The claim line reads:
Name: CANNON, SIDNEY V · HIC: 841313019M · ACCT: 873961758B · ICN: 998025763L · ASG: Y · MOA: MA01 MA18
| Serv date | POS | NOS | Proc | Mods | Billed | Allowed | Deduct | Coins | Grp/RC-Amt | Prov Pd |
|---|---|---|---|---|---|---|---|---|---|---|
| 09/20/2012 | 11 | 1 | 77290 | TC | 1934.54 | 486.22 | 0.00 | 97.24 | CO-45 1448.32 | 388.98 |
| 09/20/2012 | 11 | 1 | 77014 | TC | 360.00 | 107.73 | 0.00 | 21.55 | CO-45 252.27 | 86.18 |
| 09/20/2012 | 11 | 1 | 77334 | TC | 1363.62 | 92.97 | 0.00 | 18.59 | CO-45 1270.65 | 74.38 |
| Claim totals | 3658.16 | 686.92 | 0.00 | 137.38 | 2971.24 | 549.54 |
Below the claim totals, the notice shows:
- Pt Resp: 137.38
- Adjustments to totals: Prev Pd (none), Interest 0.00, Late Filing Charge 0.00
- Net: 549.54
- Claim information forwarded to: Blue Cross of Nevada
The check totals for the notice are 1 claim, billed amount 3658.16, allowed amount 686.92, deductible 0.00, coinsurance 137.38, total RC amount 2971.24, provider paid 549.54, provider adjustment 0.00 and check amount 549.54.
The glossary at the bottom of the notice explains the codes used:
| Code | Meaning |
|---|---|
| MA01 | If you do not agree with what we approved for these services, you may appeal our decision. To make sure that we are fair to you, we require another individual that did not process your initial claim to conduct the appeal. |
| MA18 | The claim information is also being forwarded to the patient’s supplemental insurer. Send any questions regarding supplemental benefits to them. |
| 45 | Charges exceed your contracted/legislated fee arrangement. |
| CO | Contractual Obligations |
EOB terms and what other payers call them
| Medicare term | Definition | Terms used by other payers |
|---|---|---|
| Remittance Notice | The title of the report issued by the payer that summarizes the processing details of the claim. | Explanation of Benefits, Explanation of Payment, Remittance Advice, Statement of Payments |
| Billed / Billed Amt | The fee charged for the services. | Charge Amount, Charges, Requested Amount, Submitted Expenses |
| Allowed / Allowed Amt | The amount of the fee that is allowed under the contracted rate with the payer. | Eligible Expense or Amount, Approved, Covered Charges |
| Deductible / Deductible Amt | Shows whether any of the allowed fee was applied to an outstanding deductible on the patient’s policy. | Annual Deductible |
| Coins / Coins Amt | The amount of the allowed fee that the patient must pay under the policy terms. | Customer or Patient Liability, Out of Pocket Amount (OOP). Commercial payers may also show a Copayment on a service, which is a flat rate charged regardless of the fee. |
| Grp / RC-Amt / Total RC Amt | Grp stands for Group and RC stands for Reason Code. These codes give the reason for any amount not paid by the payer. See the section below for details. | Adjustment Grp and Reason Code, Not Covered Reason, Payment Codes |
| Prov Pd / Prov Pd Amt | The amount of money paid for the claim. | Amount Paid, Payment, Benefits Paid, Pay Amount, Net $, Total Benefit, Policy Pays |
| HIC | The health insurance identification number for the patient. | Subscriber ID, Member Number, Policy Number |
| ICN | The Internal Control Number the payer assigns to the claim once it is processed. The payer uses it for internal tracking. | Claim Number, Payer Claim Control Number |
| Pt Resp | The amount of money the patient can be billed for the services on the claim. | Customer or Patient Liability, Out of Pocket Amount (OOP). This is typically the total of the deductible, coinsurance and copayment amounts applied to the services. |
| Prov Adj (Prev Pd, Interest, Late Filing Charge) | Used when the payer has additional adjustments to apply to the provider’s portion of the payment. It may increase the base payment, as when interest is paid. It decreases the base payment if part of the service was previously paid on another ICN. | Penalty, Recoupment |
| Remark Codes | Codes that give more explanation for an adjustment already described by an adjustment group and reason code. See the section below for details. | REM or RMK |
Claim Adjustment Group Codes
A Claim Adjustment Group Code is two letters that assign responsibility for a claim adjustment on the insurance Explanation of Benefits. There are 5 EOB Claim Adjustment Group Codes:
| Code | Full name | Description and indicated action |
|---|---|---|
| CO | Contractual Obligation | The amount of the fee that must be written off as uncollectable based on the provider’s agreement with the payer. It most commonly shows the amount billed over the payer’s allowed fee schedule amount. A contracted provider cannot pass contractual obligation amounts on to the patient. |
| CR | Corrections and Reversal | Mainly used to show that the payer has reprocessed a service. It applies when a denial was overturned and additional payment was sent. It can also be used when the payer reverses an original payment, which tells the provider there was an overpayment on the service. |
| OA | Other Adjustment | A miscellaneous category. The attached reason code is the key to understanding the effect of the adjustment and how to process it. It is typically seen on a secondary payer EOB to show the amount paid by the primary carrier and how it affected the payment issued. |
| PI | Payer Initiated Reductions | A payer may use this code to explain money withheld from the claim payment. If a provider owes the payer a refund, the payer can withhold payments on new services. |
| PR | Patient Responsibility | This is the simplest code to understand. Any amount to be passed on to the patient, or in some cases to a secondary payer, carries this code. It applies to the deductible, copayment and coinsurance. |
For more on these codes, read What are EOB Claim Adjustment Group Codes?
Claim Adjustment Reason Codes
Group codes are combined with Claim Adjustment Reason Codes, which can be numeric or alphanumeric and range from 1 to W2. For a complete list, see the Claim Adjustment Reason Codes published by X12. A reason code explains an adjustment. It must state why a claim or service line was paid differently than it was billed. If there is no adjustment to a claim or line, there is no adjustment reason code.
The top 5 examples of EOB claim adjustments are:
| Grp/RC | Indicated action |
|---|---|
| CO-45 | The claim amount that must be written off based on the payer’s contracted fee schedule. |
| CO-97 | The benefit for this service is included in the payment or allowance for another service or procedure that has already been adjudicated. |
| OA-23 | The effect of the prior payer’s adjudication, including payments and/or adjustments. |
| PR-1 | The amount applied to the patient’s deductible. |
| PR-2 | The amount applied to the patient’s coinsurance. |
Remark Codes
Each remark code corresponds either to a standard message in the Remittance Advice Remark Code list or to a payer-specific message shown on the EOB. For a complete list, see the Remittance Advice Remark Codes published by X12. For examples of how remark codes work with reason codes, see Remark codes in medical billing.
| Remark code | Expected use |
|---|---|
| M2 | Applied to a denied or bundled service to show that the service was not paid separately because the patient is an inpatient. |
| M25 | Explains that a service was paid at a lower rate than the expected contractual rate because the information furnished does not support the need for this level of service. |
| M29 | Used when a service that requires documentation was denied because the operative note or report was missing. |
| MA18 | Used by Medicare to show that the claim information was sent electronically to a secondary payer. |
| MA40 | Explains a denied inpatient service when the admission date was missing, incomplete or invalid. |
The disallowed amount
As explained above, on the standard Medicare remittance, the Grp/RC-Amt column shows the combined adjustment code for the service billed. Directly to the right of the code is a number, as in this example: CO-45 1448.32. This number is the disallowed amount for the service line. Other payers show the same amount using other terms, such as Non-allowed Amount, Not Covered, Discount, Ineligible or Policy Does Not Cover.
Each piece of information on the Explanation of Benefits explains part of the payment. When you read all of the pieces together, you can see exactly how the payer processed the claim.
You can also consider practice management software such as Iridium Suite from Medical Business Systems to automate more of your practice. One of the advanced features in this physician billing system automatically retrieves and adjudicates your Electronic Remittance Advices (ERAs) from many of the large payers. This can almost eliminate time-consuming manual EOB posting.
What has changed since this was written
- The HIC number was replaced by the MBI. Medicare remittances and claims now show the Medicare Beneficiary Identifier (MBI) instead of the SSN-based HIC number, which Medicare stopped accepting on claims in 2020. See HIC number, MBI and ICN.
- The code lists moved to X12. Claim Adjustment Reason Codes and Remittance Advice Remark Codes are now published at x12.org instead of the Washington Publishing Company website, and codes are added, changed and deactivated several times a year. See GRP/RC-AMT on a Medicare remittance.
- ERAs and EFT became standard. HIPAA operating rules for electronic funds transfer and electronic remittance advice took effect on January 1, 2014, so health plans must offer both on request. See Did You Know This About the ACA: EFT/ERA Mandates?
- Code 77014 on the sample was deleted. CT guidance code 77014 was deleted on January 1, 2026, when the radiation treatment delivery and image guidance codes changed. See The 2026 radiation treatment delivery codes.