EOB (Explanation of Benefits)
A document sent by a health insurer to a provider (and often to the patient) after processing a claim. The EOB shows the billed amount, the allowed amount under the contract, the payer's payment, any contractual adjustment, and the patient's remaining financial responsibility. The EOB is the primary tool for verifying that a claim was paid correctly.
Why this matters for your clinic
Every EOB your practice receives is a payment verification document. Matching EOB payments against what your contract says you should have been paid is how you catch underpayments before they are posted as contractual adjustments and written off. Most practices post EOBs to ERA (Electronic Remittance Advice) files automatically, which means systematic underpayments can go undetected for months or years.
EOBs also reveal the reason code for any adjustment or denial. The CARC (Claim Adjustment Reason Code) and RARC (Remittance Advice Remark Code) on an EOB tell you precisely why a claim was paid at a reduced rate or denied. Tracking reason codes by payer and service type is the foundation of any denial management program.
Patient-facing EOBs are a separate document the insurer mails to the patient. When the patient's EOB and your practice's remittance do not agree, it is usually a sign of a posting error, a coordination of benefits issue, or a payer calculation error that warrants follow-up.
What good looks like
HFMA MAP Keys guidance treats regular EOB reconciliation against contracted rates as a core revenue cycle function. CMS requires payers to issue Medicare Summary Notices (the Medicare equivalent of an EOB) to beneficiaries and Remittance Advice to providers after each claim adjudication.
Example
A dermatology practice bills $300 for CPT 99214. The EOB shows: billed $300, allowed $180, payer paid $144 (80%), patient responsibility $36 (20% coinsurance), contractual adjustment $120. If the contracted allowed amount is actually $195, the payer underpaid by $15 on this claim. Across 50 similar claims per day, that is $750 per day in underpayments that would be invisible without EOB-to-contract reconciliation.
From Sorso
EOB reconciliation at the line-item level is where we find the most recoverable underpayments in new engagements. The work is tedious but the yield is real, and once the process is automated it runs passively in the background.
Founder of Sorso. 19 years in corporate finance. Managed a $450M loan portfolio before building a fractional CFO firm exclusively for healthcare clinics.
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