This is not a bill: Insurers give explanations of benefits a facelift

Long lost to the junk mail piles of patients across America, the maligned explanation of benefits statement is undergoing a major makeover.

The mandatory statement mailed out after a claim tells beneficiaries, among other information, the amount charged by the provider, the amount paid, and the amount for which the patient is responsible. But it is not a bill, though patients often think it is.

Before Humana did a redesign of its statements, many beneficiaries believed they were receiving a bill, said Kevin Gibson, director of retail consumer experience for Humana.

"Even though it says at the top 'This is not a bill,'" Gibson said. "We used to get telephone calls, 'Why am I getting this bill?'"

Starting around 2007, Humana began to overhaul its EOB, with revisions taking place annually, said Elizabeth Collier McGehee, a consultant with Humana's consumer experience department.

"We've done two complete redesigns," she said. "We update them every year."

Among the most significant changes is timing. The mailer changed from a statement sent out after every claim was processed to one that arrives monthly or quarterly, depending on claim utilization. This hopefully means fewer patients will think they are bills.

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"It no longer comes after each visit, it no longer feels as a bill," Gibson said. "Part of it is the way we design the material."

In addition to including claim info, Humana's EOB also reminds beneficiaries that it's time to get their check-ups including mammograms or physicals.

It may also suggest to those using a brand-name drug that there is a less-expensive, generic alternative available.

"We really do try to influence positive behavior, targeting messages for generic drugs or glaucoma screening for the year," Collier McGehee said.  "The statement is important in how we engage with a member."

When beneficiaries switch to a generic drug, that's a benefit to Humana, Gibson said.

A good EOB affects the Healthcare Effectiveness Data and Information Set, or HEDIS scores, which measures insurer performance. This impacts star ratings and can ultimately help enrollment rate, he said.

"We saw it as a huge opportunity to create a customer engagement tool," Gibson said. "We created a statement that said how much they're spending and how much value Humana is providing. We use it as an opportunity to message our consumers. The ultimate goal is to create a tool to engage in health."

Humana's Health and Wellbeing Guide is now combined with the EOB.

In the past, Collier McGehee said, "A member could have gotten 30-plus documents. We've gotten it down to three."

Cigna's EOB also went through a major revision around the same time as Humana's.

Ingrid Lindberg, a former customer experience officer for Cigna who worked on the redesign, said clustering for an episode of care is less confusing to a customer than sending out 20 EOBs.

Payers may dispute waiting, but Lindberg said insurers are required to send out EOBs within 30 days of service.

According to her, customer confusion over EOBs comes down to the language and the math.

"Look at most EOBs, the math doesn't add up," Lindberg said. "You're billed this and you owe this."

Cigna's new EOB statement.

Cigna let beneficiaries know that the provider was their physician after finding out that 87 percent of beneficiaries identified the insurer as the provider and 52 percent thought coinsurance was the insurance carried by their spouse.

Lindberg said she remembers seeing her first Cigna statement, which she described as formatted in tiny typeface and filled with medical codes.

Both Humana and Cigna simplified the language while staying within Centers for Medicare and Medicaid Services guidelines.

"Nowhere does it say deductible," Lindberg said of the redesigned Cigna EOB. "We say there's an amount that Cigna paid. It gives you a single view shot of your coverage and what amount of money your coverage has saved you. We went from 'amount billed,' to 'discount.' We showed that discount. We inserted at the bottom, stole it straight from Walgreens, it said, 'You've saved. Because you've stayed in network, you've saved.'"

Both Humana and Cigna deal in EOBs that number in the millions monthly. Both found they could send out fewer individual pieces but more information.

Their new EOBs have reduced the number of calls from customers confused about benefits, which has led to increased beneficiary retention.

Gibson said that at Humana the nature of the calls has changed. Before, consumers were asking about claim status. Now it's more about drug interactions or getting appointment reminders.

"We have changed the conversation," Gibson said. "We encourage them to take their statement to their doctors."

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"Look at what drives the customer -- only 6 percent of how a consumer feels about a health plan is driven by customer service," Lindberg said. "Thirty percent is driven by communications. People stay if they're happy. Retention equals revenue."

Both Humana and Cigna have cut down on costs, too, especially in terms of postage stamps and paper, considering more people are choosing to receive these digitally.

By government mandate, the EOB must be mailed unless a consumer opts to receive the information digitally.  A beneficiary providing an email address isn't enough. They must opt-in.

By federal requirement, insurers send out a separate letter if a claim is denied. States also have individual requirements.

Cigna was able to make its redesign happen by involving senior management, the legal team and marketing, she said. A small team did the design.

"It's not nearly as expensive as people imagine," Lindberg said. "ROI was almost immediate. It pays for itself very rapidly."

Lindberg is now at consulting firm Chief Customer, which she founded. She continues to work with insurers to design a better EOB.

"For the most part, the industry has done a horrible job in using its most pervasive industry tool," Lindberg said. "You've got such an opportunity with space. We know people open them."

Humana's EOB open rate is 90 percent, Collier McGehee said. Fifty percent of beneficiaries glance at and 30 percent read it cover to cover.

Cigna and Humana have both received "excellent" designations in EOB clarity, content and design from Dalbar, a Boston-based market research firm that annually grades EOB statements.

"It all comes back to decision-making information in a friendly format," Collier McGehee said. "It's all about personalized consumer engagement."

Twitter: @SusanJMorse