Assignment of Benefits (AOB) is an advantage to policyholders, whereas it presents problems for insurance companies. It is a legal document signed by the policyholder, creating an agreement between the beneficiary and a third party. This agreement transfers control from the beneficiary to the third party, allowing the latter to directly file an insurance claim with the insurer, thus eliminating the need for policyholder involvement.
The Insurance Information Institute considers AOB as a method to settle claims on behalf of a policyholder. After the policyholder signs an AOB, it becomes the third party’s responsibility to address the issue and request payment from the insurer for the service provided.
What is the Purpose of AOB?
Once the AOB contractual agreement is signed, it authorizes the third party to submit the claim to the insurance company for the service rendered. This is beneficial for healthcare providers, as it allows them to move insurer reimbursement directly, bypassing the patient. This circumvents potential issues such as underpayments, denials, and appeals, and expedites the process of resolving the issue.
For instance, an out-of-network or non-participating provider, not bound by any legal contract with the insurer regarding service rates, can, upon signing an AOB, submit the insurance claim along with supporting documents, hoping to receive reimbursement at the actual billed charges. In cases where the insurer pays less than the billed charges or refuses to pay the amount, the provider is at liberty to appeal the underpayment or denial.
Services Using AOB:
Services that typically use AOB include:
Impact of AOB on Insurers:
Impact of AOB on Patients:
Before hiring a third party, it is advisable for patients to get multiple estimates from different companies or contractors to understand the average cost. Moreover, checking for reviews and references before making any decision is crucial. Once a company is chosen, it is vital to read the contract carefully before signing. Having everything in writing, such as the cost, time schedules, payment schedules, and the work scope, helps avoid confusion. It is also essential to review the documents sent to the insurer to prevent the abuse of inflated claim costs.
Overall, Assignment of Benefits (AOB) is an essential tool for healthcare providers and patients, making healthcare management more efficient and less stressful.