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What is assignment of benefits?
An assignment of benefits is when a patient signs paperwork requiring his health insurance provider to pay his physician or hospital directly. AOBs also play a part in other cases dealing with insurance, such as homeowners insurance, but here we are defining the term in the area of medical benefits.
Typically, when signing an AOB agreement, you agree to allow the medical provider to seek payment from your health insurance company directly. The intent of an AOB agreement is to make the process easier for you, as you do not need to deal directly with your insurer.
An AOB also can cut out some of the costs in the form of service fees often associated with processing. By doing this, you, as a patient, can focus on your medical treatment and recovery, without having to worry about the process involved with paying your medical bills.
Assignment of benefits example
When you sign an AOB agreement, you give a third party the right to seek payment for services rendered on the part of the provider, and the medical field is a classic example of where you may sign an assignment of benefits agreement.
A list of the providers or services that use AOBs include the following:
- Ambulance services.
- Ambulatory surgical center services.
- Clinical diagnostic lab services.
- Drugs and biologicals.
- Home dialysis supplies and equipment.
- Physician services for patients that use Medicare and Medicaid.
- Services of medical professionals other than a primary physician, including certified registered nurse anesthetists, clinical nurse specialists, clinical psychologists, clinical social workers, nurse midwives, nurse practitioners and physician assistants.
- Simplified billing roster for vaccines, such as for the influenza virus and pneumococcal.
Medical insurance claims represent the most common form of AOB agreement. You need to make sure that your insurer authorizes you to use an AOB with your medical provider; otherwise the insurer might not honor the AOB.
One area of contention concerning medical AOBs is the Employee Retirement Income Security Act plan. While set up to protect you if you participate in a pension or employer-based health plan, it also can present difficulties for providers trying to enforce an AOB.
This is due in part to a plan’s limitations on payments, especially for out-of-network providers. Before signing an out-of-network AOB, check with your insurer to see exactly what is covered.