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DALBAR: Insurer EOBs Continue to Confuse Consumers

A small number of innovative health insurers — including Arkansas BlueCross BlueShield, CIGNA, and Humana —'buck the tradition of incomprehensible customer communications, according to the third party evaluator.

Financial services industry third party evaluator DALBAR reports that 68 percent of explanation of benefits (EOB) forms issued by health insurers receive failing grades from consumers. The finding issued from DALBAR's first national evaluation of health insurance communications, comparing the usefulness of communications from 34 leading insurers, including the federal government's Medicare program.

"This failure rate helps to explain why health care costs continue to rise with little resistance on the part of consumers — they just don't know what they are buying," asserts Kathleen Whalen, managing director, DALBAR. "An uninformed consumer is vulnerable to high prices, fraud and abuse."

A DALBAR news release cites a small number of "innovative" health insurers — including Arkansas BlueCross BlueShield, CIGNA, and Humana —'that have "recognized the importance of EOBs to American consumers and have transformed the documents into understandable and even useful tools for consumers."

According to the release, the EOBs were evaluated using a method that has been developed and refined over the past two decades of evaluating print communication. Communications earned credit for including features that strongly impact a consumer's ability to act prudently and make decisions. Features include the ability to understand the significance of the information, answer pertinent questions and utilize design elements that enhanced their overall effectiveness.

Key Findings of the DALBAR study include:

Nearly seven out of ten firms failed to produce EOBs that provide a basic level of understandability. Just 9% of firms (3 out of 34) received a DALBAR Designation of "Excellent" for the Clarity, Content and Design of their EOBs. Less than a third of the EOBs evaluated received the minimum Designation of "Good" or higher. Only 3 firms include any charts and graphics on their EOBs to help consumers understand how their benefits work. Most messaging included in EOBs takes the form of supplemental notes that are often written in esoteric language and placed far away from the information to which they apply. These notes often contain the most important elements of the EOB " i.e., the "explanations." The majority of EOBs failed to clearly answer the following most basic consumer questions: How much, if anything, do I owe?; What action should I take now?; What do I do with this document?

Anthony O'Donnell has covered technology in the insurance industry since 2000, when he joined the editorial staff of Insurance & Technology. As an editor and reporter for I&T and the InformationWeek Financial Services of TechWeb he has written on all areas of information ... View Full Bio

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