Explanation of Benefits codes are used to describe the billing and payments for medical services, according to Medical Billing and Coding. The codes are meant to reduce the incidences of medical insurance fraud by tracking the type and nature of medical procedures performed on an insured individual.
EOB codes describe specific medical tests and procedures, according to AARP. This allows the insured individual to confirm the date and type of procedure he had performed. It further provides individuals the opportunity to detect potential errors, fraud and abuses, such as services that were not ordered by the treating physician or multiple charges for a single service.
EOB codes also describe reasons the third-party payer gives for denying or rejecting a medical service, according to Medical Billing and Coding. By tracking individual procedures, the third-party payer is able to determine when a service should be covered or denied. Some reasons for denied coverage include excessive diagnoses, medically unnecessary procedures, experimental procedures and incomplete information from the medical biller.
Medicare advises insured individuals to compare the claims given in the EOB against receipt statements obtained at the doctor's office. Individuals who find inaccuracies can find assistance on the Medicare website or by calling the toll-free number.