Assignment of Benefit (AOB)
By Steven M. Verno, CMBS, CEMCS, CMSCS
An excerpt of Medical Billing Terminology (c) 2009 Steven M. Verno. Published with
Assignment of Benefit (AOB) is a simple term that can have very drastic
consequences. Assignment means to take something and give it to someone
else. Example: I assign my parking spot to
Jim. Benefit is a health care service provided under a contract between a health
insurance company and an employer or patient. SO, an assignment of benefit simply means the patient is asking
permission to take the payment of their health benefit and give it to the doctor so that the doctor can apply the
benefit payment to the medical debt owed by the patient.
This is a request sent to the insurance company, signed by the patient or member, requesting that the
payment of their health benefit be sent to a person they designate to receive the payment of the health benefit.
This request may or may not be honored and accepted by the insurance company depending on the patient’s or member’s
health benefit contract, or State Law.
The patient’s or member’s health benefit contract may prohibit the assignment of the health benefit
payment to anyone. State Law such as in Florida and Louisiana may require the insurance company to honor the
Assignment request even if the contract prohibits it. If the Assignment is prohibited, the payment of the health
benefit will be sent directly to the patient or member; and then requires the provider to bill the patient or
Assignment of Benefit and State Laws
Not every patient has the contracted right to assign their benefit payment. Even if you have the
patient sign an AOB form, the insurance company doesn’t have to honor it if the patient cannot contractually assign
their benefit payment to anyone. The only exception is if there is a State Law mandating it.
The provider has the option to do this on a claim by claim basis.
If accepted, the insurance company pays the patient’s health benefit directly to the person
designated by the patient to receive the payment of the health benefit. The provider has checked “Yes” for
“Assignment” on the claim form. Block 27 (Assignment) of the CMS
State Law such as in Florida and Louisiana may require the insurance company to honor the Assignment request
even if the contract prohibits it. If the Assignment is prohibited, the payment of the health benefit will be sent
directly to the patient or member. Then requires the provider to bill the patient or
Non-Acceptance of AOB
If the provider does NOT accept assignment, the payment of the health benefit is sent to the patient or
member. Some insurance companies such as Medicare, Railroad Medicare, and Tricare allow you to bill the patient for
115% of the allowable. For example, if the allowable is $100, you can bill the patient for $115.00. Assignment only
works if the patient’s contract allows the assignment of the benefit payment, or State Law mandates acceptance of
State Assignment of Benefit Laws can be referenced on the American College of Emergency Physician
(ACEP) website http://www.acep.org/advocacy.aspx?LinkIdentifier=id&id=29364&fid=1018&Mo=No