In such cases, it may be referred to as balance billing. Many people find themselves in this situation, where some extra charges are made by a healthcare professional.
Before the No Surprises Act took effect, the Kaiser Family Foundation (KFF) reported that about 1 in 5 emergency room visits by insured adults resulted in at least one unexpected out-of-network medical bill. This highlights how common surprise medical charges once were and why it is important to understand your billing rights.
Balance billing refers to a procedure whereby a healthcare provider bills you for the gap between the total cost of the provided care and the portion that your insurance company will agree to cover.
With new legislation making sure that most patients do not get surprised by their medical bills, there are times when balance billing is still acceptable. Below is all you need to know about this process.
Here is everything you need to know about balance billing.
What Is Balance Billing?
Balance billing refers to the process of charging a patient for the difference after their insurance company has paid the allowed amount for a medical service.
This can happen with many types of healthcare, including hospital care, specialist visits, emergency treatment, and integrative medicine services, especially if the provider is out of your insurance plan's network or the services are only partially covered.
An easy illustration would be like this:
-
The doctor bills you $800 for some medical procedure.
-
The insurance company allows only $500 for the procedure.
-
The insurance company pays a portion of the allowed cost depending on your health insurance coverage.
-
If the doctor is allowed to bill you the extra $300, it is balance billing.
The balance billing amount will be different from your normal healthcare costs, which include:
-
Deductible
-
Copayment (copay)
-
Coinsurance
These are all normal healthcare costs covered in your health insurance.
How Does Balance Billing Work?
The majority of health insurance plans enter into agreements with the medical care providers. Agreements between insurance plans and the healthcare providers establish prices for medical procedures.
If you go to an in-network healthcare provider, the price that will be charged for the medical procedure is agreed upon by the insurance plan. The healthcare provider cannot bill you more than the usual amount.
If you go to an out-of-network healthcare provider, no pricing agreement may exist. In this case, the healthcare provider charges their full price and sends you the invoice for the remaining balance.
In-Network vs. Out-of-Network Providers
Understanding the difference between these providers is important.
In-Network Providers
In-network providers have agreements with your health insurance provider. The agreements include offering their services at negotiated prices.
If you visit an in-network provider, then you will only be required to pay:
-
Deductible
-
Copayment
-
Coinsurance
You will not be billed for the rest of the bill.
Out-of-Network Providers
Providers who are not part of the network do not have a contract with your insurance company.
Since there is no negotiation of prices with them, they tend to charge more than what your insurance will deem fit. This can lead to you being sent a balance bill since your insurance covers only part of the price charged.
When Is Balance Billing Allowed?
Balance billing may still be legal in some cases.
In some instances, balance billing can take place:
-
If you elect to have medical care provided by an out-of-network provider.
-
If you have out-of-network coverage under your health insurance plan but it does not cover the entire bill from the provider.
-
There are no federal or state regulations that do not permit balance billing in your case.
You are informed about the out-of-network treatment you receive, and you have consented to waive some protection from the law in this case.
When Is Balance Billing Not Allowed?
In the U.S., the No Surprises Act, which was implemented on January 1, 2022, is an essential safeguard against unexpected medical bills.
According to this federal law, balance billing is usually not allowed for the following:
-
Services delivered in an emergency setting
-
Emergency air transport services (but not for ground transportation services)
-
Many services delivered by out-of-network providers at in-network facilities (hospitals and surgery centers)
In such cases, patients normally cannot be charged anything beyond what they would be expected to pay for regular in-network cost-sharing. But there are still some exceptions to this rule.
What Is the Difference Between Balance Billing and Surprise Billing?
These two concepts tend to be mixed up, but they are different.
Balance billing is defined as charging you the difference between the amount charged by the healthcare provider and what your insurance company has paid.
The term surprise billing refers to a situation where you unexpectedly get a balance bill despite receiving in-network care.
For instance, when you visit an in-network facility for surgery and then realize later that the anesthesiologist was out-of-network and charges you separately for services provided, this is called surprise billing.
The No Surprises Act was introduced to minimize such occurrences.
Common Situations Where Balance Billing Can Happen
The balance billing process may happen in many cases, such as:
-
Attending an appointment at an out-of-network specialty.
-
Getting treatment when you travel away from your insurance network.
-
Going to an out-of-network hospital.
-
Getting services from out-of-network medical practitioners.
-
Getting services not fully covered by your insurance plan.
Be sure to verify the status of the provider regarding your insurance coverage before getting any non-emergency treatment.
What Should You Do If You Receive a Balance Bill?
Getting a surprise medical bill might be shocking for you, but there are several things that you can do.
Review the Bill Carefully
Compare the bill to your insurance’s Explanation of Benefits (EOB).
Check:
-
The provider's name
-
Service dates
-
Fees
-
Payment made by the insurance
-
Remaining balance
Sometimes errors occur.
Confirm Your Network Status
Ensure that the provider was indeed out of THE network. The list of providers may not be up to date, and it is important to check with both the provider and your insurer.
Contact Your Insurance Company
Inquire about the reasons why your claim was processed in this manner.
Examples of questions you should ask are as follows:
-
Is the provider regarded as being out-of-network?
-
Was the service covered?
-
Does the No Surprises Act apply?
Your insurance company can answer these questions.
Speak With the Provider's Billing Office
In case the bill is accurate, consider whether they can:
-
Decrease the total amount
-
Provide you with discounts
-
Arrange a payment schedule
-
Correct any billing mistakes
Most healthcare facilities are very willing to cooperate with their clients.
File an Appeal if Necessary
If you feel the balance billing was unwarranted, you can appeal the decision of the insurance company or appeal to the appropriate authority. Be sure to keep a copy of all the bills and communications during the process.
How Can You Avoid Balance Billing?
Even though it may be hard to prepare for an emergency situation, some things can help make sure that you do not face any unexpected bills.
Some tips are:
-
Always try to use in-network providers.
-
Check network coverage before appointments.
-
Make sure all healthcare providers used are in-network.
-
Be aware of your insurance coverage before treatment.
-
Examine your EOB carefully.
-
Save copies of medical bills and insurance documents.
-
Reach out to your insurance provider if you have any concerns before treatment.
A little planning can go a long way towards preventing costly medical bills.
Does Every Insurance Plan Handle Balance Billing the Same Way?
No, each health insurance policy has different requirements.
These include such things as:
-
Whether your policy covers out-of-network services
-
Your deductible
-
Your coinsurance rate
-
Your yearly maximum for out-of-pocket costs
-
Federal protection
-
State insurance laws
If you are not sure what your policy covers, check with your insurance company before you receive any non-emergency services.
Why Is Balance Billing an Important Healthcare Issue?
Balance billing is one of the most important issues, since it can put extra financial pressure on patients and their families due to unforeseen medical expenses.
There is a lot of people who get services assuming that they have medical insurance and, later on, get bills a few weeks or months after the treatment.
The protection from federal legislation such as the No Surprises Act has helped prevent surprise medical bills in many cases. Nevertheless, it would be useful to know how insurance operates.
Final Thoughts
Balance billing in the healthcare sector might seem complex at times. However, having basic knowledge about it will go a long way in protecting you against it. Balance billing usually occurs when a health provider charges more than what your insurance company is willing to cover.
Although the No Surprises Act has helped in reducing surprise balance billing for numerous people, balance billing may still happen under some circumstances.
To prevent this problem from occurring, ensure that you have checked whether the providers are in your insurance network and whether you have enough health insurance coverage prior to seeking any non-emergency health services.