Avoid the Trap of Balance Billing

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It is no secret that payers and providers have conflict as it relates to reimbursement rates for medical services, and there is another stakeholder, the patient, that plays an important role in the financial impact of healthcare reimbursement. Usually, patients are faced with unforeseen bills from their providers due to an unpaid portion of a claim. This is usually referred to as balance billing. Balance billing, also called “extra billing,” is defined as a healthcare provider billing a patient for the difference between what the patient’s health insurance chooses to reimburse and what the provider chooses to charge. For example, if the provider charges $100 for a service and the allowed amount is $70, the practice bills the patient the remaining $30. The question is: Does the patient actually owe the balance of a bill after their insurance pays?

To Bill or Not to Bill Is the Question

At a glance this may not seem like a problem, but if a provider is a preferred provider or contracted with a health plan, he or she may not balance bill for covered charges. The key is knowing when you can or cannot balance bill a patient. Billing a patient for any charges or balance of a bill above the allowable rate in the provider contract is considered illegal. Most healthcare plans will inform the provider as to what is permissible to collect or what the patient is responsible for under their coverage benefits. Practices can collect up front at the time of service for any co-pays, co-insurance, deductible or any amount due for services not covered by the patient’s plan.

On the other hand, out-of-network physicians, those not bounded by contractual in-network rate agreements, have the ability to bill patients for the entire remaining balance. Keep in mind, if the insurance plan or the contract specifies that the patient is not responsible for any deductible, co-pay or co-insurance, then it is also illegal to bill the patient for any charges.

The rise in unpaid medical bills has a detrimental financial impact on physician practices and the healthcare system at large. The increase on administrative burdens and accounts receivable has unanticipated consequences to cost and budget in practices. The biggest problem practices are facing with balance billing is due to a lack of transparency from the insurance plans with their beneficiaries. There are some cases where patients are unaware they received care or services outside of their network until they receive the bill for the balance. Additionally, insurance plans deny or reject charges that should be paid, but inform patients that there is no balance on their bill—again, this leaves practices stuck with an unpaid bill or having to write off a lot of charges.