Balance Billing Defined
When there is a balance still owed on a medical bill after insurance as well as a co-payment or deductible has been paid per contractual obligations, the result is a balance bill. With patients expected to assume a larger share of the healthcare coverage burdens as well as being limited to what insurance networks are willing to cover, many patients are crying foul over what they see as abuses due to the prevalence of in-network facilities bringing in non-network personnel who then charge patients accordingly – often to the tune of thousands of dollars more than they would have expected.
As a result, some states have taken steps to limit or restrict altogether the types of balance billing allowed by providers, especially for those who provide services within but don’t belong to a facility’s network.
Is balance billing legal?
Depending on the circumstances, it can be legal to engage in billing for balances due, and could include any of the following scenarios:
- A patient uses healthcare services from a provider not contracted with their insurer, Medicaid or Medicare. This is often found in “concierge” medical practices, where physicians may bypass the insurance process altogether, as well as those patients seeking care outside of a plan’s network. While a plan may cover some out-of-network expenses a non-participating provider is not obligated to accept that plan’s reimbursement as payment in full. A bill for any remaining unpaid charges may be sent to the patient, even if over the patient’s co-pay or deductible.
- Non-covered services are provided even though the clinician providing them may be under contract with that plan. Services which aren’t deemed medically necessary, such as many cosmetic procedures, make the patient responsible for the entire bill.
Due to so many problems encountered and the legalities that have been challenged in courts, health insurance regulators in an increasing number of states have laws which may differ from the above general principles. The Kaiser Family Foundation is one source of information about state laws governing balance billing.
Balance billing is usually considered illegal when any of the following situations apply:
- When a patient is covered by Medicare and receives services from a provider who accepts Medicare assignment.
- When a patient is covered by Medicaid and receives services from a provider with an agreement with Medicaid.
- When a hospital or physician has contracted with a health plan but is billing more than allowed under the terms of the contract.
In the above cases, an agreement between a provider, Medicare or Medicaid or the insurance company includes a clause that forbids balance billing. Medicare assignment is in place when a hospital (or other provider) signs an agreement to see Medicare patients and agrees to accept the Medicare negotiated rate which includes the copayment or deductible as payment in full.
Out-of-network charges can create billing problems
Unsuspecting patients may be in for an unpleasant surprise when they receive a balance bill from an out-of-network clinician who, unknown to the patient, provided services through an in-network facility.
For example, a patient chooses an in-network hospital for treatment and has x-rays that are read by a non-network radiologist. While the hospital bill charges the in-network rate, the radiologist can charge whatever he or she wishes and is free to balance bill, leaving the patient stuck with expenses higher than anticipated.
Providers most likely to use balance billing
Clinicians in the following areas may find themselves more likely to balance bill:
- ER physicians
- Durable medical equipment (DME) providers
Because “surprise” balance billing has become so problematic for patients, states are now taking consumer protection measures to rein in billable charges, amounts and the circumstances. (Patients covered under self-insured plans in use by many larger employers are regulated by federal law under ERISA.)
Recent state regulations governing balance billing
Below is a partial list of states currently or soon to enact laws regulating balance billing, especially as applicable to out-of-network providers. If you practice in any of the following states, you (and your billing service) should be aware of these regulations:
- New York has had protections in place from "surprise" balance billing since 2015.
- California passed legislation (AB72) preventing patients from being charged for out-of-network services received at in-network facilities. The law is applicable to plans renewed or issued on or after July 1, 2017.
- Arizona passed Senate Bill 1441 in 2017, and which will go into effect in 2019. Under this bill, patients will be allowed to seek arbitration of surprise balance bill charges exceeding $1,000.
- Connecticut, Illinois and Maryland all have patient protections in place from surprise balance billing.
- As of 2018 Tennessee requires facilities to notify patients prior to treatment and in writing if any providers are out-of-network with the patient’s insurance. Out-of-network providers in an in-network facility can’t balance bill without prior disclosure.
- New Hampshire and Washington began 2018 with legislation providing patients with relief from balance billing
Physicians for Fair Coverage (PFC), a coalition of providers developing policies including balance billing, have recommended setting fair and appropriate reimbursement schedules connected to an independently verified and recognized charge database. Among the reforms suggested include:
- A minimum benefit standard of fair and transparent pricing for out-of-network treatment.
- Enough providers within networks, especially in ER medicine, serving the number of network patients.
- In-network rates for patients encountering unexpected out-of-network care.
- Tough penalties for insurers and clinicians who violate the law’s provisions.
Benefits of working with a medical claims billing and practice management service
One good way to avoid potential balance billing problems is to work with an experienced billing service such as M-Scribe. We’ve been helping practices of all sizes and specialties with medical billing and practice management and marketing since 2002, and are current on the latest medical billing and healthcare regulations and issues.
Contact M-Scribe at 888-727-4234 or by email for more information on how we can help your practice be fully compliant while boosting revenues.