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Balance Billing - Have Your Overpaid?

Understanding This Controversial Billing Practice

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Updated May 22, 2010

Balance Billing - Have Your Overpaid?

Don't overpay because of balance billing - understand your rights!

Nancy R. Cohen @ Getty Images

What Is Balance Billing?

Balance billing is a controversial and often illegal practice in which your healthcare provider – usually a physician or hospital – goes after you for money that you don’t owe.

Balance billing may happen when your health plan pays less than what your doctor or hospital charges and want to be paid. Your healthcare provider may demand the balance of the bill from you. Unfortunately, some people do not know that this is inappropriate and, fearing a call from a debt collector or a threat to their credit rating, pay what is being asked.

Balance billing usually happens when healthcare providers who participate in a managed-care network or in Medicare believe that the health plan is not paying enough for a medical service or is taking too long to pay. However valid the payment issue may be, your doctor should only appeal to your health plan and not get you and other patients caught in the middle.

Is Balance Billing Always Illegal?

Balance billing is illegal for all approved Medicare services provided by your doctor or hospital. Additionally, 47 states have laws that require doctors and other health providers who have a contract with a health plan to seek payment only from that health plan and not from their patients.

These laws vary from state to state and may include only some types of health plans. Pennsylvania is a good example of a state with a balance bill law that applies to most (if not all) healthcare providers – "it shall be unlawful for any health care practitioner, or any primary health center, corporation, facility, institution or other entity that employs a health care practitioner, to balance-bill."

Balance billing does not include your doctor or other provider charging or collecting out-of-pocket expenses such as deductibles, copayments, or co-insurance that may be required by your health plan.

Your state’s ban on balance billing usually does not apply if you have an elective procedure, such as cosmetic surgery, which is not a covered benefit. Additionally, you may be liable for the complete bill or a balance if you get an out-of-network service that is not an emergency and has not been approved by your health plan.

Many states also protect members of health plans from balance billing in emergencies. If you have a medical emergency, you may have no control over who treats you and where you are treated. For example, if you have a heart attack or are in a bad accident, you may be taken to a hospital that is not in your health plan’s network.

Do Health Plans Allow Doctors to Balance Bill?

If your doctor is part of a managed care network (and most physicians do belong to one or more networks) she has a contract with your health plan that most likely prohibits her from sending you a bill in excess of your required copayments. Typical contract language, for example, often is worded as follows: "the provider agrees to accept the payer's network rate as payment in full for covered services and shall not balance-bill the payer's subscribers."

If your in-network doctor bills you in violation of her contract, she could risk a financial penalty or cancellation of her contract with the health plan. Even if your health plan does not prohibit balance billing, your doctor is still subject to any state laws that ban balance billing.

How Can I Prevent Balance Billing?

The best way to prevent getting an inappropriate bill from a healthcare provider is to make sure that you fully understand your health plan’s rules and you know how to read and interpret the explanation of benefits (EOB) sent by your health plan or Medicare.

You can decrease your chances of balance billing by:

  • only using in-network doctors, hospitals, and other providers (such as labs and x-ray facilities)
  • knowing what services are covered by your health plan
  • making sure to get prior authorization for a medical service, if required

When in doubt, call your health plan’s customer service line for advice.

What Can I Do if I Receive a Balance Bill?

If you have any concerns that the bill you received is not appropriate, do not pay it. You have several options, including:

  • Call your health plan first and determine what your payment responsibility is. If you are in an HMO and received your service from a network doctor, your only responsibility should be your copayment. When you call, have all the necessary paperwork, including your member number, the balance bill, and your EOB.
  • Call your doctor’s office or hospital billing department and dispute the charges. When you call, make sure that you know what your health plan’s balance billing rules as well as laws in your state. Usually, you can find this information on the website of your state’s insurance department.
  • If you cannot resolve the issue with your health plan or doctor’s office, file a complaint with your state’s insurance department or Attorney General. Your state may also have a consumer advocate office.
  • If you need assistance, you can hire a medical billing advocate or check with the Patient Advocate Foundation to see if you qualify for its services.
  • Also, you can consult a lawyer who specializes in medical billing disputes.

According to a study done in California in 2007 about 56% of people who received an inappropriate balance bill from an emergency room paid it. The average bill was $300, meaning balance billing was a $528 million burden on patients with health insurance. This is just for the state of California and only for emergency room visits!

Although national figures are not available, some health economists and patient advocates estimate that consumers pay $1 billion or more a year in balance billing for which they are not responsible.

Your doctor should be bickering with your health plan, not you! Do not pay a bill that you are not sure about until you check with your health plan. And, if you owe the money, it is important that you pay your doctor – she has to pay office rent, the cost of supplies, and staff salaries.

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