What Is Balance Billing in Healthcare?

by Raju · 19/05/2022

Privately insured consumers pay for healthcare premiums, expecting insurance to cover the cost of medically necessary care beyond their cost-sharing. Balance billing (in terms of healthcare billing) occurs when a patient is billed the remaining balance between the total cost of services being charged and the amount the insurance pays.

Based on the agreement with the insurer, the in-network healthcare providers accept the full insurance payment for their services. Healthcare providers are not permitted to bill the patient any extra amount. Balance billing is only allowed when the provider is not in your insurance network.

Health Insurance Terms

Copay

It is an amount set for paying every time you use a particular healthcare service, such as general practitioners, dentists, dermatologists, etc.

Coinsurance

This means you pay a certain percentage of the total cost of healthcare service but only after meeting your deductible. You pay coinsurance until you meet your plan’s maximum out-of-pocket for that year.

In-network

It refers to healthcare providers that are part of a network of providers who have signed a contract with the insurer to provide their services at negotiated fees.

Out-of-network

It refers to hospitals, physicians, and other healthcare providers not operating within the insurers’ provider network. This means that providers have not signed a contract with the health insurance to accept negotiated fees for their services to patients.

Deductible

You pay a fixed amount of money toward your healthcare bills each year before the health insurance coverage fully kicks in and takes up your healthcare bills.

Surprise Billing Legislation and What It Means for Healthcare Billing

Surprise billing (also known as balance billing) is when a patient is billed for unknowingly receiving care from an out-of-network doctor. In most cases, these are unforeseen medical bills resulting from emergencies or scheduled clinical care.

Some states have enacted surprise billing laws that impact reimbursement for out-of-network health care services. The providers should disclose their plan participation status. The legislation also has added new health plan regulations concerning reimbursement and networks for out-of-network services.

Several states already have consumer protection laws from surprise and balance bills in in-network hospitals and emergency departments. President Trump signed the No Surprise Act in late 2020 after congress passed it with bipartisan support.

This legislation has been widely termed the second major covid-19 relief bill which contains substantial COVID-19 relief measures. It also appropriated government funding for the first nine months of 2021 and fixed surprise balance billing.

Is Balance Billing Legal in Healthcare?

Balance billing is not illegal per se. It depends on the state’s laws in which the patient is located. However, some states have laws that protect their patients from balance billing.

Circumstances when balance billing is legal to include:

When a patient knowingly gets services that his or her insurance does not cover
When a patient knowingly gets services from a healthcare provider that has no agreements with his or her insurance provider

Circumstances when balance billing is illegal to include:

When a patient unknowingly gets services from an out-of-network healthcare provider while inside the facilities of the in-network healthcare provider
When a healthcare provider has an agreement with the patient’s insurance provider but charges more than what the agreement dictates
If you have Medicaid or Medicare, you receive covered services, and your doctor accepts Medicaid or Medicare

If you have received a balance bill, you should first check whether the bill is legal and/or a mistake. Checking in with your insurance and what it covers will help you understand why you were billed.

The policy you have is the primary determinant of whether your insurance plan will offer coverage for your out-of-network visits or not. Some plans cater to partial cost payments while others do not. Typically, insurance plans that agree to pay for out-of-network care only pay for Usual, Customary, and Reasonable rates (UCR or U&C).

UCR is calculated based on the rates charged for a particular service within that geographic area. The doctor you visit might charge you $500, but your insurance might determine the UCR to be $200. You have to pay the remaining balance from your pocket.

Discover More About Healthcare Billing Today

Unlike other businesses, medical practices deal with convoluted billing processes where payment of delivered services does not come for weeks or months. Balance billing services involve third-party companies that handle a medical practitioner’s revenue cycle management. Medical balance billing services expedite the time it takes to receive money from insurance and the government, saving payroll costs.

As the health sector is advancing, outsourcing balance billing services has become a great way to maintain the profitability of health centers. To get the most out of healthcare billing services, find a service package that includes setup, implementation, and work integration. Also, make sure you will be getting the best practice management software.

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