Balance billing is a significant financial burden that can unexpectedly impact patients after receiving medical care. This practice occurs when a healthcare provider bills a patient for the difference between the provider’s total charge for a service and the amount the patient’s insurance company has paid. A balance bill asks the patient to cover a cost separate from standard out-of-pocket expenses, such as copayments, deductibles, and coinsurance. Understanding this mechanism is key to navigating medical billing complexities.
Defining Balance Billing
The billing cycle starts with the provider’s full price, known as the “billed charge.” The provider submits this charge to the insurer, which determines an “allowed amount” for the service. The allowed amount is the maximum price the insurer considers reasonable and uses as the basis for payment. The billed charge is nearly always higher than the insurer’s allowed amount. If the provider is out-of-network (OON) and has not agreed to accept the allowed amount as full payment, they may bill the patient for the remaining “balance.” This difference between the provider’s charge and the insurer’s payment is the balance bill, which is distinct from standard patient cost-sharing like copays or coinsurance.
The Role of Network Status
The network status of the provider is the primary factor determining if balance billing can occur. In-network providers contract with the insurer and agree not to balance bill patients for covered services. This contract requires them to accept the allowed amount as full payment, minus the patient’s cost-sharing. Balance billing typically arises when a patient uses an out-of-network (OON) provider. Since OON providers lack a contract, they are not bound by the insurer’s rates and can charge their full fee. For planned OON care, the patient may be responsible for the difference between the OON provider’s charge and the amount the insurer covers. A particularly problematic scenario is “surprise billing,” which happens when a patient uses an in-network facility but is unknowingly treated by an OON provider. This often occurs with ancillary services, such as anesthesiologists or radiologists, who may be OON even if the hospital is in-network.
Federal Protections Against Balance Billing
The No Surprises Act (NSA), effective January 2022, established federal protections for consumers against surprise balance bills. The law bans balance billing for most emergency services, even if the facility or provider is out-of-network. Patients receiving emergency care cannot be billed for more than their standard in-network cost-sharing amount. The NSA also bans balance billing for non-emergency services provided by OON providers at an in-network facility. This protection is especially relevant for ancillary services like anesthesiology, radiology, and pathology, where the patient often cannot choose the specific provider. The law limits a patient’s financial responsibility for these services to the in-network copayment, deductible, or coinsurance. This cost-sharing is based on the “qualified payment amount” (QPA), which is generally the insurer’s median contracted rate for a similar service in that geographic area. The QPA determines the maximum amount the patient can be charged. Importantly, the NSA does not apply to all types of insurance, excluding plans like Medicare, Medicaid, and TRICARE. Furthermore, the protections do not cover ground ambulance services.
Steps to Take When You Receive a Bill
If a bill appears to be a balance bill, first compare it carefully with the Explanation of Benefits (EOB) from your insurer. The EOB details the provider’s charge, the allowed amount, the insurer’s payment, and your calculated cost-sharing responsibility. If the provider’s bill asks for an amount greater than the patient responsibility listed on the EOB, it may be an unlawful balance bill. Next, contact both the provider’s billing office and your insurance company for clarification. Inform the provider that you believe the bill violates the No Surprises Act, especially if the service was an emergency or an unexpected OON service at an in-network facility. The provider must follow the law and may need to reprocess the claim. If the issue is not resolved, or if the provider attempts to send the bill to collections, file a complaint with the appropriate federal or state agency. The Centers for Medicare & Medicaid Services (CMS) offers a federal process for filing complaints regarding NSA violations. Documenting all communication and keeping copies of all paperwork is essential throughout this process.