Health insurance counseling

Understanding balance billing and when it’s not legal

CVC Director of Patient Services Lauren Ruiz explains the basics about balance billing.

Balance billing is already a hot topic this year in health care. Of course, like many health care practices, most people don’t understand or hear about balance billing until they experience it—in the form of an unexpected bill for hundreds or thousands of dollars.

Understanding more about how it works can help you avoid that. So, take a moment to learn:

  • What is balance billing and why is it noteworthy?
  • When is it legal?
  • When is it not legal?
  • What laws exist to prevent surprise bills?

balance billing bill

What is balance billing?

“Balance billing” is simply the industry term for when medical providers charge a higher price than the amount your insurance agreed to pay and you are billed for the difference.

These otherwise normal bills are noteworthy because they can be surprisingly high or are unexpected for the health care user for a number of reasons.

Some reasons these bills surprise people:

  • Medical pricing in the U.S. health care system isn’t very transparent. For example:
    • People may assume the cost of a service is affordable because they’ve never paid it in full. In reality, prices can vary a lot and even basic blood work can be over $1,000 out of network.
    • People might confirm a price with a provider beforehand and then something changes before the procedure.
    • People trust their doctors to do what’s best for them, but doctors often don’t know the costs of the services they recommend.
  • Out-of-network providers unexpectedly work in in-network facilities. Providers that insurance companies have negotiated cheaper rates with are referred to as “in network” and typically cost you, the health care user, less. However, many health care facilities use outsourcing services for providers like anesthesiologists, emergency room physicians, pathologists, radiologists, and ambulatory services. So, even if you go to an in-network facility and an in-network doctor performs the procedure, other services you receive could still be out-of-network.
  • Changes to care happen last minute while a person is in an emergency health situation and too frightened or out of it to approve or ask the price.

An important thing to note is that balance billing can happen as a mistake—so if you understand when it is or isn’t legal, you can better spot these mistakes.

When it’s legal

Providers can legally balance bill you when:

  • You use a health care provider that does not have a negotiated, in-network contract with your insurer, including:
    • Out-of-network providers.
    • Concierge medical providers.
  • You receive services not covered by your health insurance plan.

When it’s not legal

balance billing handshakeBalance billing is illegal if the provider has a contract with your insurance that requires them to accept the negotiated rate for covered services as payment in full. So, if you receive a balance bill for any costs above your plan’s in-network rate, contact your doctor and insurer and ask about the contract to see if it’s an error.

If you have Medicare or Medicaid, the contract between your insurance and the provider is known as “accepting Medicare/Medicaid assignment.” If your provider “accepts assignment,” then it can not legally bill you for costs higher than what your insurance agreed to pay for covered services.

Before choosing a provider or before utilizing medical services, you can ask whether they accept assignment. If they say yes, you will know that any balance bill you receive is a mistake. Contact them immediately to appeal the charge.

Remember, if you are inappropriately charged more than your insurer will pay through balance billing, you are still responsible for your regular cost-sharing portion (copay/co-insurance). Providers just can’t bill you for costs beyond that.

Avoiding balance bills

The best ways to avoid balance bills are to:

  • Ask a lot of questions about costs and record the answers.
  • Insist that all of your care, services and providers are in-network. One thing you can do is write this on every form you sign.
  • And ask whether your provider has a contract with your insurer to accept negotiated rates. Record the answers and keep your own copy of every document in case you have to file an appeal.

In reality, most people aren’t aware that they are responsible for preventing surprise bills. Even if they are, few have time or—especially while sick—energy to do everything on that list. Particularly in cases involving emergency decisions, most people don’t have the wherewithal or time to research their network coverage before receiving care.

The practice has attracted growing news coverage and attention from legislators. People are increasingly expressing their frustration to legislators about these surprise bills. Many states have taken action to protect health care users.

Laws against balance billing

California, Connecticut, Florida, Illinois, Maryland, and New York have enacted a comprehensive set of laws, but in other states, balance billing protections vary. Check out these resources to see what exists in your state:

While no federal law is currently in place, a bipartisan group of senators introduced legislation known as the Protecting Patients from Surprise Medical Bills Act that addresses some of the concerns about balance billing.

Until the laws change, health care users are likely to start seeing more of these bills, according to analysis by The Commonwealth Fund. They found insurance-provider networks are shrinking. That could mean pricier out-of-network charges will surprise more people accustomed to services being in-network.

Check out part two of this surprise bill series to learn more about preventing and navigating unexpected bills

Recent articles