What is Balance Billing

Balance billing is a practice by a health care provider that bills the patient for the difference between what the provider charges and what insurance covers.

BREAKING DOWN Balance Billing

Balance billing occurs when the patient’s provider is out-of-network or if a particular service isn’t covered. It is not uncommon for balance billing to surprise patients who assumed that by seeing an in-network provider, all services and referrals would likely be covered by their insurance. In reality, it is all too common for referred providers or partnered services, such as lab testing, to be out-of-network and therefore subject to balance billing.

With balance billing on the rise and little transparency offered by providers, more individuals find themselves facing steep hospital bills. Legislators have taken notice: A number of states now have laws that protect patients from out-of-network medical bills that result from emergency care. These states include New York, New Jersey, Pennsylvania, and California. A number of federal and state legislators have introduced bills that aim for stronger consumer protections, such as notification laws that would require providers to inform patients if a specialist is out-of-network.

Real-World Example of Balance Billing

Consider the following example: a man visits his in-network, primary care provider because he is experiencing chronic knee pain that interferes with his daily activities at home and at work in addition to limiting his ability to exercise. His primary care provider refers him to an orthopedic specialist within the same hospital system. The man decides to see the doctor after being told that she is the best specialist in the region and assumes the doctor, working within the same hospital, is covered by his insurance policy.

Several weeks later, once the insurer processes claims from both the primary care doctor and the specialist, who are reimbursed for their services, the man receives two bills. The first bill, from the primary care physician, is for $30. His insurance paid 70 percent of the $100 bill and billed the man for the amount of his co-insurance responsibility. The orthopedist, however, sends a much higher bill. Her established fee for a new-patient consultation is $1,000. While the man’s insurer offers out-of-network coverage, it will only cover half of the fee for the visit to the specialist. Furthermore, the patient is responsible for 30-percent out-of-network coinsurance on that portion of the fee, which equals $150. The orthopedist bills the man for another $650, which is the difference between the $350 she received from the patient’s insurance company and her $1,000 fee.