30 things to know about balance billing

A long-fought battle over fair reimbursement rates for both in-network and out-of-network medical coverage has largely pitted payers against providers. Unfortunately, patients are often caught in the crosshairs, strapped with unanticipated healthcare bills that can have detrimental financial effects.

The practice of balance billing refers to a physician's ability to bill patients for outstanding balances after the insurance company submits its portion of the bill. Out-of-network physicians, not bound by in-network rate agreements, have the ability to bill patients for the entire remaining balance.

Balance billing may occur when a patient receives a bill for an episode of care previously believed to be in-network and therefore covered by the insurance company, or when an insurance company contributes less money than expected for a medical service.

In recent years, the rise in out-of-network payer-provider reimbursement clashes have spawned a growing number of balance billing cases. Last October, Aetna discouraged members from seeking emergency medical care at in-network Allegheny Health Network hospitals in Pittsburgh after out-of-network emergency physicians began 'aggressively' balance billing policy holders. In a more drastic move, UnitedHealthcare announced last year the insurer would no longer cover medical bills for members who unknowingly received out-of-network treatment by physicians at in-network hospitals.  

Consumer advocacy groups and federal and state legislators are turning their attention to balance billing practices this year with renewed vigor, helping payers and providers find new ways to settle financial disagreements.

Here are 30 things to know about balance billing.

1. Balance billing is on the rise nationally. In 2011, around 8 percent of privately insured individuals used out-of-network care, 40 percent of which resulted in unanticipated medical costs due to balance billing, reports Health Services Research. In 2015, a nationwide study from Consumers Union found nearly one third of privately insured Americans received an unanticipated bill when their health plan paid less than expected for medical services within the past two years.

2. Lack of provider, network transparency.
The rise in balance billing is partially attributable to a lack of network transparency with patients. In many cases patients are unaware they have received out-of-network care until they receive a balance bill in the mail. Nearly 70 percent of individuals with unaffordable out-of-network medical bills did not know the healthcare provider was not in their plan's network at the time of care, according to a survey conducted by Kaiser Family Foundation and The New York Times.

3. Balance billing is a contributing factor to medical debt.
The same KFF survey found among non-elderly insured adults struggling to pay their medical bills, charges from out-of-network providers were a contributing factor about one-third of the time.

4. Insurers are narrowing networks in an effort to reduce costs.
As insurance companies narrow provider networks to keep premiums down, the number of patients who inadvertently received out-of-network care has jumped at hospitals, particularly with regard to contracted physicians.

5. Even though a hospital may be in-network, their ER physicians may not.
A Health Services Research survey found that in 2011, about 68 percent of patients who had out-of-network care encounters said it happened during an episode of emergency care. These kinds of unanticipated medical bills arise when a hospital participates in different insurance networks than its subcontracted emergency physician group. Balance billing can also occur when a patient does not have access to in-network facilities in an emergency situation. 

6. Emergency physicians feel forced out of network due to low reimbursement rates.
A September 2015 survey by the AmericanCollege of Emergency Physicians found 20 percent of ER physicians reported contemplating or knowing of colleagues who opted out of insurance networks, 90 percent of whom said health plans weren't willing to negotiate reasonable market rates for services.


7. Insurance companies may choose which patients to cover, whereas hospitals cannot.Hospital emergency departments operate under the Emergency Medical Treatment and Active Labor Act. It requires hospitals to care for all patients in emergency care situations, regardless of his or her ability to pay. Insurance companies have the ability to decide which individuals to cover, as well as which physicians to bring into their network. As more insurance companies consolidate and narrow their network coverage of medical providers, they increase the likelihood patients may find themselves in out-of-network situations


8. About a quarter of U.S. states have laws that protect consumers from out-of-network medical bills incurred by emergency care. According to a study from Kaiser Family Foundation, 24 states have implemented laws that restrict providers from balance billing in emergency care situations, including California, Delaware, New Jersey, New York and Pennsylvania, among others.


9. Balance billing and contracted physicians. Hospitals contract with physician groups for a number of specialty positions besides emergency services. These can include anesthesiologists, pathologists and radiologists. In some cases, these physicians do not participate in the same network as the hospital, unbeknownst to the patient. When physician groups and insurers are unable to resolve reimbursement disputes, patients can be billed for the balance on out-of-network charges. In Texas, for example, the specialty services most likely to submit balance bills are anesthesiologists, lab services, surgery and radiology, reports the Texas Department of Insurance.

10. It's generally not a hospital requirement for physicians who work there to be in network. "We are sensitive to additional bills that patients may receive from affiliated physicians that practice at our hospitals," said Kimberly Johnson, director of communications for Brentwood, Tenn.-based TriStar Health, in USA Today. "We encourage those physicians to participate in the same insurance contracts in which our hospitals participate."

11. Balance billing complaints are up 1,000 percent in Texas. According to the Texas Department of Insurance, balance billing complaints rose from 112 in 2012 to 1,334 in 2015, an increase of 1,000 percent.

12. Surprise billing, or surprise coverage?
Some Americans who have chosen health plans based on affordable premiums have found themselves unable to afford their high deductibles. Many times what a patient perceives as a surprise medical bill is simply the high deductible associated with low-priced premium, said Jay Kaplan, MD, president of the AmericanCollege of Emergency Physicians. In fact, nine in 10 emergency physicians said they believe health insurance companies are misleading patients by offering affordable premiums for policies that actually have very little health coverage, according to a recent ACEP survey.

13. Payer and providers break network ties over reimbursement rates.
The news has been rife with payer-provider contract disputes over the past two years, largely centered on unfair reimbursement rates that shift financial responsibility onto patients and physicians. Last year, Carondelet Health Network in Tucson, Ariz., accused Blue Cross Blue Shield of offering untenable reimbursement rates. Community Health System in Munster, Ind., severed ties with Anthem BCBS earlier this year citing an inability to agree on fair and sustainable network costs, only to come to an agreement months later.As commercial payers continue to reduce reimbursement levels, to the point of not covering operating costs, "health insurance companies are driving physicians out-of-network," said Dr. Kaplan. 

14. Payers are reducing reimbursements to out-of-network providers.
Some disgruntled payers, upset by providers' extraordinary out-of-network rates, have continued to lower the amount they pay for out-of-network services — heaping more financial obligation onto patients. Last year, health insurance giant UnitedHealthcare said it would scale back how much it pays out-of-network physicians who practice at in-network hospitals, accusing physicians of demanding excessively high reimbursement levels, according to Kaiser Health News.

15. Payers have sued providers for 'excessive' reimbursement rates.
Some payers that have accused provider groups of charging outlandish rates for medical services have taken legal action. Aetna, for instance, sued a half dozen out-of-network physicians in the past few years, alleging gross over charging for medical services. Aetna has also sued free-standing ERs for excessive facility fees. In 2014, Aetna filed suit against two Houston-area ERs in federal court, alleging the clinics committed fraud by forming misleading ties with hospitals in order to charge excessive facility fees to patients.

16. Patients are taking hospitals to court over balance billing practices. As an increasing number of patients face balance bills, many are questioning the legality and fairness of hospital balance billing practices. In a recent lawsuit brought by Martinsville (Va.) Memorial Hospital against a patient, a judge ordered the hospital accept 25 percent of its chargemaster rate as payment-in-full for emergency care provided to a patient with an out-of-network insurance. The patient's lawyer argued this payment was sufficient because the hospital accepts 25 percent of prices specified in its chargemaster as payment-in-full for services to uninsured patients.

17. Air ambulance billing disputes, complaints on the rise. In rural areas of the U.S. the high price for life-saving air ambulance flights has grabbed media attention as rural residents, faced with excessive balance billing, have turned to state and federal auditors for intervention. Those in rural areas often must rely on air ambulance flights in life-or-death situations in lieu of feasible ground transportation. Reimbursement rate disputes between payers and medical air transport companies have strapped patients with devastating medical bills. For example, when Amy Thomson's newborn daughter was in heart failure, Ms. Thomson had to use an air ambulance service in rural Montana for transport to a more capable facility. At the time her insurance company, PacificSource, did not have an in-network air ambulance company near her family, reports Montana Public Radio. Ms. Thomson received a $43,000 balance bill from Airlift Northwest after PacificSource contributed a policy cap of $13,000.

18. Provider-based billing practices. Consumers have been increasingly vocal about surprise medical bills derived from provider-based billing practices. Provider-based billing allows a healthcare organization to bill patients for physician care in addition to a service charge for the patient's use of hospital facilities and equipment. In some cases, a patient may be responsible for the service bill if their insurance declines to pay or if the patient has a high deductible health plan. Large hospitals like Cleveland Clinic have faced increased scrutiny for provider-based billing practices. After paying a $30 copayment for in-network care with a Cleveland Clinic chiropractor, Julie Beinhardt reported receiving a balance bill of $3,000 for provider-based service fees her insurance plan refused to cover.

19. President Barack Obama signed legislation against provider-based billing.
Last year, President Obama signed legislation outlawing provider-based billing at off-campus outpatient facilities. The legislation does not apply to existing outpatient centers that already engage in the practice, however.

20. The president's 2017 budget proposal includes a provision to eliminate surprise medical bills.
Although details are minimal, the president's 2017 budget proposal includes a provision to eliminate balance billing privately insured patients. The administration would address the issue by requiring physicians who regularly provide services in hospitals to accept in-network rates for service reimbursement, even if they aren't in the insurer's network.

21. More states are proposing independent dispute resolution between payers and providers in balance billing cases.
Independent dispute resolution establishes a legal space in which providers and health insurers can settle disagreements regarding balance billing without involving the patient. The states of Illinois and New York have arbitration methods in place, and Washington and Pennsylvania are currently considering a similar resolution method.

22. New York
has some of the strongest consumer protection laws. Under New York law, consumers are generally protected from owing more than their in-network copayment, coinsurance or deductible on bills they receive for out-of-network emergency services. Patients can complete an assignment of benefits form that absolves them of financial responsibility and allows the provider to pursue payment from the health plan in balance billing disputes.

23. Florida Gov. Rick Scott signed a bill banning surprise medical charges.
The governor signed HB 221, which put new limits on balance billing. Under the bill, consumers cannot be charged more than the equivalent of in-network charges in emergencies and at other times where the patient has no real choice — such as an out-of-network anesthesiologist for a scheduled procedure at an in-network hospital, according to a Palm Beach Post report. The bill exempts ambulance services.

24. Washington
State Rep. Eileen Cody (D-Seattle) sponsored a bill to prevent balance billing in 2017. Under HB 2447, if patients receive emergency care from their health plan's approved hospital, they would pay only the expected charges, according to a statement from Washington Insurance Commissioner Mike Kreidler. Also, any disputes over contracts or out-of-network fees would be worked out between the insurer and the medical provider or facility.

25. The extent of balance billing in Washington is a source of debate. The Consumer's Union estimates about one out of three Washingtonians with private insurance received a surprise medical bill in the past two years. However, the Washington Chapter of the American College of Emergency Physicians says it leaves less than 1 percent of ER patients with a bill that is more than $250, according to a KING report.

26. Lawmakers, consumer advocates and healthcare professionals are part of an ongoing discussion in California on how to curb balance billing. Under legislation recently reintroduced by California Assemblyman Rob Bonta (D-Oakland), consumers who go to an in-network facility but are treated by an out-of-network provider would only be charged what they would have been charged if the provider participated in their plan, according to The Wall Street Journal. Physicians who thought they were underpaid would have the option of appeal. The California Medical Association has come out in opposition to Assemblyman Bonta's bill, and is working on a plan of its own with a different approach to the problem, according to a California Healthline report. Overall, the association wants a plan that puts more of the financial onus on insurers and provides physicians with a better deal, the report states.

27. Lawmakers in North Dakota and Montana are taking on air ambulance balance billing. The lawmakers have proposed an amendment to the federal Airline Deregulation Act aimed at protecting consumers from high balance bills after receiving air ambulance services, reports Inforum. Passed in 1978, the Airline Deregulation Act was intended to encourage competition in air passenger services by allowing customers to choose based on ticket prices, routes and schedules. The amendment would allow states to create a call list hospitals and emergency responders would use to summon air ambulances. The list would designate which transport services accept insurance payments in full for air services and which companies bill patients for the outstanding balance.

28. The "End Surprise Billing Act". Federal lawmakers are making moves to outlaw balance billing nationally. Co-sponsored by 25 lawmakers, the End Surprise Billing Act would protect patients from balance billing who went to in-network facilities for emergency services, reports Consumerist. In non-emergency cases, the legislation would require providers to notify patients within 24 hours if an out-of-network specialist will be involved in an episode of care.

29. Consumers don't know how to navigate the legal waters. According to a Consumer Union report, 57 percent of patients who encountered balance billing from contracted physicians within the last two years paid in full because they didn't know their rights to fight the bills. An overwhelming majority (87 percent) did not know which agency or department in their state government is tasked with handling complaints about health insurance. "So many times, people just give up [in surprise billing disputes]," Elisabeth Benjamin, vice president of health initiatives with Community Service Society of New York, told NPR.

30. The New York Times dedicated a series to consumer encounters with surprise healthcare bills. Elisabeth Rosenthal's series in The New York Times entitled Paying Til it Hurts examined the personal and financial implications of excessive, unexpected medical costs on Americans, their families and their healthcare consumption. Ms. Rosenthal's installments often feature individuals with unaffordable balance bills like Peter Drier, who was served a $117,000 balance bill for an out-of-network physician's assistant he never knew was present during surgery. 

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