Balance billing occurs when healthcare providers bill their patients for charges other than copayments, coinsurance or any amount that may remain on annual deductible. Though in-network providers are prohibited from engaging in this practice, some out-of-network providers do balance bill their patients. This is mainly because many insurance plans cover out-of-network providers at a lower rate – typically a small percentage of charges. With the Affordable Care Act (ACA), this practice is becoming more prevalent. Let us see how.
Impact of the Affordable Care Act
Before ACA implementation, health insurers used to keep costs down and profits high. This was done by passing price increases from providers to employers and charging riskier as well as less healthy beneficiaries more for insurance. With ACA, individuals couldn’t be refused or charged more for insurance premiums on the basis of age or health status. The Act also mandated a medical loss ratio of 80 to 85% – the percentage of premiums to be spent directly on medical expenses.
The insurers are left with no other way to keep costs down than removing high-charging doctors and hospitals from their network of providers. Higher-cost providers looking to maintain the income they are used to, sometimes pass that expense on to the consumer. An increasing number of physicians do not have contracts with health insurance carriers because they either choose to be out of network or they are dropped by insurers that narrow their provider networks. Often, many consumers find it difficult to handle the expenses when it runs into thousands.
Balance Billing – Importance of Educating Patients
Balance billing often come as surprise bills for patients, and it is not often easy for providers to collect the money directly from patients. However, providers can make balance billing work by educating patients on the financial implications of out-of-network care. By remaining patient-friendly and not charging exorbitant rates, out of network providers can stay viable. It is the responsibility of the physician to discuss applicable deductibles and difference between deductibles for out-of-network and in-network services with their patients. Providers can ask the patients to pay part of the payment upfront; they can also consider charging less for those patients that may find it difficult to make the due payments.
Another important thing is to choose patients carefully, i.e. verify their insurance coverage before providing services. Many HMOs and some lower-cost PPOs do not provide out-of-network coverage at all. Most PPOs reimburse out-of-network services but they may recognize only a fraction of the entire bill and pay a lower percentage of that amount than they would for in-network service.
Providers sometimes face another problem when balance billing – insurers may send the payment to the patient instead of the provider. Therefore during the verification process, ensure that the patient’s insurance contract does not have a clause by which the payments go to the patient. Only some states such as Texas, Alaska, Alabama, Connecticut and Georgia assign the benefits to the provider.
Physicians should guard against charging their patients exorbitantly. In the U.S. there are 13 states that prohibit balance billing by out-of-network providers in specific situations. For instance,
- Providers in California cannot balance bill for emergency services.
- In Maryland, providers are prohibited from balance billing of HMO members for covered services.
- Connecticut bans balance billing of both HMO and PPO patients, though the law is yet to be properly enforced.
It is important to note that physicians who balance bill excessively are likely to face grave consequences. Physicians should be able to explain their fee schedule and cost structure to their patients. This will help maintain a good relationship with patients. When accepting patients, it is important to verify the insurance details thoroughly preferably with the support of expert insurance verification specialists.