In order to avoid unexpected medical bills, it is important to know how your health plan works and how a practice referred to “balance billing” can affect you. Most plans have a specific network of doctors and facilities that their members can use for their medical care. To be a part of a plan’s network, these doctors and facilities contract with the plan and agree to accept a specific rate for their services under the plan. These doctors and facilities are considered “in-network.” Doctors and facilities that don’t have a contracted relationship with an insurer are considered “out-of-network.”
The main difference between in-network and out-of-network healthcare providers is that in-network healthcare providers work with your insurance company to provide negotiated (discounted) rates, while out-of-network providers do not agree to discounted rates. For example:
You visit an in-network doctor and the total charge is $250. The doctor and your plan have negotiated a $75 discount. The plan then pays the doctor $140 (which they have agreed is the “allowed amount” for the doctor to receive). You then have to pay the remaining $35.
But, if you visit an out-of-network doctor and the total charge is $250 and there is no negotiated discount. The plan pays the doctor $140, but you’ll be responsible for the entire remainder, which is $110.
The latter part of the example regarding out-of-network doctors is an example of “balance billing.” Balance billing occurs when out-of-network doctors and facilities bill patients for the difference between a billed charge and a health plan’s allowed amount. However, this type of balance billing is typically not allowed when:
- you have Medicare and you’re using a healthcare provider that accepts Medicare assignment;
- you have Medicaid and your provider has an agreement with Medicaid; or
- your doctor or facility has a contract with your health plan (in-network) and is billing you more than your plan’s contract allows.
Patients can also face balance billing when they receive care from a provider they did not know was out-of-network. For example:
You are going to have surgery at a hospital. Both your surgeon and the hospital are in your plan’s network. But during the surgery you need anesthesia so that you are not awake. The person who gives you the anesthesia, the anesthesiologist, whom you did not choose, is not in-network. A few weeks later you receive a large bill from the anesthesiologist, who was not covered by your plan.
This is another example of balance billing, or “surprise billing.” Patients who think that they are being careful to only visit in-network providers are often surprised by these bills. Another example of when this often happens is when your doctor sends your blood to an out-of-network lab for testing. You can avoid this by asking your doctor to make sure they are using an in-network lab for your plan.
These situations can leave patients with huge medical bills that they are unable to pay, and can even lead to bankruptcy.
Some states have tried to protect patients from balance billing. For example, on July 1, a California law went into effect that says, if you have a non-emergency service and visit an in-network facility (like a hospital or a lab), you will only be responsible for your in-network share of the cost even if you’re seen by an out-of-network provider.
This is a giant step in terms of healthcare and patient care, as a recent Consumers Union survey found that nearly 1 in 4 Californians who visited a hospital or had surgery in the past two years were charged an out-of-network cost when they thought the provider was in-network.
In addition to knowing how to use your plan, you also need to make sure that you understand what type of plan you have. Because, the California law does not cover employer-sponsored plans that are self-insured. To find out of your plan in self-insured, you can call the number on your insurance card, or talk to your employer’s human resources representative.
New York and Florida also have comprehensive state laws to protect patients from balance billing. But there are a total of 21 states that have laws that deal with balance billing. To check if your state has a law protecting you from balance billing, visit Triage Cancer’s Chart of State Laws.
If you think you are being balance billed, there may be steps that you can take to deal with the bill.