Balance bills refer to expenses a patient incurs after receiving care from an out-of-network provider, usually during inpatient care at a hospital. When this happens, the insurance company typically pays some portion of the out-of-network provider’s fee, but this is almost always less than the list price for their services. The hospital then charges the patient a balance bill for the remaining balance, or the difference between the out-of-network provider’s list price and what the insurance company is willing to pay.

Balance billing is one of the most common ways that people with health insurance incur unexpected medical debt, because patients often do not know that they will be receiving care from out-of-network providers in the first place, or have no choice in the matter.

How common is balance billing?

When you have health insurance, you typically seek care from providers that are in your health insurance network and covered by your plan to avoid paying more than you need to.

But despite patients’ careful planning for inpatient care to be conducted at in-network hospitals by in-network lead doctors, auxiliary doctors who provide support during a procedure such as anesthesiologists and radiologists may be out-of-network. These specialists are rarely involved in the initial consultation and are not chosen by patients, leading patients to discover out-of-network costs once it is already too late. This type of “surprise billing” happens in about 9% of planned hospital admissions.

For example, suppose you require a hip replacement, which is a procedure covered by your insurance, and you arrange for an in-network chief surgeon at an in-network hospital. However, unknown to you, the anesthesiologist who supports the surgery is subcontracted by the hospital and not accept your insurance, greeting you with a hefty medical bill after the anesthesia your insurance doesn’t cover wears off.

Further, when you require emergency care, you may not have the capacity to ensure that the life-saving care you receive is conducted at an in-network hospital or by in-network emergency room doctors. Research finds that about 20% of emergency hospital visits involve at least one out-of-network provider, and as many as two-thirds of all ambulance rides are out-of-network.

Sometimes, balance billing can even occur illegally when your provider accepts your health insurance or your Medicare/Medicaid. At best, this is a clerical error - at worst, outright fraud.

You may also find yourself in a situation where you need care from a specialist who is out-of-network if you or a dependent contract a rare medical condition.

No matter the reason for balance billing, it always involves a situation where patients face a lack of choice or information as consumers.

Why does balance billing occur so often?

Balance billing reflects the exploitation of a lucrative market failure in the American healthcare system that has driven countless (source number?) patients into debt, simply by accessing care they need.

Demand for live-saving and life-enhancing care is inelastic, meaning that the demand will always be there even if prices are high. Providers know this, and are incentivized to take advantage of opaque pricing and weak regulations in the healthcare market.

While providers that patients choose (such as primary care doctors or lead surgeons) face strong market pressure to enter health insurance networks (otherwise patients with insurance wouldn’t use them), providers that patients do not choose can remain out-of-network. Because these providers’ list prices are not negotiated with the insurance company, they are not constrained by market forces and tend to be rather exorbitant, allowing providers to capitalize on both direct insurance payments and hefty balance bills.

The ethics of medical pricing are of secondary concern when there is money to be made.

How do I know when I am being balance billed?

If you receive an unexpectedly high medical bill after receiving care that you anticipated would be covered in-network, first ensure that you have paid your deductible, coinsurance, and copayment. If you have and there is still a balance owed to the hospital, you are being balance billed.

What can I do when I receive an unexpected balance bill?

  1. Contact the provider’s medical billing office and ask if the bill was a mistake - this is surprisingly common. Keep a record of what they tell you in case you need to appeal the bill. If the bill is indeed an error, the hospital will drop the bill.
  2. If the billing office informs you that you did inadvertently receive care from an out-of-network doctor under their employ, contact your state’s insurance department and request an appeal. Some states have consumer protections requiring providers to notify you of possible out-of-network charges prior to receiving care, and you may be able to have the bill waived.
  3. Negotiate with the medical office and politely request that they reduce the bill. The sooner you do this the better. They may be willing to accept a smaller sum if you agree to pay it upfront. Providers almost always prefer to receive a portion of the charge rather than have the bill go to collections. You should refuse any offer for a payment plan because of potential billing errors - you have a case for a discount.
  4. Negotiate with your insurance company. Since your insurer has already paid a portion of the out-of-network provider’s list price, you will likely be unable to file a formal appeal because your insurer didn’t deny your claim. Instead, request that your insurer “reconsider the decision to cover this as out-of-network care,” and explain why you did not anticipate out-of-network costs.
  5. If you feel that your insurance company hasn’t treated you fairly, check your plan handbook and follow your insurance company’s internal complaint resolution process. If this is unsuccessful, you can in turn file a complaint with your state’s insurance department.

When standard measures don’t relieve your unexpected balance bill, Atana is your most powerful line of defense.