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What Is Balance Billing in Health Insurance?

Balance billing is a practice in health insurance in which providers bill patients for the balance of the bill unpaid by the patient's health insurance. Providers, including doctors, hospitals, facilities and labs among others, submit claims to the insurer for reimbursement and may try to collect the balance from the patient. Occasionally, providers balance-bill when they should not. Patients should exercise caution in paying when they receive a bill.

  1. How It Works

    • The billing process is usually simple. The patient visits the provider and the provider bills the patient's health insurance company for their services. The patient pays any co-pays and coinsurance, while the insurance company reimburses the provider for their services. Then the bill is closed as paid in full. Issues occur when the provider feels entitled to a higher payment amount than that paid by the insurer, or doesn't wait for the insurer to make a payment before billing the patient.

    Network Providers

    • Providers who sign an agreement to participate in an insurer's network agree to accept certain reimbursement rates for services. Though they may attempt to charge more for services, the insurer only pays the agreed amount, per their reimbursement arrangement. According to the agreement, the provider is not allowed to balance-bill the patient for the difference between what was charged and the amount the insurer paid. Patients who receive a bill for the difference need to notify their insurer as this is an illegal practice.

    Out-of-Network Providers

    • Providers without network agreements can charge any amount for their services that they want to. If the patient chooses to receive services from an out-of-network provider, the patient will be responsible for the bill, minus any co-insurance payment from their insurer if they have out-of-network coverage. This is one situation in which balance billing is acceptable. The caveat is that some states, and federally with Medicare and Tricare, have laws restricting the amount a provider can balance-bill their patients.

    Bottom Line

    • As a patient, to avoid getting caught up in balance billing, before receiving services, confirm with your health insurer that the provider you're seeing is in-network. If you choose to see an out-of-network provider, recognize that you may be stuck paying a large portion of the bill, despite having out-of-network coverage. Additionally, patients should never pay a bill before it has been submitted to and paid by the insurer. Getting the money back from a provider who's been overpaid is not always easy.

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