What Is Balance Billing on Insurance?

Receipt of a balance billing statement qualifies as one of life's most unpleasant experiences because the bill's amount typically far exceeds what you expected, or have the immediate means to pay.

Legality

• In many states, including Delaware and Texas, use of balance billing violates state law--its application only allowed under certain circumstances--specifically when using medical providers or facilities who have not contracted with your insurance company. In such cases, these providers charge more for medical procedures than the reimbursement rates an insurer establishes for approved services.

Exception

• In certain instances, you do not face penalties or receive a balance bill if you resort to using a non-contracted physician, hospital or clinic. This exception applies when no contracted doctors or facilities lie in close vicinity to your residence, forcing you to make use of easily accessible medical services from out of network providers.

Considerations

• Most state insurance departments require "no balance billing clauses" as part of any insurance contract between insurance companies, members and network providers. The clause "states that a provider may not balance bill a member for any payment owed by the plan, regardless of the reason for nonpayment," according to "Essentials of Managed Health Care."