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Making Sense of Balance Billing

Balance billing is a practice in which a healthcare provider bills an insured person for the difference between the cost of a medical service and the insurance company's reimbursement amount. Here’s more on how balance billing works, why it's more common than you might think, and what you can do about it.

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Your son breaks his arm during a baseball game, and you take him to the emergency room for treatment. He gets the care he needs and proudly wears a bright red cast home. You pay your copay and any remaining deductible at the hospital, and you walk out thinking you’ve covered the cost of care.

Your insurance should handle the remainder of the cost as stated in your plan documents, so you’re all set, right?

But several weeks later, a bill arrives in the mail. The hospital is charging you an additional $1,200 for an out-of-network radiologist, which your insurance company did not cover. This familiar and unpleasant scenario is what is known as “surprise billing” or “balance billing.”

This practice is especially frustrating for people who believe they’ve covered their bases in seeking care. It’s also far more common than you might think. According to a 2019 Modern Healthcare report, 1 in 7 patients receive a surprise medical bill even after they’ve chosen an in-network hospital. These surprise expenses can wreak havoc on people’s finances.

Understanding the ins and outs of balance billing can help you create a wellness plan that makes sense for you and your employees — saving everyone untold stress and anxiety in the process.

How Does Balance Billing Work?

When you look at conventional health insurance plans for your team, you can preview a chart or list of each plan’s shared costs, such as copays, deductibles, and coinsurance. Examining the relationship between these costs and monthly premiums should help you choose a health insurance plan that is affordable while meeting your company’s needs. But you might not be getting all the information you need to make the best decision.

For example, a company with a relatively young and healthy team might opt for a plan with a deductible of $3,000 and low premiums. But if ceratin team members plan to start families or have conditions like diabetes that require regular treatment, a plan with a higher monthly premium that offers superior coverage would best meet those needs.

All of this seems straightforward enough. You are given the plan information upfront, so you get out your calculator or spreadsheet to make an informed decision based on your available options. At least, you think you do.

Unfortunately, those careful considerations can’t account for balance billing. If a provider’s charge is higher than an insurance carrier’s allowed amount, the provider can bill the remaining balance to the member. These costs aren’t communicated ahead of time, and they can scale quite unpredictably. Many employers and consumers don’t even know balance billing is a thing until an invoice comes in for hundreds or even thousands of dollars.

And at that point, it feels too late to fix the problem.

Relief Might Be Here

The Consolidated Appropriations Act of 2021, a sweeping piece of legislation that covers everything from climate change measures to government spending appropriations, includes provisions designed to protect Americans and their families from surprise medical billing.

A portion of the legislation, known as the “No Surpises Act,” took effect on Jan. 1, 2022. It includes several measures to tackle the problem of balance billing and safeguard people against surprise medical bills, but it’s not perfect. A provision of the bill would prevent patients from having to bear the responsibility for all emergency scenarios and in any situations where they might unwittingly receive services from out-of-network providers while at in-network facilities.

A few things remain unclear, however. Air ambulance charges are addressed in the bill, for example, but more common ground ambulances are not. There is a provision to study these charges and create protections for consumers later on, but nothing is set in stone.

Although it’s likely to improve moving forward, balance billing has been a problem over the years for millions of folks throughout the U.S. While nobody is at fault — it’s simply a difference between what healthcare providers bill and what insurance companies are willing to reimburse — this unfortunate pattern should begin to improve soon.

In the interim, there are still measures people can use to eliminate some of the financial stress caused by balance billing. A benefit like Paytient can pay these costs upfront, empowering members to create payment plans to fit those expenses into their budgets over time. For more extensive balance billing — think a surprise bill of $25,000 — some providers might be willing to negotiate those bills down to a more manageable amount if you’re willing and able to pay that amount all at once.

There are numerous ingenious ways to use your Paytient card to access and afford care. For additional examples, check out this post on how Paytient can fill gaps in your health insurance plan.

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