By David Palmer
Balance billing is a major problem in our health-care system that is too often overlooked. Balance billing occurs when a health-care provider, such as a doctor, charges more for a medical procedure than the patient’s insurance company will reimburse for it and the doctor bills the patient — sometimes illegally — to make up the balance. The practice often causes bewilderment and dismay for patients who have insurance and thought they were covered, only to arrive home facing monstrous bills from doctors and hospitals.
Balance billing can result when a patient sees an in-network provider or an out-of-network provider. However, many states make it illegal for health-care providers to balance bill patients who see them in-network. This type of regulation seems like common sense: in-network providers have contractually agreed to see patients who have certain insurance plans, and so know ahead of time what the reimbursements they are agreeing to. Some states also provide patient protection against out-of-network balance billing, for example, by passing regulations that consumers cannot be held liable for charges from out-of-network doctors in in-network hospitals. However, despite these protections, the system is rife with gaps and problems. If a doctor overcharges a patient, it is up to the patient — who may not understand the reason for the bill — to raise the issue with of his or her health insurance company or fight the bill independently.
An article in Business Week estimated that patients across the country annually pay over $1 billion more than they need to because of balance billing. Indeed, as the article points out, in California, where in-network balance billing it outlawed, 1.76 million people paid more than $528 million in emergency care balance billing during a span of two years. More than 56 percent of those patients paid bills they did not have to.
There are a number of reasons why balance billing is so widespread. First, federal law doesn’t impact the vast majority of patients affected by balance billing, and it creates no accountability. Although balance billing is outlawed for Medicare patients and the Affordable Care Act (ACA) forces insurance companies to pay the same amount for emergency medical care to an out-of-network provider as they would to an in-network provider, it does not address any service deemed non-emergency (but still medically necessary). Also, even with this protection, if an out-of-network provider of emergency care happens to charge far more for services than an in-network provider, the patient can still be stuck with a massive bill and nowhere to turn. While the ACA also caps out-of-pocket expenditures for in-network providers, it does not address expenses owed to out-of-network providers.
A recent New York Times article told the story of a little girl’s operation. A billing problem arose after the surgery because the main surgeon was in-network, but the assistant surgeon was not. The family was billed for thousands of dollars for the out-of-network assistant surgeon. Patients like the ones in the article usually do not choose which doctor treats them, nor do they have the knowledge to ask the questions to ensure they are treated by an in-network physician. This problem will continue under ACA rules unless steps are taken to fix it.
Another reason why balance billing is so widespread is the patchwork of state regulation. Some states fail to offer comprehensive or equal protection from balance billing. Most states have laws prohibiting in-network providers from balance billing, but the protection is not nearly as comprehensive for out-of-network providers. When patients go to a hospital that is listed as “in-network” and hand over their insurance card, usually the last thing they are thinking is, “I need to make sure the doctor I see is actually in my network.” The family of the little girl who required surgery was not wondering if all of the surgeons were in-network; they only wanted to make sure their little girl got better.
There is also an issue with federal preemption for patients who are covered by self-insured large group plans which are covered by the Employment Retirement Income Security Act (ERISA). Such plans are not subject to state regulation and, because of this, the beneficiaries are left outside of the state’s legal protection from balance billing.
The sad fact is that many patients, despite laws prohibiting it, still experience balance billing. This puts the patient in a difficult situation. The average consumer lacks the resources to push back against either health-care providers or insurance agents about what may be an illegal bill. After all, the patient has no power to negotiate the price of an operation or medical exam. Although a patient is subjected to cost-sharing, such as co-pays, this issue is not about cost-sharing. This is about billing the patient for more than what the insurer and the provider agreed would be the price, or making the patient pick up the tab when those two parties cannot agree.
The problems with balance billing for patients are legion. Patients do not always get to choose which doctor they see in a hospital, and often have no knowledge about whether a doctor is in- or out- of network. Even if the services they receive are in-network, the patient may still experience balance billing and end up paying an illegal bill due to a lack of awareness or knowledge. The way our current health-care system is set up, health-care companies negotiate with doctors for how much the doctor will be paid.
The only way to ensure this practice of balance billing is stopped is with new federal regulation, binding all insurance plans, including those governed by ERISA. For procedures that cannot wait because of patient health concerns, patients need to be taken out of the equation: the negotiation for payment should go on between the providers and the insurance companies. Patients with insurance coverage should not be liable for an extra bill for covered procedures. For voluntary procedures, full disclosure rules, which require that the patient be made aware exactly which doctors will be involved in the operation and whether or not they are in-network or out-of-network, should be implemented.
It is unfair to stick patients with bills that they had no say in negotiating for, little recourse to fight, and often no ability to pay, and it is time this practice was stopped.
David Palmer is a healthcare fellow with Public Citizen’s Congress Watch division.