Understanding Balance Billing and Surprise Bills in U.S. Healthcare

Introduction

The U.S. healthcare system is complex, with various factors like insurance coverage and provider status influencing financial responsibilities for patients. Two key issues that often confuse patients are balance billing and surprise bills. This article aims to demystify these terms and explain the intricate relationship between them, with a focus on contemporary regulations and state policies.

Balance Billing: What it is and How it Works

Balance billing occurs when a healthcare provider bills a patient for the difference between the actual charge and the insurance-approved amount or negotiated rate. For example, if a procedure costs $1000 and the insurance reimburses $750, the provider can bill the remaining $250 as a balance bill. The permissibility of balance billing depends on the insurance carrier, the policy coverage, and prior authorizations.

In many cases, balance billing is not permissible for covered services through Medicare, marketplace preferred providers, and many insurance company's in-network providers. The situation is further complicated by specific circumstances. For example, in an emergency department (ED), the hospital visit itself is typically subject to negotiated rates, but patients may still receive a balance bill for services such as lab work, which are often performed by independent contractors.

If you face a balance bill, you should contact your insurance company to discuss the situation. They can help resolve the billing issue by resubmitting the claim for payment.

Surprise Bills: Unforeseen Costs and Protections

Surprise bills are unexpected charges from healthcare providers or facilities. They often occur when a patient receives care from a provider or facility outside their health plan's network. These bills can include co-payments, co-insurances, and balance billing, leading to higher costs.

A significant policy change affecting surprise billing was implemented by the U.S. Department of Health and Human Services (HHS), the Department of Labor, and the Department of the Treasury in 2021. This rule is part of the Requirements Related to Surprise Billing Part I, which aims to provide protections against surprise billing and excessive cost-sharing for consumers receiving healthcare services.

According to the rule, in emergency situations, patients are guaranteed coverage of emergency services regardless of the provider or facility being out-of-network. Additionally, cost-sharing for out-of-network services is capped to in-network levels, and balance billing is prohibited. This includes out-of-network emergency services, air ambulance services, and certain non-emergency services at in-network facilities like hospitals and ambulatory surgical centers. These regulations apply to group health plans and health insurance issuers starting on or after January 1, 2022.

State policies can also offer additional protections. For instance, California implemented a policy in 2017 to address surprise medical billing for out-of-network nonemergency physician services at in-network hospitals.

State and Federal Regulations

Given the varying state policies, the most reliable way to understand your rights regarding balance billing and surprise bills is to contact your insurance company. They can provide specific guidance based on your insurance plan and state regulations.

Conclusion

Understanding balance billing and surprise bills is crucial when navigating the U.S. healthcare system. While federal regulations are providing stronger protections, state policies can also play a significant role in shaping the healthcare landscape. Always communicate with your insurance company to address any billing concerns and stay informed about the latest developments in healthcare policy.