Balance billing can occur when you’ve received healthcare services from out-of-network doctors, hospitals, and other providers who are not contracted with your insurance company. That’s why it’s so important to know in advance whether or not all your doctors and healthcare facilities you consider using or may need and all potential services (such as expensive tests, X-rays, cancer treatments) are considered in-network by your insurance whether you have commercial insurance, Medicare, or Medicaid. If any of your doctors or services are out-of-network, your financial obligation will be extraordinarily high. In many such cases, your insurer may pay nothing to the out-of-network providers, and you’ll be responsible.
Balance Billing: When It’s Legal or Illegal 
- When you’re receiving services not covered by your insurance policy even if your physician and facility are contracted (in-network) with your insurance plan. A common example is cosmetic surgery (such as a face-lift for appearance rather than medical reasons).
- If you are treated in an in-network hospital but some specialists (such as radiologist or heart surgeon) are not contracted with your insurer, and are therefore considered out-of-network. The in-network hospital’s fees will be paid in accordance with the approved amount, but the out-of-network specialists will unlikely receive any payment from your insurer. You can legally be billed the out-of-network physician’s customary fee. Carol’s ski-injured husband’s anesthesiologist and radiologist were out-of-network and billed at their standard rate. Fortunately, Carol was able to negotiate reduced fees.
When Balance Billing May be Illegal – An Example
- If you have Medicare and a secondary insurance and your doctor is contracted with both insurers, that means he/she has agreed to be fully paid after Medicare pays 80 percent of the approved fee, and the remaining 20 percent is paid by your secondary insurance. So, 100 percent of the approved fee has been paid. If your doctor sends you an additional bill, that may be an example of balance billing and you can dispute the bill. But if your physician is not contracted with your secondary insurance you may legally be responsible for the 20 percent.
Protecting Yourself from Balance Billing
- Find out in advance if any of your doctors, other healthcare providers, such as specialists, or facilities you consider using are out-of-network. If any are out-of-network, find out if services can be carried out by in-network providers.
- If you need a specialist but there are none within a reasonable geographical area from you who is in-network, ask your PCP if he/she can obtain prior approval (authorization) from your insurer to obtain medical care from an out-of-network specialist by clearly and convincingly citing all the reasons why this is necessary. Your PCP may explain that there are no in-network specialists within a reasonable distance who have the special training and experience to treat your unique condition. Obtaining approval can be a very time-consuming process involving letters and phone calls to your insurance company. Alternatively, your PCP, with assistance from the out-of-network specialist, may be able to negotiate with your insurer what’s called a “single case contract”. Fees are negotiated by the insurer and the out-of-network specialist. You may need to pay a portion of the negotiated fees (there are many variations).
- Should you decide to use an out-of-network doctor or facility, knowing that your insurance will not pay, find out in advance what the costs will be. If you have a health or flexible savings account, monies in these accounts can be used to pay for services. And you may be able to negotiate lower fees or a payment plan.
If you have a question about what you consider unfair balance billing, it’s best to give your doctor or facility the benefit of the doubt and try to reconcile the problem locally by asking the business manager to explain your bill. Your provider may have recently hired a new billing manager who does not fully understand the complicated billing system.
If you can’t resolve the problem of balance billing directly with your provider and your insurance company’s policies are regulated by the state you live in, there are specific state laws about balance billing that vary from state to state (see Kaiser Family Foundation).1 A recent study shows how several states protected consumers from unfair balance billing.  If you are not satisfied with your insurer’s attempt to resolve the problem, you can follow their complaint resolution procedure or complain to your state’s department of insurance.
Federal laws protect those with Medicare and/or Medicaid who believe that they are balance-billed illegally. First try to resolve the problem locally with your provider. If you’re still not satisfied, contact the Center for Medicare and Medicaid Services. You can also get assistance from the non-profit Patient Advocacy Foundation2 or a company that assists those with billing problems.