Balance billing: How to avoid this common medical expense trap

Close up of a medical insurance form with stethoscope

Imagine receiving a hospital bill for tens of thousands of dollars despite having the best health insurance you can afford.

This scenario happens to even the most diligent health care consumers more than you’d think. Often, the culprit is balance billing, which occurs when patients are charged for the difference between what a provider charges and what the insurance will pay. It often happens after a hospitalization, where insurance covers most services, with the exception of one doctor. That doctor still wants to be paid, so she bills for the portion insurance didn’t cover, which can sometimes amount to thousands of dollars.

“You’d be surprised at how often this really happens,” says patient advocate Adria Gross, CEO and founder of MedWise, a group that helps consumers negotiate and lower medical bills. “I see it all the time, but there’s usually something you can do as a consumer.”

READ MORE: What are Medical Billing Advocates?

The effects of such a bill can be devastating, and in most states, there are no laws to protect consumers, so they must protect themselves. Even with diligence, and in states with laws against surprise bills, consumers can face these huge charges, and it’s up to them to fight them or pay.

Here’s how you can defend yourself from balance billing or avoid it in the first place:

What is balance billing?

Every insurance plan has a network, or group of hospitals and clinicians who agree to accept set payment rates, which are lower than regular charges. In most health plans, patients must receive services from in-network providers or pay more. Some plans cover a portion of non-network charges, while others cover none, except in some emergencies.

Balance billing usually occurs when you get medical services outside your network, and the difference between the network rate and the regular charge is tacked onto your bill.

READ MORE: Balance Billing In-Depth

For example, say your doctor orders blood work and sends your sample to a non-network laboratory. Your health plan covers non-network care at only 50 percent of the network rate for that service.

The lab’s total charges are $500, and your insurer’s network rate is $300. It pays $150, which is 50 percent. Your insurer expects you to pay the other $150, as outlined in your policy. But the lab also tacks on the $200 difference between its charge and the network rate. In total, you are (balance) billed $350. Had the laboratory been in your provider network, you would have paid the normal copay, or a much smaller percentage of the bill.

READ MORE: A Real-Life Balance Billing Example

How to avoid balance billing

If you’re getting balance billed, it’s probably because someone you received medical services from does not participate in your insurance network. Occasionally, it happens even when patients see in-network physicians, but that’s usually an error that can be corrected by calling the provider’s billing department.

The best way to avoid balance billing is to always receive services within your health plan’s network. Check the directory on your insurance company’s website to make sure any new doctor or medical facility you visit is in-network. Some facilities may be in-network but employ providers who are not, so call ahead to make sure all clinicians at the facility accept your health plan.

From the blood work example above, you can ask your provider for time to see whether the lab is in your network. If it’s not, you can ask whether the doctor can send your sample to a lab that is in-network.

Sometimes you may want to stray from your insurance network, even if you know you’ll pay more. For example, maybe you’ve switched insurance plans and want to keep your doctor, or you live in a remote area where the only specialist for your condition is not in your plan network. In these cases, talk to the doctor or his staff about your payment options — you may be eligible for a discount for paying ahead or paying in cash.

What to do if you’re balance billed

In other instances, you may have done your best to prevent balance billing, but it happens anyway. “Don’t panic,” says Gross, “there’s almost always something you can do.”

Follow these steps if you suspect you’ve been balance billed:

• Check your insurer’s explanation of benefits (EOB) to know for sure. This is usually delivered around the same time as the bill, corresponds to the same date of service, and should explain your coverage, including any uncovered charges from non-network doctors.
• Negotiate. Ask your provider to lower the bill, and appeal to your insurer in writing, per its policy.
• Check this ConsumersUnion site to find out state-specific information on legal steps you can take.
• If you’d like professional help, you can contact an advocate like Gross, who can do all of the above on your behalf.

READ MORE: How to Negotiate Medical Bills

If you’re handling it yourself, be persistent, Gross says. If you have no luck with the hospital’s billing manager, contact the doctor. If the doctor is no help, try calling the hospital’s management. Says Gross, “some people just want the money, but most will be sympathetic. Keep trying until you find someone who is.”