Balance Billing Notice

What Balance Billing Is — and Why It Happens

Balance billing occurs when a healthcare provider bills a patient for the difference between the provider's full charge and what the patient's insurer paid. The term describes the arithmetic: the provider charges $10,000, the insurer pays $4,000 as the contracted rate, the provider sends the patient a bill for the $6,000 "balance." This practice is deeply embedded in American healthcare billing and has been a source of financial devastation for patients for decades.

The mechanism by which balance billing occurs depends on the provider's relationship with the patient's insurer. In-network providers have signed contracts that specify their negotiated rates — they agree to accept the contracted rate as payment in full and may not bill the patient for the difference beyond the patient's standard cost-sharing. Out-of-network providers have no such contract and have historically been free to bill at their full charges, passing the balance to the patient after the insurer's payment.

The problem — and the reason balance billing is so financially damaging — is that patients frequently receive care from out-of-network providers without knowing it and without having any opportunity to choose otherwise. The clearest examples are emergency care and ancillary providers at in-network facilities. You chose the in-network hospital. You had no role in assigning your anesthesiologist. When that anesthesiologist bills you for an out-of-network balance of $15,000, the charge is the result of a system structure, not a choice you made.

When Balance Billing Is Prohibited by Federal Law

The No Surprises Act, effective January 1, 2022, created comprehensive federal prohibitions on balance billing in the categories of care where it has caused the most harm. For emergency services, balance billing is now prohibited regardless of whether the provider or the emergency department is in-network. The patient's cost is limited to their in-network cost-sharing amount — full stop. Providers cannot send a balance bill for emergency services, and if they do, it is a federal violation.

For non-emergency services at in-network hospitals and ambulatory surgical centers, balance billing is prohibited unless the provider obtains the patient's knowing, written consent at least 72 hours before the service and provides a good faith cost estimate. The consent requirements are specific and burdensome — they cannot be buried in general admission paperwork, and they require a clear disclosure of the provider's out-of-network status and estimated charges. When these requirements are not met, the balance bill is prohibited.

Air ambulance services provided by participating insurers are covered by the same federal prohibition. Given that air ambulance balance bills frequently exceed $50,000, this protection is extraordinarily significant for affected patients.

Not sure where to start? Get a free consultation — our case managers will review your situation at no cost.

State Balance Billing Laws: A Patchwork of Protections

Before the No Surprises Act, patient protection against balance billing was primarily a matter of state law — and the resulting landscape was inconsistent. Some states enacted comprehensive balance billing prohibitions that covered emergency care and ancillary providers at in-network facilities years before the federal law. Others enacted narrower protections or none at all.

State laws continue to apply alongside the federal No Surprises Act, and in some cases state protections extend to situations that federal law does not cover. Medicaid patients — covered by state insurance programs — may have broader balance billing protections under state law than under federal law in some jurisdictions. Fully insured employer plans regulated under state insurance law may be subject to state balance billing rules. Self-funded employer plans governed by ERISA, on the other hand, are generally subject to federal law rather than state insurance regulation.

Understanding which combination of federal and state protections applies to a specific balance bill requires analysis of the patient's insurance type, the state where care was provided, the type of care received, and the specific facts of the billing situation. This analysis is exactly what our case managers conduct at the outset of every balance billing case.

Balance Billing and In-Network Providers: When Contracted Providers Overcharge

Balance billing is not limited to out-of-network situations. In-network providers sometimes bill patients amounts beyond their standard cost-sharing that constitute improper balance billing under the provider's contract with the insurer. This occurs when a provider bills a patient for charges that should be written off under the contracted rate, applies incorrect deductible or coinsurance calculations, or charges for services that the contract requires to be included in the contracted rate.

In-network balance billing is less dramatic but often more surprising to patients who assume that in-network providers have correctly applied the contracted rates. When a patient's EOB shows a specific patient responsibility amount and the provider's bill shows a higher amount, the difference may constitute improper balance billing under the provider's contract. Our case managers identify these discrepancies by comparing the insurer's EOB against the provider's bill and flagging amounts that exceed the patient's stated contractual responsibility.

MedErase handles this for you. Get a free consultation and our case managers will assess your specific bill.

How to Identify a Balance Bill

The most reliable way to identify a balance bill is to compare your insurer's Explanation of Benefits against the provider's bill. The EOB shows what the insurer paid, what was adjusted as the contracted rate reduction, and what your remaining patient responsibility is under the plan terms. If the provider's bill shows an amount higher than your stated patient responsibility on the EOB — and there is no explanation for the discrepancy such as services not covered by the plan — the excess charge may be improper balance billing.

The second indicator is the appearance of a bill from a provider you did not knowingly select. If you receive a bill from a physician group, radiology service, or laboratory that you cannot connect to a specific service you knowingly chose, this bill warrants immediate review for balance billing issues. The fact that you cannot identify the provider's role in your care is itself an indicator of the circumstances that the No Surprises Act was designed to address.

What Happens When a Provider Pursues a Prohibited Balance Bill

When our case managers identify a balance bill that violates the No Surprises Act or applicable state law, we send a formal written dispute to the provider documenting the specific violation, citing the applicable legal provisions, and demanding correction of the billing. We simultaneously notify the patient's insurer, which has its own obligations under the No Surprises Act to assist patients in resolving these situations.

Providers who persist in collecting a prohibited balance bill after receiving a documented violation notice can be reported to the Centers for Medicare and Medicaid Services, which enforces the No Surprises Act. Civil monetary penalties for violations can be substantial — up to $10,000 per violation. The regulatory complaint mechanism is a significant deterrent, and its existence as an escalation option strengthens the patient's position in the initial dispute substantially.