Am I Protected Against Balance Billing?

One in seven patients admitted to a hospital in their health plan's network get an unexpected bill from an out-of-network medical provider, according to March 2019 study by the Health Care Cost Institute. The problem has drawn attention in state legislatures: Twenty-five have enacted laws that protect consumers in varying degrees from surprise medical costs arising from this “balance billing.”

Balance billing occurs when you receive treatment from a medical professional or facility that is outside your health plan's network and charges you the difference between their full fee and what insurance pays — something an in-network practitioner cannot do. Even if you are at a hospital that is in your network, you might be seen by a doctor who is not, particularly in an emergency when you may have little or no control over who handles your care.

With many health plans narrowing their provider networks, and specialist practices consolidating into larger groups with more power to refuse insurers’ negotiated rates, patients are more likely to find themselves being treated by out-of-network physicians, especially in emergency cases. This means more surprise bills. In the past decade, balance billing has become the most frequent subject of complaints to many states’ insurance regulators, says Loren Adler, associate director at the Center for Health Policy at the Brookings Institution, a Washington, D.C., think tank.

Federal programs such as Medicaid and Medicare effectively ban balance billing by creating their own networks and limiting the amounts they pay to providers. But there are no such national protections for people with private insurance, including those who get coverage through Affordable Care Act exchanges.

Even state laws restricting balance billing have limited reach. The federal Employee Retirement Income Security Act, or ERISA — a 1974 law that sets guidelines for pension, retirement and health plans in the private sector — exempts so-called self-funded plans operated by private companies from most state insurance laws. Those plans, in which companies use their own money to pay for employees’ medical services rather than purchasing insurance, cover around 61 percent of people with workplace health coverage.

“It’s a huge hole in state laws that self-funded plans can’t be covered,” says Kevin Lucia, a research professor at Georgetown University’s Health Policy Institute and co-author of a comprehensive 2019 Commonwealth Fund report on state regulations on balance billing.

Which states protect consumers?

Still, state statutes offer some relief to many patients. About half of the 25 state laws on the books as of December 2018 prohibit providers from issuing balance bills in most or all circumstances. Nine of them — California, Connecticut, Florida, Illinois, Maryland, New Hampshire, New Jersey, New York and Oregon — provide what the Commonwealth Fund terms “comprehensive” protection, meaning they:

• cover all emergency care and in-network non-emergency care;
• apply to all types of insurance, including preferred provider organizations (PPOs) and health maintenance organizations (HMOs);
• prohibit balance billing and hold consumers harmless from extra charges by medical providers;
• and establish a method to determine payment. This could be setting a payment standard (based, for example, on what Medicare charges for a service, or on the usual and customary fee in a given region) or requiring arbitration-style dispute resolution between insurers and providers.