In-Network: In-network refers to providers or health care facilities that are part of a health plan’s network of providers and has a signed contract agreeing to accept the health insurance plan’s negotiated fees.
Out-of-Network: This phrase usually refers to physicians, hospitals, or other healthcare providers who do not participate in an insurer’s provider network. This means that the provider has not signed a contract to accept the health insurance plan’s negotiated fees.
Usual and Customary: A reasonable and customary fee is the amount of money that a particular health insurance company (or self-insured health plan) determines is the normal or acceptable range of payment for a specific health-related service or medical procedure.
Deductible: A deductible is a fixed amount you have to pay each year toward the cost of your health care bills before your health insurance coverage kicks in fully and begins to pay for you.
Copay: A copay is a set amount you pay whenever you use a particular type of healthcare service.
Coinsurance: With coinsurance, you pay a percentage of the cost of a healthcare service—usually after you’ve met your deductible. You continue paying coinsurance until you’ve met your plan’s maximum out-of-pocket for the year.
We interviewed Lindsey, Manager of Billing & Collections, at NuVasive Clinical Services to hear about balance billing practices and how it affects patients and providers.
Q: Can you explain the concept of balance billing?
A: Balance billing is a practice where a health care provider bills a patient for the difference between their charge amount and any amounts paid by the patient’s insurer or applied to a patient’s deductible, coinsurance, or copay. It is important to note that billing a patient for amounts applied to their deductible, coinsurance, or copay is not considered balance billing. When a patient and a health insurance company both pay for health care expenses, it’s called cost sharing. Deductibles, coinsurance, and copays are all examples of cost sharing and these amounts are pre-determined per a patient’s benefit plan.
- Example:A healthcare provider bills $500 to an insurance for a service. The insurance pays $200 and applies $100 to patient responsibility for the deductible, coinsurance or copay. This leaves a remaining balance of $200. If the healthcare provider bills the patient for the remaining $200 balance this would be considered balance billing.
Q: Is balance billing legal?
A: In some circumstances it is and in some it is not.
Healthcare providers that are in-network have agreed to accept the insurance plan’s negotiated fees. Balance billing would not be permitted under an in-network agreement because the healthcare provider has agreed to accept the negotiated fees as payment in full plus any applicable deductible, coinsurance, or copay. In the above example this would mean that the healthcare provider would accept the $200 plus the $100 (deductible, coinsurance, or copay amount) as payment in full and would adjust off the remaining $200 balance. In this situation, balance billing is NOT legal.
Healthcare providers that are out-of-network have not agreed to accept the insurance plan’s negotiated fees and could balance bill the patient. Without a signed agreement between the healthcare provider and the insurance plan, the healthcare provider is not limited in what they may bill the patient and may seek to hold the patient responsible for any amounts not paid by the insurance plan. In this situation balance billing IS legal.
Q: Can you comment on the practice of waiving copays and deductibles?
A: It is unlawful to routinely waive copays, coinsurance, and deductibles. Providers are at risk of violating Federal Anti-Kickback Statutes, Federal False Claims Act, and state laws. The only legitimate reason to waive a copay or deductible is the patient’s genuine financial hardship.
Q: What practices does NCS employ to support patients that are under financial stress?
A: NCS has a very robust patient care process which offers many opportunities for patients to pay as little out of pocket as possible. As a company, we are extremely mindful that surgery can be expensive. We offer our patients payment plans as low as $25 per month, charity adjustments that will match the amount of charity assistance they are approved for at the facility, a very easy financial hardship application, and our staff that is ready to appeal an out-of-network situation. We are always looking for opportunities help our patients and alleviate any financial stress.
Q: Some states have implemented “surprise bill” legislation, to provide relief from the widespread practice of balance billing for out-of-network services. Can you help explain this topic?
A: A surprise bill is when a member receives services from an out-of-network provider at an in-network hospital or other center and receives a bill for those services that they were not expecting. Some states have implemented surprise billing laws that may impact reimbursement for some out-of-network health care services, by requiring new disclosures from providers regarding their plan participation status. They have also added new rules for health plans regarding networks and reimbursement for out-of-network services.
Several states have laws on the books that provide some amount of consumer protection from balance and surprise bills in emergency departments and in-network hospitals. Some statuatory schemes are more far reaching than others, for example, California, Connecticut, Florida, Illinois, Maryland, and New York. NCS strives to comply with state requirements, as applicable, including by not engaging in “surprise” balance billing, Patients will receive bills when their health insurance applies patient responsibility due for a deductible, coinsurance, or copay.
To learn more about patient billing, check out our article on Patient Billing Practices here.