Avoid the Trap of Balance Billing

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It is no secret that payers and providers have conflict as it relates to reimbursement rates for medical services, and there is another stakeholder, the patient, that plays an important role in the financial impact of healthcare reimbursement. Usually, patients are faced with unforeseen bills from their providers due to an unpaid portion of a claim. This is usually referred to as balance billing. Balance billing, also called “extra billing,” is defined as a healthcare provider billing a patient for the difference between what the patient’s health insurance chooses to reimburse and what the provider chooses to charge. For example, if the provider charges $100 for a service and the allowed amount is $70, the practice bills the patient the remaining $30. The question is: Does the patient actually owe the balance of a bill after their insurance pays?

To Bill or Not to Bill Is the Question

At a glance this may not seem like a problem, but if a provider is a preferred provider or contracted with a health plan, he or she may not balance bill for covered charges. The key is knowing when you can or cannot balance bill a patient. Billing a patient for any charges or balance of a bill above the allowable rate in the provider contract is considered illegal. Most healthcare plans will inform the provider as to what is permissible to collect or what the patient is responsible for under their coverage benefits. Practices can collect up front at the time of service for any co-pays, co-insurance, deductible or any amount due for services not covered by the patient’s plan.

On the other hand, out-of-network physicians, those not bounded by contractual in-network rate agreements, have the ability to bill patients for the entire remaining balance. Keep in mind, if the insurance plan or the contract specifies that the patient is not responsible for any deductible, co-pay or co-insurance, then it is also illegal to bill the patient for any charges.

The rise in unpaid medical bills has a detrimental financial impact on physician practices and the healthcare system at large. The increase on administrative burdens and accounts receivable has unanticipated consequences to cost and budget in practices. The biggest problem practices are facing with balance billing is due to a lack of transparency from the insurance plans with their beneficiaries. There are some cases where patients are unaware they received care or services outside of their network until they receive the bill for the balance. Additionally, insurance plans deny or reject charges that should be paid, but inform patients that there is no balance on their bill—again, this leaves practices stuck with an unpaid bill or having to write off a lot of charges.

The federal government is concerned about erroneous balance billing practices as they relate to qualified Medicare beneficiaries. As a result, in February 2016, Medicare revised its MedLearn Matters article, SE1128, Prohibition on Balance Billing Dually Eligible Individuals Enrolled in the Qualified Medicare Beneficiary (QMB) Program, indicating: “Federal law bars Medicare providers from balance billing a QMB beneficiary under any circumstances.” See Section 1902(n)(3)(B) of the Social Security Act, as modified by Section 4714 of the Balanced Budget Act of 1997.

QMB is a Medicaid program for Medicare beneficiaries that exempts them from liability for Medicare cost sharing. State Medicaid programs may pay providers for Medicare deductibles, co-insurance and co-payments. However, as permitted by federal law, states can limit provider reimbursement for Medicare cost sharing under certain circumstances. Medicare providers must accept the Medicare payment and Medicaid payment (if any) as payment in full for services rendered to a QMB beneficiary. Medicare providers who violate these billing prohibitions are violating their Medicare Provider Agreement and may be subject to sanctions. (See Sections 1902(n)(3)(C); 1905(p)(3); 1866(a)(1)(A); 1848(g)(3)(A) of the Social Security Act.)

Providers who participate in traditional Medicare and Medicare Advantage Plans (not only those that accept Medicaid) must follow all of their balance billing exclusions. It is vital that front- and back-office staff members understand the process of balance billing and exclusions for Medicare and private carriers. It is also significant to know the billing process if a patient has dual coverage, whether it is with commercial insurance and/or Medicare. The Balanced Budget Act of 1997 prohibits the collection of cost-share amounts directly from dual-eligible individuals (i.e., individuals who have both Medicare and Medicaid). Providers who serve patients who are dually eligible must either accept the payment received as payment in full or seek reimbursement for any cost share from the appropriate state source. For additional information on dual eligibility, visit the CMS website.

To avoid any and all confusion with patient responsibility and uncovered services, it is important for practices to diligently strive to inform patients of their covered services versus what the insurance will pay or will not pay for. The financial impact of writing off charges due to denied claims or patients disputing a bill is inconvenient and inefficient. Physicians and practice managers should review and update all documents and software that are used to capture charges to avoid any outstanding charges in accounts or write-offs. Taking the necessary proactive steps to protect your practice’s financial status is necessary.

For more information on billing, coding and practice management or to set up training for your practice, visit Rheumatology or contact the ACR’s Practice Management Director Antanya Chung at [email protected].