Skip Navigation

Unexpected charges: what states are doing about balance billing

Contributor(s):
Hoadley, Jack.
Lucia, Kevin.
Schwartz, Sonya.
California HealthCare Foundation.
Publication:
Oakland, Calif. : California HealthCare Foundation, c2009
Language(s):
English
Format:
Text
Subject(s):
Accounts Payable and Receivable
Fees and Charges -- legislation & jurisprudence
Managed Care Programs -- economics
Cost Sharing
Financing, Personal
Health Care Costs
Private Sector
State Government
Humans
California
Genre(s):
Technical Report
Abstract:
To most consumers, health insurance means protection against large bills from health care providers. But in some situations involving managed care organizations (MCOs), the provider expects a higher payment than the amount the health insurer is willing to pay. The result can be a bill for the remaining balance, sent to the patient--a practice known as balance billing. Most people with private health insurance are covered by an MCO, a category that includes both health maintenance organizations and preferred provider organizations. MCO members take comfort in the belief that if they follow MCO rules they will not face costs greater than their premium and required cost sharing (copayments, deductibles, and co-insurance). MCOs have networks of providers with whom they have negotiated reimbursement contracts. For the most part, members understand that they must use these network providers to minimize their out-of-pocket expenses. However, even a careful consumer can end up being treated by an out-of-network provider. When this happens, the patient is at risk of receiving a bill from the provider for the difference between the provider's charge and the amount the MCO is willing to pay. In some cases, patients face hundreds of dollars in charges--referred to as balance bills--above their expected cost sharing. Many states have struggled to produce legislative or regulatory solutions to address balance billing. To date, relatively few states have passed laws protecting patients from balance billing by out-of-network providers. Those laws appear relatively successful in protecting MCO members from large balance bills. But they have been less successful in navigating the competing interests of MCOs and health care providers in determining an appropriate, equitable payment; most laws seem to impose higher costs on one group or the other. The fundamental conflict is how to protect MCO members while establishing a clear means of determining a payment level appropriate for both MCOs and providers. This paper provides context on the extent of out-of-network service utilization and the potential problem imposed by balance billing, and then describes how some states have responded. It shares observations based on an examination of state laws and interviews with regulators, providers, MCOs, and consumer advocacy organizations that may be helpful for policymakers considering balance billing legislation in California and elsewhere.
Copyright:
Reproduced with permission of the copyright holder. Further use of the material is subject to CC BY license. (More information)
Illustrations:
Illustrations
NLM Unique ID:
101515135 (See catalog record)
Contributor(s):
Hoadley, Jack.
Lucia, Kevin.
Schwartz, Sonya.
California HealthCare Foundation.
Publication:
Oakland, Calif. : California HealthCare Foundation, c2009
Language(s):
English
Format:
Text
Subject(s):
Accounts Payable and Receivable
Fees and Charges -- legislation & jurisprudence
Managed Care Programs -- economics
Cost Sharing
Financing, Personal
Health Care Costs
Private Sector
State Government
Humans
California
Genre(s):
Technical Report
Abstract:
To most consumers, health insurance means protection against large bills from health care providers. But in some situations involving managed care organizations (MCOs), the provider expects a higher payment than the amount the health insurer is willing to pay. The result can be a bill for the remaining balance, sent to the patient--a practice known as balance billing. Most people with private health insurance are covered by an MCO, a category that includes both health maintenance organizations and preferred provider organizations. MCO members take comfort in the belief that if they follow MCO rules they will not face costs greater than their premium and required cost sharing (copayments, deductibles, and co-insurance). MCOs have networks of providers with whom they have negotiated reimbursement contracts. For the most part, members understand that they must use these network providers to minimize their out-of-pocket expenses. However, even a careful consumer can end up being treated by an out-of-network provider. When this happens, the patient is at risk of receiving a bill from the provider for the difference between the provider's charge and the amount the MCO is willing to pay. In some cases, patients face hundreds of dollars in charges--referred to as balance bills--above their expected cost sharing. Many states have struggled to produce legislative or regulatory solutions to address balance billing. To date, relatively few states have passed laws protecting patients from balance billing by out-of-network providers. Those laws appear relatively successful in protecting MCO members from large balance bills. But they have been less successful in navigating the competing interests of MCOs and health care providers in determining an appropriate, equitable payment; most laws seem to impose higher costs on one group or the other. The fundamental conflict is how to protect MCO members while establishing a clear means of determining a payment level appropriate for both MCOs and providers. This paper provides context on the extent of out-of-network service utilization and the potential problem imposed by balance billing, and then describes how some states have responded. It shares observations based on an examination of state laws and interviews with regulators, providers, MCOs, and consumer advocacy organizations that may be helpful for policymakers considering balance billing legislation in California and elsewhere.
Copyright:
Reproduced with permission of the copyright holder. Further use of the material is subject to CC BY license. (More information)
Illustrations:
Illustrations
NLM Unique ID:
101515135 (See catalog record)