Balance billing is a financial hurdle that often surprises patients and complicates operations for healthcare providers, quickly turning a positive healthcare experience into a stressful financial puzzle. It can be an extremely frustrating process for patients and practices, especially within behavioral health services, largely due to misconceptions about how it works. This guide explains what balance billing means, why it happens, and how healthcare practices can navigate these financial complexities more effectively.
What Is Balance Billing and How Does It Work?
The cost of healthcare services and the amount a patient’s insurance is willing to cover don’t always align. When this happens, a practice known as balance billing occurs, where healthcare providers charge patients for the gap between their total service cost and the amount the insurance company paid.
This practice is most common when patients receive out-of-network care, either without realizing it, because they had no other option, or because they mistakenly believed a service was covered by their insurance when it wasn’t. An in-network healthcare provider, on the other hand, would have agreed to accept the insurance payment as payment in full and is, therefore, not allowed to balance bill their patients.
Unlike standard cost-sharing arrangements, which are predetermined in healthcare insurance, such as copayments, deductibles, and coinsurance, balance bills often come as a surprise, leaving patients feeling blindsided by unexpected medical expenses.
Why Does Balance Billing Happen?
Balance billing often stems from broader issues in how provider networks are structured and regulated. To start, many insurance companies are reducing their network sizes to manage expenses, meaning fewer available in-network physicians. This makes it more difficult for patients to access covered care, especially in hospital settings or emergency situations where multiple physicians may be involved in their care.
Another issue is that, in many states, there aren’t strict requirements to evaluate the adequacy of these networks with measurable standards, including ensuring that patients have access to in-network physicians at hospitals. Even when patients have out-of-network coverage, insurance companies often set lower reimbursement rates for these providers, meaning that the gap between provider charges and insurance payments is then passed on to patients through balance billing.
Common Problems with Balance Billing
As covered above, even at in-network facilities, there can be services that aren’t fully covered by insurance. A common example is Applied Behavior Analysis (ABA) provided by a Board Certified Behavior Analyst (BCBA). Since billing for ABA therapy involves precise coding and documentation, even small discrepancies in ABA billing codes can lead to unexpected charges for patients. BCBAs also need to be individually credentialed by insurance providers, so it is possible to encounter an out-of-network BCBA even if the facility where the care is being carried out is in-network.
Behavioral health care is also highly individualized, so treatment plans may not always fit neatly into standard insurance coverage categories. These billing misconceptions in ABA therapy can complicate the process further, leading to even more confusion about what aspects of treatment are covered and to what extent.
The situation becomes even more challenging with behavioral health treatments, which often require multiple sessions over an extended period, increasing the likelihood of balance billing. Clear communication between providers, insurance companies, and patients is critical for ensuring that all parties are fully informed about costs and coverage ahead of time to avoid unexpected balance billing.
The Impact of Balance Billing
Balance billing, if not handled correctly, can weave a complex web of challenges for healthcare practices and their patients. In behavioral health, where patient trust plays such a huge role in effective care, it’s important for practices to ensure that they are being transparent with their billing practices. The consequences of surprise medical bills can extend far beyond simple financial transactions, potentially disrupting treatment progress and damaging crucial therapeutic relationships.
Healthcare providers must walk a fine line between maintaining their practice’s financial health and serving their patients. Out-of-network reimbursement rates from insurance companies often don’t cover the full cost of care, so will rely on balance billing to keep their practices viable. However, this creates additional administrative burdens, from tracking and documenting charges to managing billing disputes and patient concerns.
For patients, the effects can be particularly severe. A patient receiving behavioral health services may already be in a vulnerable position, and unexpected bills can add significant stress to their situation. When patients receive surprise bills, they might:
- Feel blindsided and lose trust in their provider.
- Face difficult choices between continuing necessary treatment and managing their finances.
- Experience increased anxiety about seeking future care.
- Risk interrupting their treatment progress due to financial concerns.
To minimize these negative impacts while maintaining practice sustainability, healthcare providers need to focus on clear communication surrounding any potential costs before treatment begins. If there is a clear understanding between the insurer, patient, and healthcare provider ahead of time, it can help prevent many of the challenges associated with balance billing.
Understanding the Legalities of Balance Billing
While balance billing is a common practice, it is governed by a complex set of regulations that vary by state and the type of healthcare service provided. Behavioral health practices must understand these legal frameworks to ensure compliance and protect their patients from unexpected financial burdens.
When Is Balance Billing Allowed?
Balance billing is generally allowed when a patient voluntarily seeks care from an out-of-network provider. In these cases, the patient is typically aware that their provider is not within their insurance network and consents to the potential for higher charges.
However, providers must clearly communicate their out-of-network status and any associated costs to their patients upfront to avoid misunderstandings when billing patients. In some states, specific laws allow balance billing under certain circumstances, provided that patients are fully informed and have agreed to the terms of care.
When Is Balance Billing Not Allowed?
Balance billing is prohibited in several scenarios to protect patients from unexpected medical expenses. For example, the No Surprises Act, which took effect in the United States in 2022, protects patients from balance billing in emergency situations and for certain non-emergency services provided by out-of-network providers at in-network facilities. Under this act, patients cannot be billed more than the in-network cost-sharing amount for these services. Additionally, some states have their own regulations that further restrict or ban balance billing, ensuring patients are not financially penalized for receiving out-of-network care in specific contexts.
Best Practices for Managing Balance Billing
Balance billing is a persistent issue in healthcare and will likely continue to be, creating financial difficulties for providers and patients. While out-of-network care often necessitates additional patient billing considerations, the primary goal should always be to balance fair provider reimbursement with patient financial protection.
Most of the issues around balance billing stem from a lack of understanding or transparency, leading to “surprise” bills. Healthcare providers can take several key steps to maintain transparency and minimize the impact of balance billing on their patients.
- Fee Schedule Transparency: Providers should maintain and share clear fee schedules. By discussing charges upfront and providing detailed cost information before treatment begins, patients can better understand their potential financial responsibilities based on their insurance coverage.
- Network Status Clarity: Transparency about network status is crucial. Healthcare providers should communicate which insurance networks they participate in to help patients make informed decisions about their care and anticipate any potential out-of-pocket costs.
- Financial Flexibility: Providers should work with their patients to address financial hardships. This might include offering payment plans, adjusting fees when possible, or helping patients understand their coverage options. By being flexible and understanding, providers can help reduce the financial burden while maintaining the quality of care.
The goal is to strike a balance between maintaining practice viability and ensuring patients can access the care they need without unexpected financial strain. By implementing proactive billing policies and prioritizing clear, open communication, healthcare practices can better manage balance billing while preserving their therapeutic relationships.
Getting Help with Your Billing Needs
To effectively navigate the complexities of balance billing and patient care, healthcare providers might benefit from partnering with a company that provides specialized billing services. These service providers can offer expert knowledge in managing insurance claims, optimizing reimbursement rates, and ensuring compliance with constantly evolving regulations.
Missing Piece specializes in patient billing services for behavioral health care providers, especially for Applied Behavior Analysis (ABA) practices. We understand the unique challenges that practices in this field face and offer tailored solutions to streamline your billing process and reduce your practice’s administrative burden, saving you time on your ABA therapy billing. You can focus on delivering high-quality patient care while we handle the intricacies of balance billing and insurance management. Contact us to find out more about how we can help.