In a typical health insurance plan, the insurer determines the "allowed" charge for a particular service and then agrees to pay some specified percentage of that (say, 80%) if the doctor (of facility, if it is a facility charge) who provides the service is "in network" and a lower percentage (say, 60%) if the doc (or facility) is "out of network". In-network docs agree to accept the "allowed" charge as full payment for the service rendered. That is why you see, on your bill, a "contractual adjustment." So the provider may bill $1000 "retail" for some service, but the "allowed" charge by the insurer may be, say, $300. The in-network doc then writes off the $700 difference. (He can still charge you for the portion of the allowed charge that the insurer does not pay -- the 20% or whatever). However, an out of network doc can typically bill you for the full difference between his "retail" charge and what the insurer pays. That is referred to as "balance billing." This is something patients often don't focus on, until it is too late. They may think the difference between using an in network doc and an out of network doc (or facility) is simply the difference between, say, 80% coverage and 60% coverage. The bigger difference, however, can be the balance billing. Balance billing is controversial, and some states have tried to limit it. But the docs say "if I choose not to join a network, I should be able to bill whatever I want."
Balance billing is particularly controversial with respect to doctors who a patient does not choose -- for example, typically a patient does not choose his anesthesiologist or (except for some particularly sophisticated people who populate this board, and who are not at all typical of medical patients) their pathologists. And of course they don't choose their ER docs or emergency surgeons, etc. But if one of these people turns out to be out of network, and decides to balance bill the patient, it can be VERY expensive. There are people who have had to file personal bankruptcy because of this sort of unanticipated balance billing.
In Maryland, the largest health insurance company in the state refuses to pay out of network doctors directly. Instead, it pays the patients. The insurer does this in order to induce docs to join the network. A doc who joins the network must waive the right to balance bill, but he gets the benefit of direct payment from the insurer, rather than having to chase patients who often don't pay or pay very late, etc. This is a substantial benefit for docs. The MD legislature had a proposed bill that would have required all insurers in the state to make direct payment to out of network docs. (Most already did, but as I said the largest one did not). The docs union (so to speak) liked that but the largest insurance company hated it. The insurer would lose its leverage to keep docs in the network. If a doc could get direct payment from the insurer even if he was out of network -- and at the same time preserve the right to balance bill -- why not do that? Then someone said "lets add an amendment to this bill to make balance billing illegal." That insurers liked that but the docs did not. In the end, a compromise was worked out where (1) insurers have to pay out of network docs directly (whatever their reimbursement is to out of network providers under the particular policy); (2) out of network doctors who are "hospital affiliated" cannot balance bill; but (3) these out of network docs will get reimbursed by the insurance company at a higher rate than in network docs who provide the same service -- to compensate for the prohibition on balance billing. I have oversimplified this a little bit and left out some detail, but that is the basic idea. It is (in my view) a novel compromise. It has not taken effect yet. It is also not the law in other states, so, as they say, your mileage may vary.
Some of you seem to have an experience where an out of network doctor did not balance bill. That happens. No doctor or hospital is required to balance bill. But it is a risk when you use an out of network doctor or facility and do not address the issue up front. I am told by some doctor friends that it is often possible to negotiate with out of network doctors, to eliminate or very substantially reduce any balance billing. But, of course, the time to do that is before the service is rendered -- and many patients are not focused on that sort of thing when they are facing a serious illness or surgery.
Age 46. Father died of p ca.
My psa starting age 40: 1.4, 1.3, 1.43, 1.74, 1.7, 1.5, 1.5
Post Edited (medved) : 5/22/2010 2:31:34 PM (GMT-6)