What is Balance Billing?

Balance billing refers to the practice of a physician charging a patient when he feels that a third-party insurance provider has not properly reimbursed him for his services. This occurs when the fee charged by the doctor is larger than the payment offered by the insurer. In most cases, this takes place when a patient goes to a physician somewhere outside of the patient's network of doctors. If balance billing occurs when a patient stays within his network of providers, it could be an illegal action by the physician demanding payment.

Most people rely on health care insurance to take care of the payments for all of their medical needs. The basic process calls for a patient to pay an insurer some sort of premium to obtain insurance. After that, the insurance provider pays physicians for any medical coverage that the patient needs, although that is dependent on the type of coverage obtained. When a patient with insurance still receives a bill from a physician, it is known as balance billing.

As an example of balance billing, imagine that a doctor charges $200 US Dollars (USD) for performing a certain procedure on a patient. The patient has insurance, and the insurance company's contract with the doctor stipulates that she be paid $180 USD for her services on the patient. There is a $20 USD difference between the desired fee and what the doctor actually receives. To recover this difference, she sends a bill directly to the patient demanding payment of this $20 USD.

If the doctor is not included in the health care network offered by the patient's insurance company, this practice may indeed be perfectly legal. An individual looking to purchase a health care insurance plan should be aware of the network of doctors included in the plan. Should he require any services outside of this network, he could indeed be subject to balance billing, because a doctor outside the network has no contractual ties to the patient's insurance plan.

By contrast, balance billing that occurs within a patient's network of providers may indeed be an illegal practice. Many private and government-funded plans outlaw the practice, so patients should ask their insurance provider about any bills that come directly from a physician before paying them. It is important to note that some payments may be required of patients even if they stay inside their network of providers. Such legitimate payments include deductibles and co-payments, which are included in many insurance plans to cover some medical expenses.