Cost sharing and balance billing determine patient financial obligations after health insurance pays the medical bills owed to an ambulance, dentist, doctor, hospital, or laboratory.
Cost sharing insurance features such as deductibles, copayments, coinsurance, and out-of-pocket maximums come into play when you use in-network providers.
Balance billing often results in large unpleasant surprises when you use an out-of-network dentist, doctor, or hospital.
Therefore, be very careful when deciding where to go for diagnosis and treatment. Learn how to fight back against hidden charges that catch you by surprise.
Cost Sharing with In-Network Providers
Cost-sharing defines patient financial obligation after health insurance pays in-network providers. Participating dentists, doctors, and hospitals accept the “allowed amount” found on your explanation of benefits statement as payment in full – less any remaining patient cost-sharing obligations.
Learn the difference between a deductible, copayment, coinsurance, and out-of-pocket maximum (MOOP). Medical debt consolidation loans can help you fund these leftover amounts and keep your account away from collection agencies.
The deductible is the amount the individual or family pays before the health insurance plan begins covering services. After you meet the in-network deductible, you are responsible for funding only the copayments and coinsurance until reaching the MOOP for the plan year.
Health insurance premiums are the amount you pay monthly whether you need care or not. The plans with the lowest premiums often have the skinniest networks (see next section) and/or the highest deductible limits.
The family deductible is the limit that all covered family members must pay in combination before the health insurance begins covering services. Two obscure definitions affect how this feature works.
- The aggregate family deductible does not pay any benefits for any person until medical costs reach the specified limit
- Embedded family deductible begins paying benefits after
- Any person member meets his or her individual deductible
- The entire family reaches the annual limit
The embedded individual deductible is the limit any one person covered by the plan must pay before the health insurance begins covering services. After meeting the limit, this one person is only responsible for funding copayments, and coinsurance until reaching the MOOP.
Copayment is a fixed cost-sharing amount ($20 to $30) the patient must fund each time he or she utilizes a healthcare service. You begin making copayments after meeting the deductible. The provider is required to collect the copayment at the point of service.
- Plans waive copayment requirements for preventive care
- Copayments do not count towards the deductible
Copayment assistance programs can help patients with these costs.
Coinsurance is the percentage of the allowed amount patients must pay for care at in-network providers. For example, a patient with a 20% coinsurance requirement must pay $200 of a $1,000 claim after the insurance company reimburses the remaining 80%.
- Coinsurance does not count towards the deductible
- It kicks in only after reaching this annual limit
The Out-of-Pocket Maximum (MOOP) limits the total any individual or family pays in deductibles, copayments, and coinsurance for in-network care during the plan year. The calculation excludes premium payments.
The insurance plan covers 100% of approved claim expenses once you reach the annual out-of-pocket limit. For example, the 2019 MOOP for Health Savings Accounts is $7,900 for self-only and $15,800 for family coverage
Balance Billing Out-of-Network Charges
The balance billing of out-of-network charges often accounts for large medical bills after health insurance pays. Keep in mind; it is the patient’s responsibility to verify that insurance covers the cost of care.
Therefore, do your homework when choosing a dentist, doctor, or hospital. Know what using a non-participating provider means to your cost of care. Learn how to fight surprise balance bills.
Out of Network Meaning
“Out of network” means that the healthcare provider does not have a written contract with your insurance plan. Be careful to note the definitions for “accept” versus “participate” when choosing a dentist, doctor, or hospital.
- They accept payment from health insurance plans
- Many often file claims on your behalf
- Enforce patient cost-sharing features
- They do not participate in the lower negotiated “Allowed Amount”
- Freely collect on the higher “Provider Charges”
- Ignore out-of-pocket maximums
Out-of-network also means that the cost-sharing elements are often much higher after insurance pays: the deductible, copayment, coinsurance, and out-of-pocket maximum.
Beware, the insurance plan calculates and enforces the annual out-of-pocket maximum (MOOP) for out-of-network services differently. This is where large balance bills can happen.
- Charges up to the Allowed Amount: The MOOP limit applies to deductible, copayments, and coinsurance calculated based on this figure.
- Charges above the Allowed Amount: The MOOP does not limit these expenses, as there is no written contract.
Health insurance plans do not have a written contract to reimburse out-of-network providers at a specified fee schedule for each service. Instead, most carriers tap the Usual, Customary, and Reasonable (UCR) fees published for each geographic area to determine the allowed amount.
Keep in mind that UCR reimbursement levels are often higher. Non-participating dentists, doctors, and hospitals forgo greater patient volume in exchange for higher prices. You will reach your out-of-network deductible and MOOP more quickly.
How to Fight
How do you fight balance-billing surprises from out-of-network providers? Take advantage of all of the possible arrows in your quiver when going to battle creditors.
- Apply for charity care if you meet income requirements
- Dispute charges that seem too high and services not rendered
- Compare service pricing to local usual, customary, and reasonable fee schedules
- File a complaint
- Against providers with your state medical board
- Against the insurers with your state insurance board
- Negotiate a settlement with the collection agency
- Wait out the statute of limitations on medical debt
- Engage legal protections in your state (see below)
The Medicare balance billing rules can be confusing because of the government-run alphabet soup (Parts A and B plus QMB, SLMB, QI). Plus, the variety of supplemental plans that elderly members may choose can complicate the equation.
These general rules apply to providers who do not accept Medicare (A & B) assignment.
- Pay upfront at the time of service
- Must submit a claim for the patient
- Can charge only 15% over the fee schedule amount
- Private Opt Out Contracts
- Medicare does not pay any claims
- Provider has no limits on service fees
- Patient is 100% responsible for any charge
Medicaid balance billing rules are clearer even though federal and 50 different state guidelines can come into play. The federal regulations always take precedent.
One rule (42 C.F.R. § 447.15) addresses the issue head-on.
“A state plan must provide that the Medicaid agency must limit participation in the Medicaid program to providers who accept, as payment in full, the amounts paid by the agency plus any deductible, coinsurance or copayment required by the plan to be paid by the individual.”
This rule explains the difficulty in finding Medicaid doctors and dentists. Reimbursement is very low and balance billing is illegal.
Balance billing laws in your state can help you fight out-of-network surprises. These state laws target two types of common situations that trap unsuspecting consumers.
- Valid medical emergencies
- Out-of-network providers working at in-network hospitals
- Emergency room doctors
- Imaging and radiology
- Laboratory or pathologist
However, the patient legal protections are very limited.
- Only 21 states have a related statute on the books
- Some limit safeguards to HMO members only
- Federal rules (ERISA) exempts self-insured employer plans from state regulation
California’s surprise medical bill law protects consumers when they go to in-network facilities such as hospitals, labs, or imaging centers, or need emergency treatment. Providers cannot send patients out-of-network bills when the consumer did everything right.
Note that the law applies only to people in health plans regulated by the Department of Managed Health Care or the California Department of Insurance. This excludes three groups.
- Self-insured plans
- Medi-Cal (Medicaid)
The Illinois Network Adequacy and Transparency Act (NAT) added to existing balance billing protections beginning in 2019. Patients who acted in good faith have new benefits.
- Insurer will cover services as in-network
- When options are inadequate
- Emergency treatment
- Limits on penalties for failure to pre-certify
- Denies greater out-of-pocket costs at in-network hospitals
The Illinois law does not apply when you willfully seek out-of-network care.
New Jersey passed assembly bill 2039 on June 1, 2018. The law attempts to reduce surprise balance bills. Emergent or inadvertent out-of-network service providers cannot bill patients in excess of their deductible, copayment or coinsurance obligation.
Pennsylvania House Bill 1553 would protect consumers of health care coverage against surprise balance bills for emergency and other covered services when the patient seeks care from in-network facilities. This bill has yet to become law as of December 2018.
Texas law provides certain protections against balance billing if you cannot avoid out-of-network treatment because of medical emergencies or a lack of preferred providers.
The level of legal protections varies by plan design.
- HMO or EPO plans limit exposure to in-network cost sharing
- PPO plans must pay provider based on usual, customary, and reasonable fees. Amounts above these figures paid by patients count towards the deductible and out-of-pocket maximum.
The Florida law prohibits an out-of-network outfit from balance billing members of a preferred provider organization (PPO), an exclusive provider organization (EPO), or a Health Maintenance Organization (HMO). The rule applies to certain services only.
- Emergency services without a prior authorization determination
- Non-emergency services provided at a participating facility
The New York law protects consumers from surprise balance bills brought about by three reasons.
- Emergency services
- Out-of-network doctor at a participating hospital or ambulatory surgical center
- Referrals from in-network doctor to a non-participating provider
Members of unions or self-insured plans can file disputes through the state-run Independent Dispute Resolution (IDR) Process.