Coding and Billing

Why It’s Never OK to Charge a Patient More to Make Up for What Insurance Didn’t Pay

By Mark Wright, OD, FCOVD,
and Carole Burns, OD, FCOVD

March 2, 2022

Some practices charge a patient the balance of what their insurance did not pay. Known as balance billing, this violates contracts with third-party payors. Here is why you should never do this, and what you should do instead.

When a provider signs a contract with a third party that has a clause that says the provider cannot balance bill, then it is a violation of the contract if the provider balance bills the patient. We have yet to see a contract with a third party – vision or medical – that does not contain a no balance billing clause.
An example here will help.

Consider the situation where a provider has signed a contract containing a clause forbidding balance billing. The provider charges the $100 for a procedure. The third party approves payment of $60 and will generally write a check to the provider for that amount ($60). If the provider bills the patient for the $40 that the third party did not pay, then that is what is called balance billing.

Let’s consider a slightly more complicated scenario. The provider charges $100, however, the patient has a $200 deductible and has met none of the deductible so far this year. The third party approves a $60 payment. How does the provider collect money for the $100 charge? The third party expects the provider to collect $60 from the patient because the deductible has not been met and the provider to collect $0 from the third party since the $60 approved payment has been met. Since there is a no balance billing clause in the contract, the provider cannot balance bill the patient to collect the remaining $40 from the patient.

Let’s consider another scenario. The patient has a $50 deductible, which has not been met, and a $10 co-pay. The usual and customary fee for the procedure the patient has today is $100. The third party approves $60 for this procedure. The deductible is $50 and the co-pay is $10. The deductible and co-pay add up to $60, so the provider needs to collect $60 from the patient and $0 from the insurance company. And, with the no balance billing clause, the remaining $40 cannot be collected from the patient.

But what if the patient needed the same procedure six months later? The deductible at this point in time has been met. Assuming the third party reimbursement allowed charge is still $60, the co-pay will need to be paid by the patient ($10), the third party will send the provider a check for $60 – $10 = $50 and the provider cannot balance bill the patient for the remaining $40.

All of this becomes moot when there is no contract between the provider and a third party. The provider can bill whatever they want and the patient is responsible to pay the full amount. (Be aware there are special rules for Medicare non-providers.)

By understanding what is allowed and what is not allowed, providers can be reimbursed correctly from third parties and also collect from patients what is allowed to be billed and collected. Violating the balance billing rules can have more significant implications beyond just returning the money improperly collected. HHS may impose civil penalties of up to $10,000 per violation for violation of balance billing prohibitions.

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