Practice Management Alert

Question: Another practice in our area has started balance billing patients. Would you explain what balance billing is and whether our practice can start doing this as well?

Balance billing is charging full fees over and above the carrier-covered amounts, and billing the patient for the portion that the insurance company or medical plan does not pay.

Physicians often wonder if they can bill patients the difference between the doctor's standard fee for a service and what an insurance carrier pays for that service -- otherwise known as balance billing. In most cases, you cannot pass the extra cost onto the patient, says Barbara Colburn, president and CEO of Total Health Care Solutions in Ocala, Fla.

You should first look at your carrier contract when determining if you can balance bill. Many carriers prohibit participating physicians from billing covered patients more than the applicable copay.

"The contract of a prominent payer, for example, generally states that -the provider agrees to accept the payer's network rate as payment in full for covered services and shall not balance bill the payer's subscribers,- " Colburn says.

Reading your contract will clearly explain what you-re allowed -- and not allowed -- to do, says Barbara J. Cobuzzi, MBA, CPC, OTO, CPC-H, CPC-P, CHCC, director of outreach programs for the American Academy of Professional Coders, the coding organization in Salt Lake City. "For example, there are some services such as immunizations and preventive care that copays don't apply to, and that can affect your ability to balance bill patients."

If your physician participates with Medicare, for example, you cannot balance bill for services to those patients. Medicare requires a participating provider to accept assignment for all Medicare claims, and the patient must pay his 20 percent co-insurance at the time of service. But if your physician does not participate with Medicare and does not accept assignment, he does not agree to accept Medicare's allowed amount as payment in full. In that case, you may be able to charge the patient, up to the limiting charge, for the service.

If you-re dealing with a non-Medicare payer, you can bill all the way up to your physician's fee. "You don't have to stick to the Medicare limiting fee," Cobuzzi says. For non-Medicare payers, you are therefore fully within your rights to balance bill the patient up to your full fee if there aren't any contractual or state laws prohibiting that.

"Since the non-HMO physicians are not under contract, they can balance bill HMO patients unless there is some written or other arrangement prohibiting them from doing so," Colburn says.

Keep in mind: You should consider how balance billing in this way will affect your public relations with your patients. If you charge what the patient perceives to be excessive, you may end up with unhappy patients.

How it works: As long as you balance bill the patient the difference between what the insurance paid and the insurance allowance, you can write off the difference between the insurance allowance and your physician fee, Cobuzzi says. "That's what some doctors do to exist in a non-par situation and still be able to get patients to come to them," she adds. "It is illegal to take what the payer pays and not balance bill the patient that difference."

You-ve determined that your physician does not participate with one insurance carrier, so you can balance bill that carrier's patients, right? Not necessarily. The answer depends on your state's laws.

Some states ban balance billing even for out-of-network physicians. In addition, most government-sponsored programs in most states, including many workers- compensation plans, Medicaid and motor vehicle plans, prohibit balance billing the patient.

For example, New Mexico's workers- compensation plan states, "You may not balance bill the patient for any amount not paid by the insurer. However, if the claim is determined not to be covered by New Mexico workers- compensation, you may bill the patient or the patient's health insurance."