How do out of network healthcare services lead to extreme medical bills?
Patients sometimes receive healthcare services from providers that are considered “out-of-network” for their insurance plan. This type of situation may arise as a result of miscommunication and misunderstanding of coverage by the patient or provider. Or it may occur due to a medical emergency or other medical necessity.
Claims submitted by out-of-network providers may be partially denied by the insurer, leading the hospital to seek payment directly from the patient. When billing patients directly, hospitals and healthcare providers may attempt to charge significantly higher prices than they would charge insurance companies for in-network services.
Understand how health insurance networks and medical billing work.
Insurance companies negotiate pricing agreements with healthcare providers. The group of providers with which your insurance company has established pricing agreements represent your “network”. Services with these providers are considered “in-network”. Providers that have not established pricing agreements with insurers are considered “out-of-network”.
When it comes time to pay a claim, an out-of-network hospital will frequently charge more than an insurance company is willing to pay. There is no contract stating that the hospital cannot charge the patient the difference between what the insurance company paid and the hospital charge master rate. This is called “balance billing” and it is important to know that many states have laws regulating what can be charged in this instance.
It is even possible to have out-of-network medical bill charges from an in-network hospital. It’s increasingly common for certain doctors or departments at “in-network hospitals'' to be legally independent from the hospital, not have an agreement with the insurance company, and therefore be considered “out-of-network.”
How to handle bills due to out-of-network medical billing.
If you are facing large out-of-network medical bills, consider the following options:
- Research “balance billing” laws in your state
- Depending on state laws, you may consider a consultation with an attorney
- Negotiate with the insurance company and hospital, working to get them to agree on an “in-network” rate. First, you will need to convince the insurance company that the bill represents a financial hardship and you had no option but to go out-of-network. Second, you will need to convince the hospital that the in-network rate will provide them the best financial outcome.