What is Balance Billing?

Learn About Extra Billing and When It's Legal

Patient paying nurse with credit card in clinic
Hero Images/Getty Images

Balance billing is a medical practice employed by hospitals, clinics, doctors’ offices and other medical facilities. The practice consists of billing patients for the balance between what they want to charge their patients for services and what the insurance company has already reimbursed them. Thus, in this situation, the patient would be responsible for the difference of the cost covered by their insurance provider and the amount the doctor or hospital decides to charge.

Balance billing is sometimes referred to as extra billing.

Legality of the Practice of Balance Billing

In most situations, the practice of balance billing is considered to be illegal. The practice of balance billing is illegal for all Medicare patients, or individuals older than 65 years of age. The practice of balance billing is also illegal in 47 of the 50 states of the United States of America when patients with private insurance plans seek medical care from doctors and medical facilities that are under contract with the insurer of the patient.

There is an exception regarding the legality of the practice of balance billing, however. The exception is if a health care provider informs the patient ahead of time that a particular service that the patient may need or is considering most likely will not be covered by the insurance company or payer. In this situation, with proper prior notification on the part of the health insurance provider, then balance billing can be applied, whether or not the payer actually does reimburse any of the total amounts due to the provider for the service.

Argument in Favor of the Practice of Balance Billing

Those in favor of the practice of balance billing point to the fact that the practice increases the overall incomes of high-quality health care providers. High-quality health care providers need a high overall income in order to be able to provide the best quality of coverage, and thus the practice of balance billings helps in that regard.

Argument Against the Practice of Balance Billing

The main and obvious argument against the practice of balance billings is that it prevents certain individuals from getting the care that they need because it will be too expensive. All people should be able to have access to health care should they need it, but high out-of-pocket costs as a result of the practice of balance billing makes care difficult to obtain for some.

Example of The Practice of Balance Billing

An example of the practice of balance billing, via healthcare.gov: For example, if the provider’s charge is $100 and the allowed amount is $70, the provider may bill you for the remaining $30. A preferred provider may not balance bill you for covered services.