Balance billing occurs when providers bill a patient for the difference between the amount they charge and the amount that the patient’s insurance pays. The amount that insurers pay providers is almost always less than the providers’ “retail price.” Some providers will bill the patient for the difference, or balance; this is called balance billing.
Providers that are in-network have agreed to accept the insurance payment as payment in full (less any applicable copays), and are not allowed to balance bill the patient. However, balance billing is allowed if the provider is not in your insurance network.
Some insurance plans cover out-of-network care, but the medical provider has not signed any sort of agreement with the insurer in that case. If the insurer covers out-of-network care, they will pay the provider based on the insurer’s reasonable and customary rates (keeping in mind that the patient will be responsible for the out-of-network deductible and coinsurance, which is typically quite a bit higher than in-network cost-sharing). But at that point, the provider can bill the patient for the difference between what was billed and what the insurer paid. They do not have to write off the difference the way an in-network provider would.
This is all fairly straightforward in situations where the patient chooses to see an out-of-network provider, with the understanding that out-of-pocket costs will be significantly higher and that balance billing is likely. However, it’s a very different scenario when patients seek care at an in-network facility, and later find out that they were also treated by one or more out-of-network medical providers. This “surprise balance billing” is frustrating and costly for patients, particularly in cases where their insurance simply doesn’t cover out-of-network care at all, and the provider “balance bills” the entire bill. States are slowly working to address this issue, but so far, there has been no nationwide approach to solving it.