Balance billing

Balance billing is a term used for the amount a doctor charges after your insurance company pays the negotiated rate (opens in new tab) for a service, device, or drug. The remaining “balance” is what the doctor may change you for the services you received based on the doctor’s list prices, not a contracted rate.

Here’s an example of balance billing in action. Say you went for a bike ride. You hurt your ankle trying to avoid a cat running across the road. (Bad kitty!) You hobble over to the ER, where the doctor gives you an X-ray to see if any bones are broken.

After your visit, the hospital sends over a $200 claim to your insurance company for the X-ray. Your insurer pays $100 per their negotiated rates with the hospital. But the doctor who treated you isn’t part of your insurance company’s network (opens in new tab), meaning she doesn’t have a contract with your insurance company and won’t accept their usual rates. Later on, the doctor sends you a bill for $100 – the difference between what your insurer paid and what the hospital charged.

Word to the wise: In some states, balance billing is an illegal practice for some or all medical services. Before paying any surprise bills for care you received from an out-of-network doctor, check with your insurance company to see what you’re financially responsible for and what you can negotiate.