The “Balance-Billing” Conundrum

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Doctors versus Patients

Dr. David Edward Marcinko; MBA, CMP™


Recently, it was reported to the public that millions of patients are paying medical bills they don’t actually owe after being confused about the practices of “balanced billing.” .

Formal Definition

According to the Dictionary of Health Insurance and Managed Care – and others – balance billing [BB] may be defined as:

“The practice of a physician, medical clinic, hospital, ASC or medical provider billing a patient for all charges not paid for by an insurance company or healthcare plan. Balance billing is generally prohibited by managed care plans”.

The story in Business Week, on page 40 by Chad Terhune in the September 8, 2008 issue, goes on to discuss how it’s illegal for doctors, hospitals or labs to bill patients for the difference if they deem the insurance payment too low, but that it happens routinely to the tune of $1 billion each year.

And, healthcare journalist Sarah Arnquist similarly noted the practice with more patient BB horror stories in The Health Care Blog [THCB], a policy and political e-periodical not unlike this Executive Post in format; but not content.

Not a New Problem

However, long before the threatening horror-stories first ran about doctors aggressively pursing collections, maybe even as much as a two decades ago, our network of physicians, attorneys, insurance and risk management experts have been writing about this situation in both peer-reviewed and non-peer-reviewed print and traditional publications.

So, the conundrum is not really a new one. In fact, Medicare first prohibited BB, in 1991. But, its ferocity; pitting patient against doctor, might indeed be an emerging issue. And, it is deeply distasteful on many levels. 

Managed Care Contracts

Over the years, managed care has replaced usual, customary and reasonable [UCR] fee-for-service [FFS] medicine with a contracted fee-schedule.  Essentially under managed care, an MD can “charge” just about anything s/he might want, but the managed care organization (MSO) will only reimburse up to its maximum contractual allowance as determined by a previously set fee schedule; known as a managed care legal-contract.

In other words, medical providers have pre-accepted a fee schedule and have agreed and been contracted to accept “payment-in-full” for services rendered. And, the greater the difference between the MD charge and the allowable reimbursement, the more the MD will eventually write off as artificially inflated accounts receivables [ARs].

Therefore, there is no “balance-bill” to pay [sans fine print specials, out-of-network provider and venue clauses, etc].


Physician Mindset

Yet, the balance billing mindset continuers by some, especially older, doctors and patients! Why mature docs and patients? It’s because the current and next-generation of doctors, and patients, never practiced or worked in a FS environment, and know little of it?

Now, this might occur benignly; but more often than not today – and in my experience as a multiple-hat wearing medical provider, insurance agent, physician-executive and health economist – it occurs maliciously and greedily; pitting the doctor against patient.

Of course, a common physician defense ploy is the cry: “I didn’t know it was wrong” – or – “my staff was doing the balance-billing; not me.”

Staff Education and Training

So, the doctor’s medical staff is an extension of the physician. And, the physician can become vicariously liable for staff transgressions.

Furthermore, several federal regulations, including HIPAA, the False Claims Act, and OSHA have specific staff training requirements. Failure to provide the required training not only subjects the physician to the risk of employee transgression, but also to the risk of administrative discipline for failure to conduct proper training of staff.

Patient Mindset 

Now, since most patients receive health insurance their employers, it seems odd that some remain so naive about this conundrum; ethics aside. I mean, managed care has been around for almost 20 years now, and its risks and benefits are well known. Contract-medicine did not begin yesterday.

And so, where have such gullible patients been living? In a hole void of newspapers, magazines, TVs and the internet? What about their neighbors, gossip, HR advisors or benefits departments at work? I know of Corporate America, and have participated in several educational programs where employees are informed of their duties and responsibilities in this managed care contracted world. 

And so, at the risk of sounding harsh, I often wonder where have these souls been?

In other worlds; naiveté has a price and if you don’t look out for yourself; who will ultimately look out for you? No one! So, get a clue, already! It’s 2008; not 1988.

The Offensive Plan

As a patient, if this occurs to you, as it did to me when I once visited an out of state optometrist who tried to BB me while on vacation, you might consider the following pre-emptive strike. Forewarned is forearmed and it is far better to play offense, than defense, with these aggressive and greedy docs:

  • Read and understand your managed care plan contract. Know your duties and responsibilities. Follow the rules.
  • Privately inform your medial provider that you are aware of the “contract-medicine” concept.
  • Confidently tell the provider to put the BB invoice in writing, under his personal signature.
  • Whisper to him/her you will fax it to your employer, third-party payer, attorney, IRS, OIG, DOJ and/or insurance commissioner for a collegial second-opinion check.

Finally, once the problem has been resolved, politely inform the provider that true BB is illegal; and suggest that if your health plan’s compensation is too low, he/she should not re-enlist on the plan.



This was all I had to do, as the flustered provider apologized to me, citing personal and staff ignorance. Of course, I then told him of my credentials and my doubt about his “excuse”; but was willing to give him “benefit-of-doubt” this time. No harm-no foul, I reckoned.


By personality – maternal side – I tend to employ the passive-aggressive posture of conflict resolution. So, always be knowledgeable but respectful, polite and most of all ‘umble; just like David Copperfield’s fictional character, Uriah Heep.

And, although there will always  be miscreant doctors who try to game-the-system, according to David McKalip MD, Chair, Council on Medical Economics [CME] for the Florida Medical Association [FMA], “A free market with price transparency, quality accountability and private contacting between patient and doctor, is the answer” to the unfortunate balance-billing conundrum.


Your thoughts and comments on this ME-P are appreciated. Feel free to review our top-left column, and top-right sidebar materials, links, URLs and related websites, too. Then, subscribe to the ME-P. It is fast, free and secure.

Speaker: If you need a moderator or speaker for an upcoming event, Dr. David E. Marcinko; MBA – Publisher-in-Chief of the Medical Executive-Post – is available for seminar or speaking engagements. Contact:


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15 Responses


    According to the, balance-billing may be defined as:

    (1) Physician charges in excess of Medicare or contractually allowed amounts, for which Medicare or contractual patients are responsible, subject to a limit.

    (2) In Medicare and private fee-for-service health insurance, the practice of billing patients in excess of the amount approved by the health plan. In Medicare, a balance bill cannot exceed 15 percent of the allowed charge for nonparticipating physicians.

    Hope Rachel Hetico; RN, MHA
    Managing Editor
    Health Dictionary Series™


  2. Sample Balance Billing Contract Clause

    Physician to Seek Payment from MCO Only For those health services determined by MCO to be Covered Services, Physician agrees that in no event, including but not limited to nonpayment by MCO, MCO insolvency, and breach of this Agreement, shall Physician bill, charge, collect a deposit from, seek compensation, remuneration, or reimbursement from, or have any recourse against subscriber, enrollee or persons other than MCO acting on their behalf for services provided pursuant to this Agreement. This provision shall not prohibit collection of supplemental charges or co-payments on MCO’s behalf made in accordance with the terms of applicable Agreement between MCO and Members.

    Physician further agrees that (a) this provision shall survive the termination of this Agreement regardless of the cause giving rise to termination and shall be construed to be for the benefit of Members and (b) this provision supersedes any oral or written contrary agreement now existing or hereafter entered into between Physician and Member or persons acting on their behalf.

    Any modification, addition, or deletion to the provisions of this section shall become effective on a date no earlier than fifteen (15) days after the Commissioner of Insurance has received written notice of such proposed changes.



  3. Balance Billing

    California’s balance billing ban, are hospitals about to give patients refunds?

    The fallout from California’s balance billing ban is about to get much, much worse. Why? A patient is suing an emergency physician group for the $57 he spent last year on the balance bill he had to pay for services his insurance didn’t cover.

    If successful, the results for already near-bankrupt hospitals are chilling, as “hospitals and ER doctors could be on the hook for hundreds of millions of dollars in collective refunds to patients.”

    However, one anonymous ER doc asks you to consider the following:

    “When your dad is dripping with sweat, can’t breathe and is clutching his chest with a heart attack and seconds count, the next hospital emergency department that closes because of lack of funding just may be the one down the street from you.”

    “When your child stops breathing and you have to drive an hour or more in traffic and hope that you get to the hospital before your child dies, think of the California Supreme Court’s ruling about balance billing and ask yourself whether the lives of your family were worth $57.”

    Kevin Pho; MD


  4. Dr. Anonymous

    The doc above misses the point, and/or obfuscates it, and/or has little regard for intellectual debate thru the same emotional pleas those with no logical standing often employ. i.e.; “We better do this, or that test, just TO BE SURE?

    Regarding the above, the patient might easily reply to the anonymous the doctor, with better reasoning:

    “Exactly; is your personal integrity worth a $57 contract breach, doctor?”


    “If you won’t accept payment; don’t welsh on the contract you signed – play fair or don’t play at all?”


    “Is closing your ER, and all the patients you save, worth $57?”

    Methinks the number of unnecessary procedures and tests in this ER is high; and the quality of medical care is low. What say you; readers?

    Dr. David E. Marcinko; MBA


  5. Doctors Protest Balance-Billing Ban

    In California … it figures!



  6. More on “balance billing”

    It [bb] happens when patients get care from a hospital, doctor or ambulance company that is not part of the network of providers under contract with the patient’s insurer.



  7. Hello Karen,

    Your definition of BBing is not quite correct.

    Any out-of-network doctor, healthcare entity or medical provider can charge whatever they wish – pending local market competition of course. So, BBing does not refer to out-of-network patient billing at all.

    BBing really means invoicing a patient above what a third-party insurance carrier has paid a provider, when they are in network and/or under contract to accept payment in full … and thus not bill the patient “the balance or difference” when they feel compensation was too low.

    IOW: If the MD felt the payment was too low, he/she should never have accepted the contract to begin with. After all, they had the opportunity to review the fee schedule prior to signing on the dotted line, and could opt not to do so.

    So, the docs should not – and many times legally can not – BB the patient. Moreover, this practice may be fraudulent and seems to occur far too often in California. Unfortunately, many patients are naïve and pay some, or all, of the difference and negate the contractual obligations of the provider.

    This is where savvy [physician and patient] consultants earn their fees.

    The Medical Management Consultant
    [Atlanta, GA]



    Balance Billing Types:

    Eric Bricker MD
    via Ann Miller RN MHA


  9. More on BB
    Dr. David E. Marcinko MBA


  10. The VERY UGLY truth of surprise billing

    Nicolas Argy, MD, JD
    via Ann Miller RN MHA


  11. 1 in 5 Surgeries at In-Network Facilities Had an Out-of-Network Bill

    JAMA recently released a study on out-of-network medical bills for surgeries with in-network surgeons and facilities. Here are some key findings:

    • 20.5% of surgeries with in-network surgeons and facilities had an out-of-network bill.
    • The mean potential balance bill per episode was $2011.
    • Out-of-network bills were associated with surgical assistants in 37% of these episodes.
    • Anesthesiologists were associated with 37% of episodes with out-of-network bills.

    Source: JAMA Network, February 11, 2020



    Dr. David E.Marcinko MBA


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