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How Balance-Billing Is Contributing to America's Medical Debt Problem

According to the Kaiser Family Foundation, an estimated 33 percent of Americans struggle to pay medical bills. No one is immune to medical debt and many of those who report having difficulty paying medical bills are insured through job-based group plans. However, even with health insurance coverage, individuals often fall victim to the unknown and high costs associated with out-of-network charges.

While information related to what hospitals are covered under health insurance plans is readily available, the coverage terms of individual doctors as well as specific medical services are often a mystery even to the hospital and doctors. As a result, individuals who seek care at in-network hospitals may unknowingly end up being billed for thousands of dollars of out-of-network costs that insurance won't cover.

Using a practice commonly referred to as "balance-billing," health care providers bill patients directly in an attempt to recoup charges not covered by an individual's health insurer. One woman recently relayed her own experience with balance billing. The woman, a 61-year-old clinical social worker and therapist, sought medical care after injuring her legs. While the hospital the woman chose was listed as being in her health insurance provider's network, she subsequently learned that many of the health care providers who attended to her injuries within the hospital were not covered. In an attempt to recover costs not paid by the woman's insurer, one surgeon sent her a bill for $13,000. In this case, the woman's tireless efforts and pleas to the doctor to dismiss the charges were successful; however, many Americans impacted by balance-billing are not as fortunate.

In an effort to protect consumers from surprise medical bills associated with out-of-network costs, 13 states have passed laws restricting health care providers from engaging in balance-billing practices without first notifying a patient. However, even in states where balance-billing laws exist, confusion remains as to who bears the responsibility of disclosing unexpected out-of-pocket costs to patients. Hospitals assert health insurance providers should be responsible, whereas insurers contend the responsibility should fall on hospitals and doctors.

As millions of previously uninsured individuals sign up for health insurance coverage under the Affordable Care Act, medical debt problems associated with balance-billing will impact even more Americans. In many cases, medical debt leads to a host of other problems including job loss and a growing reliance on credit cards. Thankfully in cases where these debts become unmanageable, bankruptcy can provide much-needed relief from debt and the opportunity for a fresh start.

Source: Bloomberg Businessweek, "Surprise Medical Bills Lead to Protection Laws: Health," Caroline Chen, April 4, 2014

The Henry J. Kaiser Family Foundations, "Medical Debt among People with Heath Insurance," Jan. 2014

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