Understanding Balanced Billing in Massachusetts

Understanding Balance Billing in Massachusetts

What is Balance Billing? When an insured patient receives care from an in-network provider, they pay a cost-sharing amount as defined in their health plan. The provider is paid by the insurance company at a negotiated rate for the services performed. Balance billing occurs when a patient receives care from an out-of-network provider. In this situation, an insurer may pay nothing, they may pay the full list price amount, or they may pay some amount in-between those figures. When the insurer either pays nothing or a portion of the out-of-network bill, the patient is responsible for paying the remaining balance directly to the provider.   

This practice is problematic for patients because it can saddle them with unexpected, and expensive, medical bills. Sometimes patients will choose to see an out-of-network provider and accept the costs associated with such treatment. When a patient is unknowingly treated by an out-of-network provider, they may receive a surprise bill. This often arises during emergency treatment when patients have little to no control over their circumstances or treatment. However, it can also occur when the patient seeks in-network care. For example, a patient who has surgery at an in-network facility may be treated by an out-of-network anesthesiologist and then subsequently billed for it.   

According to a report published by the Massachusetts Health Policy Commission (HPC) in 2020, surprise billing is a serious problem within the state. They estimate that surprise bills account for a significant portion of the 17% of patients who have medical debt in Massachusetts. Furthermore, the HPC report concludes that surprise billing within the state has gotten worse over time. Consider these key findings:  

The following is cited directly from the HPC Report, which uses health data compiled from 2014-2020.  

  • The HPC identified 68,342 distinct out-of-network claims in 2017 among 650,000 patients insured by one of three commercial payers in the Commonwealth. These claims represented 30,332 Massachusetts residents during 44,689 encounters in which patients most likely received care from out-of-network providers that they did not choose. 
      
  • Among these encounters, 10,590 (23.7 percent) were ambulance services, and 34,099 (76.3 percent) were professional services, primarily from ERAP providers (emergency, radiology, anesthesiology, or pathology). 
      
  • Among all out-of-network professional services, encounters within the emergency department (ED) accounted for 29.3 percent of the total (9,984).  
     
  • Outside of the ED, radiology had the most out-of-network claims (15,093), followed by pathology (9,756), and anesthesiology (8,187). 
     
  • Across a range of procedures and ambulance services, the average spending on out-of network claims far exceeded the average spending on in-network claims. 
     
  • The average balance potentially billed to patients for these out-of-network professional claims was $167 per claim. However, the amount on individual claims varied widely, ranging from $5 at the 5th percentile to $749 at the 95th percentile.  
     
  •  Among the three payers examined, 7.2 percent of ED visits in 2017 resulted in at least one out-of-network claim. 
     
  • Yet, the share of out-of-network ED visits varied substantially by hospital. In a three-year span (2015-2017), the percent of ED visits that resulted in at least one out-of-network claim by hospital ranged from less than 1 percent to 74 percent. 
     
  •  Among hospitals with the highest percentage of ED visits with an out-of-network claim, four out of the top five hospitals reported complete or substantial outsourcing of their ED staff. 
     
  • Among out-of-network visits billed by ED physicians, charges and payer-paid amounts rose substantially between 2015 and 2017.  
     
  • For example, for a moderate severity ED evaluation and monitoring (E&M) visit, the out-of-network charge on this procedure grew 11 percent from $294 to $325.  

It is clear that balance billing is an issue in Massachusetts for many patients. The new consumer protection bill signed into law by Governor Baker seeks to curtail this practice across the Commonwealth. 

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