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Health Insurance Buyers Beware: Out-of-pocket maximums aren’t the real maximums

Balance billing is one of healthcare’s hidden evils

By Deb Dorsett Hanson

Photo by rawpixel on Unsplash

As millions of people shop for health insurance plans during this open enrollment period, one of the key points most people look for is out-of-pocket maximum costs (also called out-of-pocket limits). These are costs you have to pay that are not reimbursed by health insurance companies. On almost every plan summary listed on Healthcare.gov there is a statement that reads, “ the out-of-pocket limit is the most you could pay in a year for covered services.” So, you would think that your out-of-pocket maximums would be the maximum amount of money you would have to pay for any kind of health care during the year (not including premiums, of course), right? Wrong.

Why? Because there are hidden charges lurking. If you look closer at the plan summaries, you will find a question: “What is not included in the out-of-pocket limit?” The answer is “premiums, balance-billed charges, health care this plan doesn’t cover, and penalties for failure to obtain pre-authorization for services.” Most people understand that premiums are not part of out-of-pocket expenses, and we’re willing to accept that we may have to pay for care that our plans don’t cover. It may even make sense that we have to pay penalties for failing to get pre-authorization, and we understand that none of those things can count toward our out-of-pocket limits. But what is this thing called balance-billed charges?

Balance-billed charges (also known as balance billing) is when a health care provider (doctor, therapist, anesthesiologist) bills a patient for any outstanding balance after the insurance company has paid the provider what it considers a reasonable fee. In other words, it’s the difference between what the provider charges and what the insurance company is willing to pay the provider. For example: a provider charges you $150 for a procedure. The insurance company pays the provider $100. The provider then bills you for the remaining $50. That $50 out of your pocket does not count toward your out-of-pocket maximum or your deductible. So, your out-of-pocket maximum just increased by $50.

Now, most in-network providers will not charge you for the remaining $50. But an out-of-network provider will. But I don’t use out-of-network providers, you say! Well, this is where you might get surprised/screwed. If you end up at your in-network hospital due to an emergency, the doctors who care for you may be out-of-network doctors. That’s right. Many hospitals do not require their healthcare providers to be in-network. You can do your due diligence by going to your in-network hospital, then be billed thousands of dollars from out-of-network providers, and not one penny of that cost will count toward your deductible or out-of-pocket maximum.

Yes, that emergency appendectomy at your in-network hospital could drain your savings account or cause you to lose your house, even though you have paid your insurance company thousands of dollars in premiums this year to cover you in case of just such an emergency. Balance-billing is a hidden evil within our broken healthcare system. But it’s only one of the many things wrong with it these days. Self-employed people who are having to pay hefty premiums on their own and get stuck with surprise bills like balance-billing are particularly vulnerable to the whims of the health insurance and healthcare industries.

When I mentioned this practice to a group of bright, well-educated, middle class women recently, not one of them had heard of this thing called balance billing. They were appalled that out-of-network providers would be allowed to give care at an in-network hospital, and, like me, they were especially annoyed that it could happen without the patient’s knowledge or consent.

Right now, federal law doesn’t protect consumers from balance bullying/billing, but there are some states that are trying to get it under control. It is time for consumers to put pressure on lawmakers, health insurance companies, and health care providers to eliminate balance billing — the surprise costs of healthcare — and create a system that works for everyone.

In the meantime, health insurance buyers beware. That out-of-pocket maximum isn’t your maximum at all. Start asking questions of your providers and insurance company about balance-billing before you get billed the surprise balance!