In the WSJ Health Blog:
Hospital Company Sued for Billing Patients When Insurance Doesn’t Pay
Posted by Jacob Goldstein
Say you wind up in the hospital. The hospital bills your insurance, but the insurance company thinks the price is inflated and only pays part of what’s billed. So the hospital decides that you owe the portion your insurance won’t pay.
This is called “balance billing,” and it’s been debated in health-care circles for decades.
That’s also a very insurance-friendly spin. What it actually represents is a company refusing to pay for services already rendered, and deciding unilaterally what they’ll pay. When it’s “Out of network” care, there is no agreement between the service providers and the insurance companies (and, thus, the patients) on what’s paid for at what rate, so just deciding not to pay is a way to use the insured patient as political cover to not pay a bill. Note this never works to the advantage to those actually providing services (hospitals, doctors) but is designed to leave money in the hands of insurance companies.
The insurance companies don’t want balance billing, and it’s not on noble principle, its because enough unhappy customers would cause regulatory changes that would cost them money (like, pay for services already rendered).