In today’s contentious and challenging world of healthcare law and
regulation, there is no more controversial of an issue than understanding
and deciphering the significance of the difference between a provider’s
“in-net work” billing and “out-of-network” billing.
Given the evolving complexity of the issue, and recent newspaper articles
on the issue, even the most sophisticated clients are now asking what
does out-of-network billing mean? In its simplest terms, it refers to
a healthcare provider that does not have a contract with an insurance
carrier. Although at first a basic concept, there remains continued controversy
around out-of-network billing, typically relating to how the healthcare
provider determines the amount it charges for out-of-network medical procedures,
as well as the procedures used to collect such charges.
Currently, Louisiana law allows out-of-network provides to collect from
patients the remainder of their medical bill that was not paid by their
insurance carrier. This process is typically referred to as “balanced
billing”. However, a number of these out-of-network providers have
begun waiving the patient’s portion of the bill, essentially agreeing
to accept “insurance only.” It is this action that has insurance
companies, as well as in-network providers, in opposition, for it is their
belief this partial waiver results in billed charges that are now artificially
inflated. Yet, despite this opposition, there is currently no Louisiana
statute expressly prohibiting the waiver of a commercially insured patients’
medical bill portion. Since out-of-network providers do not have a contractual
relationship with the insurance carrier, waiving the patient’s portion
of a bill will not constitute a breach of contract.
Healthcare providers should be aware, however, that although there is no
contractual obligation to balance bill a patient who is out-of-network,
insurance companies are raising red flags to this practice. Some sources
suggest that the Louisiana False Claims Act may be implicated. This law
provides that a healthcare provider cannot knowingly present or cause
to be presented a false or fraudulent claim. The argument made is that
by allowing a waiver of the patient’s portion of their out-of-network
bill at the outset of treatment, the treating healthcare provider’s
initial bill was falsely overstated, given that the provider had no intention
of ever recouping the patient’s portion.
Further, and in addition to these waivers, many healthcare providers have
taken the position that such waivers are now “bad debt” for
tax purposes and can be appropriately written-off. Unfortunately for these
healthcare providers, such actions can be contested by the IRS.
In order to avoid these potential false claim actions and “bad debt”
contestations, healthcare providers should assure that all correspondence
between the provider, the patient, and the insurance carrier are clear
and truthful. For example, if the provider utilizes a “patient financial
responsibility” form, that form should clearly and accurately describe
any waiver policy. The form should also advise the patient to carefully
review his own insurance policy to determine whether or not such a waiver
would affect his carrier’s payment obligation.
Finally, in this perilous area of healthcare reform, client should keep
abreast of changes that are occurring in the reimbursement area. If you
have any questions regarding navigating these dangerous waters, please
contact the authors of this article, Jacqueline Griffith, RN, JD and Ryan
Monsour, MBA, LLM.