Experienced Lawyers Serving Greater New Orleans
Trusted New Orleans Lawyers Courtroom. Boardroom. Community. And All Places in Between.

Health Insurance Contracts with Out-of-Network Billing

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.