Balance Billing – What It Is and Why Your Medicare Advantage Clients Should Never See It

Balance billing, in which a provider bills a member for the difference between what their carrier will pay for a service and that provider’s “retail” rate, is a relatively common practice in the medical industry and is allowable in certain circumstances for people enrolled in some types of individual and family plans. For Medicare beneficiaries enrolled in Medicare Advantage plans, however, the practice is explicitly forbidden by CMS except in a very narrow set of circumstances.

With any Medicare Advantage HMO or PPO, including Point of Service HMOs and Regional PPOs, members are protected from paying more than their agreed upon cost sharing for any covered services. These kinds of patient protections are a key part of the Medicare system, and are agreed to by all providers who choose to treat Medicare beneficiaries, including non-contracted providers who agree to accept assignment on a case by case basis. While in some cases balance billing to the plan may be allowed, that should be handled between the provider and the plan and not involve the member. Unfortunately, if claims are processed incorrectly due to confusion or misinformation at a provider’s office, members may still end up billed for services for which, by law, they should not be liable. In the case of any confusion, members should be guided by the Explanation of Benefits provided to them by their carrier above bills sent to them by providers. It is not unusual to see a provider bill a patient before the claim has been processed and paid by the carrier, resulting in an incorrect amount shown due.

It’s important to note that the restrictions on balance billing apply only to members in Medicare Advantage plans, and only to services covered by their MA plan and by Original Medicare. Members in Medicare Advantage plans that do not cover out-of-network providers, members seeking services that are outside the scope of their coverage (even through a Medicare participating provider), members who see providers who have opted out of Medicare entirely and are not contracted with their plan, and members with Medicare Supplement plans would all be subject to different charges and afforded different protections.

As their agent, you are the first point of contact for questions or problems for many clients, so if a Medicare Advantage client calls you asking about a bill they received, refer to the following.

If they saw a plan contracted provider – There is no balance billing paid by either the plan or the member. Member is responsible only for their share of cost as determined by their plan.

If they saw a non-plan contracted, Original Medicare participating provider – There is no balance billing paid by either the plan or the member. Member is responsible only for their share of cost as determined by their plan, which may be higher than their share of cost when seeing a plan contracted provider. This situation applies only to members in plans with out-of-network benefits and does not apply to members in HMOs that do not cover out-of-network providers outside of emergencies.

If they saw a non-plan contracted, non-Original Medicare participating provider – The Medicare Advantage plan may owe the provider the difference between the Medicare limiting charge and the member’s cost-sharing, but the member is only liable for their standard copay amount or their standard coinsurance percentage calculated using the Medicare limiting charge, not any higher amount billed to the plan by the provider. As in the above example, this only applies to members in plans with out-of-network benefits. For example, if a Medicare Advantage PPO member sees an out-of-network, non-participating provider, and the member has a 20% co-insurance for seeing out-of-network providers, that member would be liable for no more than 20% of the Medicare limiting charge, which is 109.25% of the Medicare fee schedule rate. The provider may bill the plan for any additional amount, but that should not involve the member.

While members are of course still liable for their cost-sharing, including out-of-network charges, it’s important for agents to be aware of the potential for mistakes and to be able to help answer questions or reassure clients who may have concerns about billing, despite it being the primary responsibility of the carrier. After all, this is a service business, and even just a few pieces of information and the right phone number to call can make a client feel well taken care of, and that should always be the goal.

There are 8 comments left Go To Comment

  1. Susan /

    If a Providers Office billed their Mac for Part B for a patient…gets a denial for OA-109 Pt enrolled in a Medicare Advantage Plan. BUT…Providers office does not bill Medicare Advantage Plan…tells staff to bill Patient. Is this legal?

    1. Britt Huber / Post Author

      Hi Susan,

      It depends on factors such as whether the provider is in network for the Medicare Advantage plan, whether the plan offers out of network coverage if not, and what type of service it was. I would get in touch with member services for the Medicare Advantage plan and see what guidance they can give. You can also always call 1-800-MEDICARE and appeal the coverage decision if necessary.

      Good luck!

  2. Beje Schweitzer /

    I know that during a hospital stay for a replacement (hip – knee) the ansethesia is included. O’Conner Hospital has a tendancy to bill the client. It has happened to me twice. You simply call customer service and usually they tell you to send the bill to them. Be prepared for a client to get upset about this and call you. I’m not sure why this happens, but it did for me both with the hip and the knee.

  3. Rebeccah /

    Thank you for this article. It precisely answers the questions I was having in anticipating of signing up my father for a Medicare Advantage plan (HMO-POS) next year. The billing person at the phycian group my father has been treated by under original Medicare this year was not able to answer my questions (they are out of network for the plan he will be signing up for, but are a Participating Provider).

  4. mh /

    How does it work for a provider who is participating with Medicare & accepts assignment, BUT treats an HMO Medicare Advantage patient with NO out of network benefits and the patient has agreed to have services and pay cash? Do you charge your normal fee? Or do you charge the Medicare allowance ?

    1. Britt Huber / Post Author

      In most cases if a patient has a Medicare Advantage plan without out of network benefits and the provider is not in network, then the service would be totally out of pocket to the patient and not covered by Medicare. In that instance, the provider can charge whatever their normal cash fee for the services would be, even if it’s higher than the Medicare allowable amount. There may be some situations that would be exceptions, so if you haven’t already, I would start by contacting member services for the Medicare Advantage plan and also discuss the fee with the provider before any appointments if possible.

  5. Christopher Colburn /

    Can your provide a reference to the CMS regulation that supports no balance billing by non-plan contracted original medicare participating providers. I can’t find a regulation specific to that situation, although most plans claim this to be the case.

    1. Britt Huber / Post Author

      Hi Christopher,

      You can take a look at the Medicare Managed Care Manual for the specific guidelines – Section 170.2 covers balance billing by provider type. You can also check the MA Payment Guide for OON Payments – Page 32 discusses balance billing.

      When in doubt, the Managed Care Manual is the primary regulation for anything Medicare related.

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