Linda Brandwin, R.N. Linda Brandwin is a registered nurse and a medical billing and claims specialist. For the past 10 years she has worked directly with insurance companies to give advice and guidance to the health care consumer. Viewers may send email or write Linda Brandwin at 5500 Single Oak Hill Ct., Woodbridge, VA 22192.

"Balance billing" huge problem
July 18, 2003

Q: I am a registered health underwriter and independent broker in this business since 1968. Unless I have missed it, you have not mentioned the huge problem that the industry has regarding "balance billing."

When providers sign on to a PPO or HMO network they agree to accept a negotiated amount of money for each procedure. In the beginning it was fixed at 60 percent of a providers' actual fee. The reason was that 60% was the usual amount the doctor ended up with after collection failures. The balance was hoped to be made up by increased traffic provided by the PPO or HMO members themselves.

Over the years there has been hard bargaining on both sides of the contract. In many cases the provider still will only receive one to two thirds of their usual fee. But even though this seems low, it is an agreed figure in their contract.

Many providers all across the country are now billing the patients for the difference between what the insurance companies pay, the negotiated rate, and their usual fee. It is illegal for the provider to do this. When challenged, the providers will blame it on "computer error" and correct the bill. But there are many patients who will pay the wrong bill and are not aware of the mistake.

Please advise your readers to check their bills and if there are any problems that can't be resolved, they should inform their insurance company.

A: I agree that this is a huge problem and it is important enough to be addressed again. Being an informed medical consumer is vital to your pocketbook. The best tool you have is the explanation of benefits, EOB, which you receive from your insurance company after a medical claim has been processed.

The most important line on the EOB will say something like "you owe this amount" or "patient responsibility." That amount must match any corresponding bill you receive from your health care provider. If the amounts do not match, there is a mistake. Have your copy of the EOB in front of you and call the health care provider's billing staff. Do not pay a bill you don't understand.

A providers' contract with the health insurance company will allow a certain amount of money for every medical bill. Anything in excess of that amount is disallowed, discounted or written off. You are not financially responsible for that money.

For example, if your physician sends your bill to the insurance company for $100, the insurance company may only allow $60. The value of the service you received from your doctor is now worth $60 according to your insurance company. Your bill will be processed based on the $60 charge. The remaining $40 is written off and has no bearing on your bill. You may not be charged for that $40.

Keep in mind that the health care providers also receive an explanation of benefits from your insurance company. Keep in mind that usually it is people who read and post the information received from your insurance company. Keep in mind that the computers do not open the envelopes containing the EOBs and the computers do not punch that information into the keyboards.