When it comes to healthcare billing, nobody likes surprises. Healthcare plan members and their employers expect transparency in the care they receive, as well as in what they have to pay for that care. Unfortunately, a lack of transparency has been a common issue across the healthcare industry, even with reference-based pricing (RBP), a pricing strategy designed to help self-insured health plans cut costs while giving members the freedom to choose their own providers.

One of the main downsides of RBP has been balance billing, which is the practice of some providers to bill the patient for the difference between the amount that an insurer pays the provider (the “allowed amount”) and the provider’s total charge for the care. As HealthCare.gov explains, “if the provider’s charge is $100 and the allowed amount is $70, the provider may bill you for the remaining $30. A preferred provider may not balance bill you for covered services.”

While in-network providers have agreed to accept the insurer’s reimbursement as payment in full (less any applicable copays), out-of-network providers are under no such contractual or legal obligation and can bill the patient for the balance. Balance billing has been on the rise nationally in recent years; according to a 2019 Modern Healthcare report, 1 in 7 patients receive a surprise medical bill even when an in-network hospital has been selected.

A February 2016 story in Becker’s Hospital Review discussed reasons for balance billing and why it has become a controversial practice targeted by consumer advocates as well as federal and state legislators. The root for much of balance billing, it said, is a lack of provider and network transparency, which results in patients often not realizing they have received out-of-network care until they get a balance bill in the mail. That’s because a hospital might participate in an insurer’s network but employ emergency physicians, anesthesiologists, pathologists, radiologists or other specialists who do not participate in the same network.

If a payer refuses to match a physician’s rate, the patient usually gets stuck with the balance. And many consumers don’t know that they have a legal right to contest bills they see as unreasonable, or they feel powerless to fight the system.

Eliminating and Challenging Balance Billing

Understandably, balance billing is scary for patients, as it can lead to tens of thousands of dollars in debt, collection agency activity, negatively impact their credit scores, and risk litigation. This, by extension, is also scary for self-insured employers.

But there’s good news for consumers and employers?and employee benefits brokers. Value-based pricing (VBP) plans, the latest generation of RBP, deliver many of the same benefits as previous RBP plans without negatives like hidden fees and balance billing problems. They deliver 25% to 30% savings the first year and then hold health benefits costs steady and below the average rate of increase.

Lucent Health is the nation’s leading administrator of VBP plans, 98% of which result in no balance billing. In the 2% of cases in which there is balance billing, Lucent’s partner Zelis offers a member financial advocacy and legal support program. A patient advocacy center (PAC) works on the member’s behalf to resolve the balance bill, ensuring that excessive charges are not passed on to the member. Balance bills are resolved, on average, in less than 60 days. In addition to easing the burden and stress on the member, this means less burden and disruption for the employer’s HR staff.

Lucent Health’s ability to address balance billing is in addition to the benefit provided by concierge care management, powered by Narus Health, which helps address any issues members might have with their benefits. Members have one number to call, as well as access to care via a mobile app. In addition, Lucent Health offer dual option plans, combining RBP plans with PPO plans to deliver highest levels of choice.

Let us know if we can help you ease your customers’ minds by providing a value-based pricing plan that confronts balance billing head-on.

Editor’s Note: This post was originally published October 2020, but new research has been cited, and new information has been added.