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Most Americans expect that having health insurance means they are protected against large, unexpected medical bills. But in some situations involving managed care plans, a physician or other health care provider expects a higher payment than the health insurer is willing to pay. The result can be a bill for the remaining balance sent to the patient — a practice known as balance billing.

Many states, including California, have struggled to produce legislative or regulatory solutions to this problem. Those few that have passed laws have been relatively successful in protecting patients in managed care plans from large balance bills from out-of-network providers. But they have been less successful in navigating the competing interests of the plans and providers in determining what constitutes an appropriate, equitable payment. Rather, most laws seem to impose higher costs on one party or the other.

This paper provides background and context about the extent of out-of-network service use by managed care patients and the potential problems imposed by balance billing, and describes how some states have responded. It offers observations based on an examination of state laws and interviews with regulators, providers, managed care organizations, and consumer advocacy organizations that may be helpful for policymakers considering balance billing legislation in California and elsewhere.

The complete paper is available under Document Downloads.