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Myth and misinformation is rampant in laboratory RCM.  Ask a dozen different laboratory billing companies whether or not it is legal to balance bill patients and you will get a dozen different answers, most of which will be wrong and all of which will be supported by the fact that they present themselves as “laboratory billing experts”. And yet this is one of the most important parts of your business.


In this series, we will explore many of the aspects that govern patient balance billing for laboratories, what you can do and cannot do legally as a lab, how this varies by state (is Texas laboratory billing or California laboratory billing different?), what are risks, gray areas of the law, and more.

Balance Billing Patients

Patient balance billing is fairly complex and requires a significant amount of thought and planning to ensure both compliance and that your policies support your business objectives.  Done incorrectly and you may end up with upset patients, calls from referring providers, salespeople screaming at you, DOJ complaints, lawsuits, or worse.  You may be thinking “we should just be conservative and there won’t be a problem.”  You may find that there is no easy solution like that because what may be legally allowed or required by one type of provider in one geography is completed opposite to what is allowed for another.  Figuring out what is legally compliant and also doesn’t conflict with your marketing and sales is a difficult process. Especially since insurance companies have been targeting laboratories specifically for their patient billing (or lack thereof).

Balance Billing Providers Impacted

All providers have to make decisions about balance billing, so technically this impacts on all providers, whether laboratories or other IDTFs and facilities, doctors, ancillary providers, or anyone else.  The providers most impacted by balance billing issues tend to be out of network providers, often facility-based providers like:

  • Anesthesia billing
  • Hospitalist billing
  • Radiology billing

And facilities like surgery centers and independent diagnostic testing facilities:

What You Should Do

  1. Work with a top medical billing company.

The best laboratory billing companies will be knowledgeable in balance billing and stay on top of changes in balance billing laws and the market.  They will have deep experience in out of network billing.  They will have customizable and flexible processes for dealing with patient statements and balance billing.

  1. Educate yourself

No healthcare provider should just go with whatever advice they are given.  This is your business and ultimately your laboratory is the one responsible and liable for all decisions made.  With anyone with whom you speak, whether attorney or lab billing company, you should ask for documentation to support their statements.  If they cannot provide it in writing, there should be serious doubts about the veracity of their claims.

  1. Get a good healthcare attorney

We are not attorneys and cannot offer legal counsel, so you should consult your healthcare attorneys not only to help you understand the laws, but to help provide you with risk assessment.  The best attorneys will not only help you find all the laws, lawsuits, and other things pertinent to your decision, but will help you decide the risk associated with decisions where there are not clear laws or legal precedent to guide you.

Topics Covered

In this series of articles we will go over in detail the following list of subjects that are most relevant to laboratories for patient balance billing.  This subject spider-webs into all sort of areas of the lab, including marketing and sales, legal, finance and accounting, but we will tackle specifically the following subjects:

  • Patient balance billing and referrals
  • Fee schedules and how it relates to patient balance billing
  • Government payers
  • Contracted payers (insurers) vs out of network billing
  • Federal law
  • Can you balance bill the patient in full?
  • Treating patients as if you are “in network”
  • Can you write off patient balances or partially write off patient balances
  • Proactively writing off patient balances vs. financial necessity
  • Cash pay discounts
  • State laws
  • Case law (lawsuits)
  • Payer retaliation

Legal disclaimer: Ibex RCM is engaged in the business of laboratory revenue cycle management analytics.  We offer information about regulations, rules, and industry practices relating to compliance.  Ibex has researched that subject and has set forth the results of that research herein.  Ibex is not a law firm and we do not offer legal advice. Ibex does not guarantee the completeness nor the accuracy of its research.  You should consult with your qualified healthcare attorney.

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