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Balance Billing, Take 2: Non-Participating Providers MUST Balance Bill

A non-participating physician who, as a general business practice, waives otherwise applicable co-insurance, co-payments or deductibles, where such waiver would affect the amount the insurer would pay, may be guilty of insurance fraud.  

Non-participating physicians are generally paid 80% of the usual, customary and reasonable[1] amount of the bills submitted for their patient treatment.  If a claim is submitted by the Insured or the physician when the physician waives balance billing, either party or both may be guilty of insurance fraud because claims submitted are proof of total charges for the treatment provided by the physician and failing to balance bill results in a misrepresentation to the insurer of the total charges collected, and therefore, skews the data available to determine the physician’s calculated usual, customary and reasonable rates.  

However, if a physician may occasionally waive a co-insurance, co-payment or deductible as a courtesy to a family member or fellow physician or for an indigent patient, he would not be guilty of insurance fraud. In addition, a decision, in the exercise of business judgment, not to pursue the full legal remedies available to collect a debt would not constitute insurance fraud. Insurance Department, Opinions of General Counsel, Opinion Number 03-04-09.

An example:

If an individual were to be insured under a health insurance policy obligating the insurer to reimburse the insured 80% of the physician’s usual and customary charges and were the physician to inform the insurer that his or her usual and customary charge for a procedure was $100, the insurer would, in anticipation that the physician would require the patient to pay him $20, reimburse the insured $80. If however, the physician were to, as a general business practice, waive the $20 co-payment, the physician’s usual and customary charge would be $80. Under those circumstances, the obligation of the insurer would be $64. Insurance Department, Opinions of General Counsel, Opinion Number 03-04-09.

Similarly, if the policy required the insured to pay a $1,000 deductible before the insurer reimbursed the insured for the physician’s usual and customary charges, and the physician reported to the insurer that his usual and customary charges for services was $1,500, the insurer would pay the physician $500 expecting that the physician would require the insured to pay the remaining $1,000. By waiving the $1,000 deductible, the physician would be charging less for the services than he reported to the insurer.  

For additional information on this topic, contact Jennifer Kirschenbaum at (516)-747-6700 ext. 302 or at


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