Direct billing is great
but it’s not perfect for everything
By Geoffrey Mann – Sep 20, 2022
Most health insurance customers love having direct billing, where their insurance provider comes to an agreement with hospitals and clinics to guarantee payment of their shared customers’ medical expenses, so the customer doesn’t need to pay at the time of the services.
This arrangement is especially valuable when the customer will have significant expenses for a major operation or accident that involves an inpatient hospital admission – paying a medical bill that might total tens of thousands of dollars can be a major challenge, even if it’s later reimbursed by the insurance company.
Direct billing for outpatient services is also very useful, but it can have its drawbacks:
- Outpatient expenses are less obvious and dire than inpatient, so the line between eligible and ineligible isn’t always clear. As a result, at the time services are provided, the insurer may not be able to tell that the expense will be covered by the policy. So sometimes the insurer will refuse the direct billing.
- One reality most people aren’t aware of is that many medical providers charge more if you have insurance. They do this because they don’t have the additional costs of administering insurance billing and payments. If your insurance were to pay the provider directly but later determine that the expense is not eligible (this does happen), you might be stuck paying the higher price.
- Policies that offer direct billing for outpatient services are usually more expensive than their counterparts. The simple fact is that customers tend to make fewer outpatient claims if there’s no direct billing, which in turn reduces claims and allows the insurer to charge lower premiums, including lower annual increases.
If you already have a policy with outpatient direct billing, you should be aware of these factors and set your expectations accordingly. If you’re thinking about getting a policy with outpatient coverage, keep this information in mind – maybe direct billing for outpatient services isn’t a critical aspect of your decision.
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