Question

How did physicians accepting Medicare assignments cause price discrimination? Explain by referring to an example of reimbursement of accepting and non-accepting (“balance billing”) physicians by Medicare.

Answer 1

Balance billing or extra billing, is the practice of a healthcare provider billing a patient for the difference between what the patient's health insurance chooses to reimburse and what the provider chooses to charge.

Balance billing lets providers raise charges through stealth rather than transparent pricing, creates unnecessary administrative costs and patient confusion, and allows insurers to simply pass along costs to patients, rather than helping them to secure good value. It is thought to erode political consensus in favour of a one-tier system of healthcare, and to inhibit some people from getting the care they need, by making that care more expensive.

The problem appears particularly in the case of emergency rooms or hospital settings, where a single provider may be out-of-network and provide services outside of the control of the patient.

Health insurance in countries like the United States is typically provided by a managed care plan with preferred or exclusive network of providers; balance billing does not occur with providers in-network, as the insurer negotiates an agreed rate ahead of the service.

Due to the discrimination in prices Balance Billing and extra fees have only been allowed recently, and in rare defined circumstances. Low-income beneficiaries are liable for balance bills.

Under health care reform, adoption of Medicare's incentive-based approach with mandatory assignment for the poor would allow for some choice based on price and would provide financial protection for all consumers.