What primary function does balance billing serve?

Balance billing refers to the practice of billing a patient for the difference between the provider's charges and the amount that the insurance company is willing to pay for those services. As medical costs can often exceed the reimbursements provided by insurers, balance billing allows healthcare providers to collect the remaining balance directly from the patient when the allowed amount by the insurance does not fully cover the service costs.

This practice is particularly relevant when a provider is out-of-network, meaning they do not have a contract with the patient's insurance company that specifies payment arrangements. In such cases, patients may be responsible for covering the excess charges that are not reimbursed by their insurance. Therefore, balance billing primarily serves to cover costs that exceed the allowed amounts determined by the insurance policy, ensuring that providers can recoup fees that would otherwise remain unpaid.

The other options do not accurately portray the primary function of balance billing, as they focus either on collecting payment from the insurer or charging patients for all costs incurred, which can misrepresent the specific nature of balance billing in relation to insurance allowances and patient responsibility.