August 28, 2026
3:42 am

Balance Billing by a Facility: What You Actually Owe

If the resident is on Medicaid and the facility participates in Medicaid, the facility generally cannot bill the resident or the family for the difference between its private rate and what Medicaid pays, because federal rules require a participating provider to accept the Medicaid payment as payment in full. That single rule decides most of these disputes, and it is why the first question is always which payer the resident was actually under on the dates being billed.

The bill itself rarely explains any of this. It arrives with a balance, a due date, and sometimes a threat of collection, addressed to whoever signed the admission paperwork. The family’s instinct is to pay it or to panic, and both are premature.

Below are two households that received similar-looking bills after similar stays and owed very different amounts. Follow whichever resembles yours. Confirm current figures with the agency named, because Medicare cost-sharing amounts change every January.

In This Article

Household A: The Nakamuras, Medicaid-Covered, Billed Anyway
Household B: The Pearsons, Private Pay With a Medicare Gap
What the No Surprises Act Does and Does Not Cover Here
Why the Two Households Get Different Answers
The Dispute Sequence That Actually Works
Where a Life Insurance Policy Fits, and Where It Does Not
Frequently Asked Questions

Balance Billing by a Facility: What You Actually Owe

Household A: The Nakamuras, Medicaid-Covered, Billed Anyway

Grace Nakamura, 84, has been in a Medicaid-certified nursing facility for fourteen months. Medicaid pays the facility, and Grace contributes nearly all of her monthly income as her patient liability, sometimes called share of cost, keeping only the state’s personal needs allowance. Her daughter received a bill for $4,180 described as an unpaid balance.

What the rules say. A provider that participates in Medicaid must accept the Medicaid payment as payment in full for covered services and may not bill the beneficiary for the difference. The federal Medicaid regulations on payment in full are at 42 CFR 447.15. Separately, the nursing home requirements bar a facility from requiring a third party to personally guarantee payment as a condition of admission.

What is legitimately billable in this household: the patient liability amount computed by the state, which the resident owes from her own income; charges for genuinely non-covered items the resident or representative requested in writing, such as a private room upgrade or a beauty salon service; and charges for periods before Medicaid eligibility began, if any.

What the daughter should do. Request an itemized bill by date and service code, ask in writing which payer the facility billed for each date, and ask for the state’s patient liability notice. Then call the state Medicaid agency and the long-term care ombudsman. In most of these cases the balance is a billing error, a lag in Medicaid processing, or an improper attempt to collect from family.

Household B: The Pearsons, Private Pay With a Medicare Gap

Walt Pearson, 79, entered a skilled nursing facility after a hip fracture. Medicare Part A covered the stay initially, then stopped. The bill is $11,300 and the family cannot tell what happened.

What the rules say. Medicare Part A covers a skilled nursing facility stay following a qualifying hospital stay, with no daily coinsurance for the first 20 days and a daily coinsurance amount for days 21 through 100. That daily amount was $209.50 in 2025 and changes each January; confirm the current figure with Medicare or a State Health Insurance Assistance Program counselor. After day 100 in a benefit period, Medicare pays nothing and the resident is private pay.

Two traps sit inside this. First, coverage can end before day 100 if the facility determines skilled care is no longer needed. When that happens the resident must receive a Notice of Medicare Non-Coverage, which carries a right to a fast appeal through the Beneficiary and Family Centered Care Quality Improvement Organization. Families often discover the notice in a folder weeks later, after the appeal window has closed. Second, observation status in the hospital does not count toward the qualifying inpatient stay, which can leave the entire skilled nursing stay uncovered.

What the Pearsons should do. Get the itemized bill, the Medicare Summary Notice, and any non-coverage notice. Appeal if the window is open. Then apply for Medicaid if the private-pay balance is unsustainable, and ask about coverage for months before the application. See what a Notice of Medicare Non-Coverage means and how retroactive Medicaid coverage works.

What the No Surprises Act Does and Does Not Cover Here

Families hear about the No Surprises Act and assume it solves facility billing. It usually does not, and knowing where the line is saves weeks.

The federal No Surprises Act, effective January 1, 2022, protects patients from surprise balance billing by out-of-network providers in specific circumstances: emergency services, non-emergency services delivered by out-of-network clinicians at in-network facilities, and air ambulance services. It also created a good faith estimate requirement for uninsured and self-pay patients, and a patient-provider dispute resolution process when a bill substantially exceeds the estimate.

What it generally does not reach: ground ambulance, ordinary private-pay long-term care charges, and the room rate a nursing facility charges a resident who is not covered by any payer. Notably, the physician who saw your parent inside the nursing home may still be an out-of-network clinician whose bill falls under the act. Read every bill separately, because a single stay can generate facility charges, therapy charges, physician charges and pharmacy charges under four different rule sets.

If you are uninsured or self-pay and did not receive a good faith estimate before scheduled care, ask for one and ask about the dispute process through the federal No Surprises Help Desk.

	Household A: Medicaid-covered	Household B: Medicare then private pay
Bill received	$4,180	$11,300
Governing rule	Medicaid payment in full, 42 CFR 447.15	Part A benefit period and daily coinsurance
Likely legitimate charge	Patient liability only	Coinsurance days and post-day-100 charges
First call	State Medicaid agency and ombudsman	SHIP counselor and the appeal line on the notice
Policy question	Do not disturb; countable resource risk	Check riders and loans before considering a sale

What the No Surprises Act Does and Does Not Cover Here

Why the Two Households Get Different Answers

Same building, same-looking invoice, different outcome, and the difference comes down to four facts.

Which payer covered each date. Medicaid dates are governed by payment-in-full rules. Medicare dates are governed by benefit periods and coinsurance. Private-pay dates are governed by the admission contract.
Whether the facility participates in the program. A non-participating facility, or a bed not certified for Medicaid, changes everything. Ask whether the specific bed is Medicaid-certified, not just the building.
What the admission agreement says. Read the section on financial responsibility and on the responsible party. Signing as a responsible party who agrees to use the resident’s funds is different from personally guaranteeing the debt, and the difference is often one word.
Whether notices were properly given. Non-coverage notices, discharge notices and bed-hold notices all carry required content and timing. A defective notice is leverage.

See what a skilled nursing facility is for how these categories are defined, and check the facility’s inspection history and staffing data on the CMS Care Compare website before any dispute escalates.

The Dispute Sequence That Actually Works

Do these in order, in writing, and keep copies.

1. Request an itemized bill by date of service, with charge codes and the payer billed for each date. A summary balance is not enough to dispute anything.

2. Request the resident’s account ledger showing every payment received from every source, including the resident’s own patient liability contributions. Misapplied payments are common.

3. Dispute in writing to the facility’s business office, stating what you believe is wrong and citing the payer for those dates. Ask for a written response within 30 days.

4. Escalate outside the building. The long-term care ombudsman for your county handles resident billing complaints at no cost. The state Medicaid agency handles payment-in-full violations. The state attorney general’s consumer protection division handles collection practices, and the federal Fair Debt Collection Practices Act applies once a third-party collector is involved.

5. Ask about financial assistance. If a hospital is the creditor, nonprofit hospitals must maintain a written financial assistance policy under the IRS rules for charitable hospitals, and balances are sometimes reduced retroactively. See how hospital bill collections work.

Where a Life Insurance Policy Fits, and Where It Does Not

Neither household should reach for a policy first, and for different reasons.

The Nakamuras should not touch the policy at all. Grace is on Medicaid. A lump sum arriving in her name is a countable resource that can end eligibility in the month it arrives and create a new spend-down problem far larger than the disputed $4,180. If her policy has a small face amount and is irrevocably assigned to a funeral home under a pre-need contract, it is likely already inside the burial exclusion her state recognizes and should be left alone. Ask the eligibility worker before anything changes. See how life insurance counts as a Medicaid asset.

The Pearsons have a real but slow option. A policy sale typically takes 60 to 120 days, so it does not answer a bill due next month. What can move faster: an accelerated death benefit rider already in the contract, a policy loan against cash value, or a reduced paid-up election that stops the premium outflow. A settlement is worth pricing only if the face amount is substantial, the premium is unaffordable, nobody depends on the death benefit, and the alternative is a lapse.

Selling is the wrong answer for small face amounts, for burial policies, for a household where a surviving spouse needs the benefit, and for a healthy insured. It is also wrong while a Medicaid application is pending. Our page on medication costs inside a facility covers another line families are billed for and often should not be.

Pine Lake Legacy does not purchase policies and is not licensed in every state. A free policy review is education only, and billing disputes belong with the ombudsman, the state Medicaid agency, and where necessary an elder law attorney.

Frequently Asked Questions

Can a nursing home bill my mother’s family for a Medicaid balance?

Generally no. A facility participating in Medicaid must accept the program’s payment as payment in full for covered services and may not bill the beneficiary for the difference, and federal nursing home rules bar requiring a third party to personally guarantee payment as a condition of admission. Request an itemized bill, then contact the state Medicaid agency and the long-term care ombudsman.

Does the No Surprises Act cover nursing home bills?

Usually not for the facility’s room and board charges. The act addresses emergency care, out-of-network clinicians treating patients at in-network facilities, and air ambulance, plus good faith estimates for self-pay patients. A physician who saw your parent inside the facility may still fall under it, so evaluate each bill in a stay separately rather than as one balance.

What is patient liability and is it different from a balance bill?

Patient liability, also called share of cost, is the portion of a Medicaid resident’s own monthly income that must be applied to the cost of care, leaving only a personal needs allowance. It is a legitimate charge computed by the state. A balance bill seeking the difference between the facility’s private rate and the Medicaid rate is a different thing and is generally not permitted.

I signed the admission paperwork. Am I personally responsible?

Read the exact language. Agreeing to act as a responsible party who applies the resident’s own funds is different from personally guaranteeing the debt, and federal rules bar requiring a personal guarantee as an admission condition. If a facility claims you signed a guarantee, ask for the page, and take it to an elder law attorney in your state before paying anything.

Medicare stopped paying before day 100. Can we appeal?

Yes, if you act quickly. When skilled coverage ends the resident must receive a Notice of Medicare Non-Coverage, which explains a fast appeal to the Quality Improvement Organization, and the deadline is short. Ask the facility for a copy of the notice and the date it was delivered, and call your State Health Insurance Assistance Program for free help filing.

Should we use a life insurance policy to clear the balance?

Not as a first move, and not at all if the resident is on Medicaid, since a lump sum can end eligibility. Dispute the bill first, since a large share of these balances are billing errors or improper charges. If a real private-pay balance remains, look at an accelerated death benefit rider or a policy loan before considering a sale, which typically takes months.

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