Out of network billing creates headaches for almost every medical practice at some point.

The rules changed with the No Surprises Act, which took effect in January 2022.

Many practices still struggle to understand what is allowed, what is prohibited, and how to protect their revenue when treating patients without a contract.

This guide explains out of network billing from the ground up. The focus stays on practical, compliant strategies that work under current federal regulations.

Out of Network Status of a Provider

A provider falls into the out of network category when no signed contract exists between that provider and the patient’s insurance plan. This means no agreed upon reimbursement rate exists. No fee schedule applies. No pre negotiated discounts govern the claim.

In network providers sign contracts that specify exactly what the insurance company will pay for each service. The provider accepts that amount as payment in full. The patient only pays their copay, coinsurance, or deductible based on that contracted rate.

Out of network providers have no such agreement. They can bill their full standard charges. The insurance company pays whatever their out of network benefit allows, which is often much less than the billed amount. The patient then becomes responsible for the remaining balance.

The Balance Billing

Balance billing refers to the difference between what the provider charges and what the insurance company pays. Here is how it works.

The provider bills 500 for an office visit. The insurance company processes the out of network claim and determines their allowed amount is 500 for an office visit. The Insurance company processes the out of network claim and determines their allowed amount is 200. The insurance pays 80 percent of that allowed amount, or 160, to the provider or the patient depending on the plan design. The patient pays their 20 percent coinsurance of 160, to the provider or the patient depending on the plan design. The patient pays their 20 percent coinsurance of 40 to the provider.

But the provider still has 300 left on that original bill. That 300 difference is the balance. Before the No Surprises Act, providers could bill that balance directly to the patient in most situations.

After the No Surprises Act, that practice is severely restricted in certain scenarios.

The No Surprises Act Overview

The No Surprises Act created a federal law that protects individuals from receiving surprise medical bills. This new federal law will apply to all Group Health Plans and Individual Health Insurance Coverage on or after January 1, 2022.

There are three basic situations protected by this new federal law.

• First, Emergency Services provided by Out-of-Network Providers at In-Network Facilities. For example, a patient is treated in the ER at an In-Network Hospital by an Out-Of-Network Physician. The patient cannot be “balance-billed”.
• Second, Non-Emergency Services provided by Out-of-Network Providers at In-Network Facilities. For example, a patient has scheduled surgery at an In-Network Facility and the Anesthesiologist or Assistant Surgeon providing their care is an Out-of-Network Provider. Unless the patient was given adequate notice and provided informed consent prior to treatment, they cannot be “balance-billed”.
• Third, Air Ambulance Services (not ground ambulances) provided by Out-of-Network Providers. The lack of protection for Ground Ambulance Services is one of the largest gaps in protecting patient’s rights.

Providers/Facilities are now required to provide a Good Faith Estimate of Charges for Scheduled Medical Procedures. This estimate helps patients understand potential out of pocket costs before treatment begins.

When Balance Billing Remains Legal

Balance billing is not completely dead. Several scenarios still allow providers to bill patients for the difference between their charge and the insurance payment.

• Out of network care at an out of network facility.A patient chooses to go to an out of network hospital or surgery center for a scheduled procedure. They are not protected because no in network facility was involved. The provider can balance bill provided the patient received proper disclosure.
• Post stabilization care after an emergency.The No Surprises Act protects patients during the emergency period only. Once the patient is stabilized and able to consent to transfer or continued care, balance billing becomes legal again if the patient chooses to remain with an out of network provider.
• Ground ambulance services.The No Surprises Act explicitly exempts ground ambulance services. Patients can still receive surprise bills from ground ambulance companies. Several states have passed their own laws addressing this gap, but no federal protection exists.
• Non emergency services with a signed waiver.An out of network provider can balance bill for non-emergency scheduled services if the patient signs a written consent form. This form must be provided at least 72 hours before the service. It must be signed by the patient voluntarily. No coercion or timing pressure is allowed.

The Patient Consent Waiver Requirements

The consent waiver for balance billing has strict requirements. Missing any element makes the waiver invalid.

• The waiver must be provided at least 72 hours before the scheduled service. The patient needs time to consider their options. Same day consent is not allowed for balance billing purposes.
• The waiver must be written in plain language. It must state in clear terms that the provider is out of network. It must explain that the patient may be balance billed for the difference between the provider’s charge and the insurance payment.
• The waiver must list the good faith estimate of expected charges. This estimate helps the patient understand the potential financial exposure. The estimate must be reasonably accurate based on the planned service.
• The patient must sign the waiver voluntarily. No one can pressure the patient at the registration desk right before the procedure. No one can refuse care if the patient declines to sign. The signature must be completely optional.

The Arbitration Process for Payment Disputes

When balance billing is prohibited, the provider and insurance company enter an independent dispute resolution process. This process determines a fair payment amount for the out of network service.

Either party can initiate arbitration within 30 days of the initial payment determination. The initiating party submits an offer amount. The responding party submits a counter offer. Both offers must be reasonable based on several factors.

The certified independent dispute resolution entity considers multiple data points. The qualifying payment amount, which is the median contracted rate for that service in that geographic area, carries the most weight. The provider’s training and experience matters. The complexity of the service matters. The acuity of the patient’s condition matters. The market share of both parties matters.

The arbitrator selects one of the two offers. No splitting or averaging occurs. The losing party pays the arbitration fees. This structure encourages both parties to submit reasonable offers rather than extreme positions.

As of 2026, over 85 percent of arbitration cases resulted in payments above the initial qualifying payment amount but below the provider’s billed charges. Providers who submit offers close to their typical in network rates tend to fare better than those who submit offers at or near their full charges.

State Laws Versus Federal Law

The No Surprises Act sets a federal floor. States can pass stronger protections, but they cannot weaken the federal requirements. This creates a patchwork of rules depending on where the practice operates.

States that already had surprise billing laws before the federal act generally keep those laws in place. Some state laws cover ground ambulance services, which the federal law does not. Some state laws apply to more facility types than the federal law covers.

When state and federal laws conflict, the law providing stronger patient protection applies. Providers must know both sets of rules. A practice in Texas faces different requirements than a practice in New York or Florida.

The federal law preempts state laws only when the state law provides less protection. For example, a state law allowing balance billing for emergency room surprise bills would be preempted because federal law prohibits that practice.

How Insurance Companies Discourage Out of Network Care

Insurance plans structure their benefits to push patients toward in network providers. Understanding these structures helps providers explain patient responsibility clearly.

Out of network deductibles

Many plans have separate deductibles for in network and out of network care. The out of network deductible is often two to four times higher than the in network deductible. The patient must meet this higher deductible before any out of network coverage begins.

Out of network coinsurance

Even after the deductible, out of network coinsurance is typically higher. An in network plan might pay 80 percent while the patient pays 20 percent. An out of network plan might pay 60 percent or even 50 percent while the patient pays the rest.

Usual and customary limits

Insurance companies pay out of network benefits based on their determination of usual and customary rates. These rates are often far below the provider’s actual charges. The patient gets stuck with the difference unless balance billing is prohibited.

No out of network coverage.

Some plans, particularly HMOs and EPOs, provide zero coverage for out of network care except in true emergencies. The patient bears the full cost of any out of network service.

The Good Faith Estimate Requirement

The No Surprises Act requires providers to give uninsured and self-pay patients a good faith estimate of expected charges. This requirement also applies to out of network patients who choose to waive balance billing protections.

The estimate must include expected charges for the primary service. It must also include any ancillary services that are reasonably expected to be performed. Anesthesia, radiology, and pathology are common ancillary services that must be included.

The estimate must be provided no later than one business day before a scheduled service. For services scheduled less than three days in advance, the estimate must be provided as soon as possible but no later than the day before.

Patients can dispute an estimate through a federal review process if the final bill exceeds the estimate by $400 or more. This dispute process can result in reduced patient payment obligations if the provider’s estimate was substantially inaccurate.

Documentation Requirements for Out of Network Claims

Proper documentation becomes even more critical for out of network claims. The insurance company has less incentive to pay fairly, so every element must be correct.

The advance notice

Document when and how the patient was informed of their out of network status. Keep a copy of any signed waiver. Note the date the waiver was provided and the date it was signed. The 72-hour rule must be satisfied for a valid waiver.

The good faith estimate

Keep a copy of every estimate provided. Note when and how it was delivered. Document any changes to the estimate based on changes in the planned service.

The claim submission

Submit the claim with the correct out of network place of service codes. Use the appropriate modifiers to indicate out of network status if the payer requires them. Include the full diagnosis and procedure codes just like any other claim.

The appeal documentation

When an out of network claim pays too low, document every appeal step. Keep copies of the explanation of benefits. Track the dates of each appeal. Include clinical records that support the medical necessity and complexity of the service.

Strategies for Managing Out of Network Patients

Despite the regulatory complexity, practices can manage out of network patients effectively. These strategies protect both the patient and the practice.

Verify benefits before every out of network appointment

Call the insurance plan or use the provider portal. Confirm the out of network deductible and its remaining balance. Confirm the out of network coinsurance percentage. Note any limits on out of network coverage.

Collect estimated patient responsibility upfront

Using the good faith estimate, calculate the expected patient portion. Collect this amount before providing the service. This prevents billing headaches later and sets clear expectations.

Obtain waivers properly

For non-emergency scheduled services where balance billing is allowed, provide the waiver at least 72 hours ahead. Never pressure the patient to sign. Document everything thoroughly.

Consider joining the network

For plans that send many out of network patients to the practice, evaluate the cost and benefit of joining. Contracted rates are lower than billed charges, but the claims process runs smoothly and denials decrease significantly.

Use the arbitration process effectively

When the No Surprises Act requires arbitration, submit a reasonable offer. Base the offer on typical in network rates for the area rather than full billed charges. This approach consistently produces better outcomes than extreme positioning.

Conclusion

Out of network billing is no longer the Wild West it used to be. The No Surprises Act changed everything. Balance billing is now banned for emergency services and for non-emergency care at in network facilities. Violations bring fines up to $10,000 per incident.

When balance billing is not allowed, the independent dispute resolution process decides the payment amount. Providers who submit reasonable offers near typical in network rates win more often than those who demand full charges.

Every practice needs a clear out of network policy. Train the front desk. Audit the waivers. Keep all documents for six years. Out of network billing is harder now, but compliant practices still get paid. The rules are clear. Follow them or face the consequences.