Out-of-network (OON) billing presents a complex mix of regulatory challenges and financial opportunities. While it allows you to set your own fees, it also introduces risks like claim denials, patient disputes, and strict compliance requirements under laws like the No Surprises Act.
This guide outlines the essential rules, challenges, and best practices to streamline your OON billing process and protect your revenue.
In-Network vs. Out-of-Network: Key Differences
-
In-Network: You have a contract with an insurer agreeing to pre-negotiated rates. Patients pay lower, predictable costs (copays, coinsurance).
-
Out-of-Network (OON): You have no contract with the patient’s insurer. You set your own fees, but patients face higher costs and you assume more collection risk and administrative burden.
The Financial Opportunity & Risk of OON Billing
Opportunity:
-
Freedom to set higher fee schedules, potentially increasing revenue per service.
-
Particularly valuable for specialized services or in areas with limited in-network providers.
Risk:
-
Balance Billing: You must collect the difference between your charge and the insurer’s payment directly from the patient.
-
Higher Administrative Costs: More complex claims, frequent denials, and increased patient communication require significant resources.
-
Unpaid Balances: Patients may be unable or unwilling to pay their larger share of the bill.
How Insurers Process OON Claims: UCR & Balance Billing
Insurers use Usual, Customary, and Reasonable (UCR) rates to determine the maximum they will pay for an OON service.
-
Usual: What you typically charge for the service.
-
Customary: The average charge by similar providers in your geographic area.
-
Reasonable: The justified fee for the service’s complexity.
Example: You charge $400. The insurer’s UCR is $250. If the patient has 40% OON coinsurance, the insurer pays $150 (60% of $250). You can then balance bill the patient for the difference: the $150 balance on the UCR amount plus the $150 difference between your fee and the UCR ($400 – $250), totaling a $300 patient responsibility.
OON Coverage by Plan Type: What to Expect
| Plan Type | Out-of-Network Coverage | Key Consideration |
|---|---|---|
| PPO | Partial coverage | Higher patient deductibles & coinsurance. Reimbursed at UCR rates. |
| POS | Partial coverage (with PCP referral) | Requires a referral from an in-network Primary Care Physician. |
| HMO | None (except emergencies) | Avoid except in true emergencies. Patient is responsible for full cost. |
| EPO | None (except emergencies) | Avoid except in true emergencies. Patient is responsible for full cost. |
Government Plans:
-
Original Medicare: Limited coverage. You can bill patients a “limiting charge” (up to 15% over Medicare’s approved amount).
-
Medicare Advantage: Follows PPO or HMO rules (see above).
-
Medicaid: Varies significantly by state. Often provides little to no OON coverage.
The No Surprises Act: Compliance is Non-Negotiable
This federal law prohibits balance billing in two key scenarios, fundamentally changing OON billing:
-
Emergency Services: All emergency services must be billed at in-network rates. You cannot balance bill the patient.
-
Ancillary Services at In-Network Facilities: If a patient receives non-emergency care at an in-network facility (e.g., a hospital), ancillary providers (e.g., anesthesiologists, radiologists, pathologists) cannot balance bill the patient, even if they are OON.
Your Role: For these scenarios, you must negotiate payment directly with the insurer through the payment determination or Independent Dispute Resolution (IDR) process. The patient is only responsible for their in-network cost-sharing.
5-Step OON Claim Submission Process
-
Verify Benefits: Always check the patient’s OON benefits and explain their financial responsibility before providing care.
-
Obtain Pre-Authorization: Secure insurer approval when required to drastically reduce denial risk.
-
Submit a Clean Claim: File accurate, complete claims with all necessary documentation (e.g., superbill, medical records).
-
Track & Follow Up: Proactively monitor claim status and follow up on delays.
-
Appeal Denials: Aggressively appeal underpayments and denials with strong documentation of medical necessity and UCR justification.
Strategies to Maximize OON Reimbursement
-
Leverage UCR Data: Use tools like the FAIR Health database to benchmark your fees and justify charges during appeals.
-
Negotiate with Insurers: Don’t accept the first offer. Negotiate directly for higher reimbursement.
-
Perfect Patient Communication: Be transparent. Provide clear cost estimates upfront to prevent disputes and improve collection rates.
-
Master the Appeal Process: Develop a systematic approach to challenging denials and underpayments.
When to Consider Outsourcing OON Billing
Outsourcing to specialists (like Medheave) can be a strategic move if your practice experiences:
-
High claim denial rates for OON services.
-
Inefficient internal processes and lengthy reimbursement cycles.
-
Staff overwhelmed by complex billing rules and follow-up tasks.
Benefit: Experts can streamline denial management, improve negotiation outcomes, and free your team to focus on patient care.
Conclusion
Successful OON billing requires a balance of strategic pricing, meticulous compliance, and proactive patient communication. By mastering these elements, you can turn the complexities of OON care into a sustainable revenue stream.
