Out-of-network (OON) billing occurs when you provide services to a patient whose insurance plan you don’t have a contract with. While these situations can be more complex than in-network billing, they can also be more profitable if handled correctly.
Key Steps for Out-of-Network Billing:
1. Verify Benefits and Set Expectations
Before providing services, verify the patient’s out-of-network benefits, including:
- Out-of-network deductible and whether it’s been met
- Coinsurance percentage (commonly 60-70% coverage vs 80-100% in-network)
- Out-of-network maximum out-of-pocket limit
- Whether the plan has out-of-network coverage at all (some HMOs and EPOs don’t)
Inform the patient in writing about their financial responsibility and obtain a signed acknowledgment.
2. Understand Your Billing Options
You have several approaches for OON billing:
- Balance Billing: You can bill patients for the difference between your charges and what insurance pays (except where prohibited by law or for emergency services under the No Surprises Act)
- Courtesy Billing: Submit claims to the insurance company on the patient’s behalf, but collect your full fee from the patient
- Self-Pay Arrangements: Offer discounted rates if the patient pays in full at time of service
3. Use Proper Claim Submission
- Submit claims using the CMS-1500 form with your full charges
- Include all required documentation
- Don’t use contracted rates; bill your standard (rack) rates
- Use appropriate modifiers if required by the payer
4. Payment Collection Strategy
- Collect estimated out-of-pocket costs upfront when possible
- Set clear payment policies for OON patients in your financial policy
- Send statements promptly when insurance processes the claim
- Offer payment plans for large balances
5. Appeal Underpayments
Insurance companies often underpay OON claims.
Don’t accept low payments without review:
- Compare payment to the usual and customary rate for your area
- Appeal if payment is unreasonably low
- Cite state prompt payment laws if applicable
- Consider balance billing the patient if appeals are unsuccessful
Important Legal Considerations:
- No Surprises Act: For emergency services and certain non-emergency services at in-network facilities, you cannot balance bill patients beyond in-network cost-sharing amounts
- State Balance Billing Laws: Some states restrict balance billing in specific situations
- Medicare/Medicaid: You generally cannot balance bill Medicare patients, and Medicaid prohibits it entirely
When to Accept OON Patients:
Consider these factors:
- Your practice’s payer mix and whether you can afford to see OON patients
- The patient’s ability to pay
- The complexity of the service and reimbursement potential
- Your capacity and whether OON patients displace in-network patients
Medwave can help you develop clear OON billing policies, verify benefits accurately, submit claims properly, and pursue maximum reimbursement while remaining compliant with all applicable laws.