Working with out of network insurance can create more billing complexity than simply submitting a claim and waiting for payment. An out of network provider does not hold a contract with the patient’s health plan, so reimbursement, patient responsibility, claim processing, and balance billing rules can differ from in network care.
For medical practices, hospitals, and billing teams, the key challenge involves understanding what the payer will actually reimburse, what the patient legally owes, and which federal or state protections limit the amount a provider can collect.
This guide explains how out of network insurance works, how providers can bill out of network claims, how reimbursement gets calculated, when balance billing may apply, and how billing teams can reduce payment problems.
What Is an Out of Network Provider?
An out of network provider is a healthcare professional, physician group, facility, or other healthcare entity that does not have a contractual agreement with a patient’s health insurance plan.
An in-network provider signs a payer contract and agrees to specific reimbursement rates and other contractual terms. An out of network provider does not operate under that same contract.
CMS defines an out of network provider as one who does not have a contract with the patient’s health plan. Patients generally pay more when they receive covered services from such providers, depending on their specific insurance policy.
For example, suppose a physician normally charges $250 for a consultation.
An in-network payer may have a contracted rate of $150. The provider accepts the payer’s contracted terms and cannot simply bill the patient for the remaining $100.
An out of network provider might submit the $250 charge to the payer. The payer may determine an allowed amount of $150, pay a percentage of that amount, and assign the remaining amount according to the patient’s plan and applicable billing rules.
That distinction makes out of network billing fundamentally different from ordinary participating provider billing.
How Does Out of Network Insurance Work?
The first thing a provider should understand is that out of network does not automatically mean the insurance company will not pay.
Some insurance plans provide out of network benefits. Others provide little or no coverage outside the network.
The patient’s benefit structure determines the provider’s reimbursement and the patient’s financial responsibility.
A typical out of network claim may involve:
- Patient eligibility verification
- Out of network benefit verification
- Deductible review
- Coinsurance calculation
- Payer allowed amount
- Claim submission
- Payer adjudication
- Insurance payment
- EOB or ERA review
- Patient balance calculation
- Patient statement or collection activity
The provider needs to verify these details before treatment whenever possible.
Example of Out of Network Reimbursement
Consider a patient with an insurance plan that provides out of network coverage.
The provider charges:
- Billed charge: $300
- The payer determines:
- Allowed amount: $180
The patient’s plan requires:
Out of network coinsurance: 40%
The payer may calculate the patient’s coinsurance using the plan’s applicable allowed amount. The provider then needs to review the EOB to determine exactly what the payer assigned to insurance responsibility and patient responsibility.
The provider cannot assume that the difference between $300 and $180 automatically becomes a collectible patient balance. Contract terms, state law, federal protections, payer rules, and the circumstances of care all matter.
CMS explains that balance billing generally involves charging the patient for the difference between the provider’s charge and the amount the health plan allows.
Out of Network vs. In Network Providers
The biggest difference involves the contractual relationship between the provider and payer.
An out of network provider therefore needs stronger front-end verification and financial communication.
What Does Out of Network Coverage Mean for Providers?
Out of network coverage means the patient’s insurance plan may provide benefits for services received from providers outside its network.
However, the plan can apply different:
- Deductibles
- Coinsurance percentages
- Copayments
- Allowed amounts
- Out of pocket limits
- Prior authorization requirements
- Referral requirements
- Coverage limitations
Some plans may have separate in network and out of network deductibles.
For example, a patient’s plan could have a $1,500 in network deductible and a $3,000 out of network deductible.
A provider who checks only the patient’s eligibility may miss this distinction.
The billing team should verify the actual benefits for the specific service and provider type.
How to Verify Out of Network Benefits
Benefit verification represents one of the most important steps in out of network billing.
Before providing scheduled services, the billing or front office team should determine:
Confirm the Patient’s Eligibility
Verify that the policy remains active on the date of service.
Check:
- Member ID
- Group number
- Effective date
- Termination date
- Plan type
- Subscriber information
- Provider network status
Eligibility alone does not confirm payment.
A patient can have active coverage while the plan provides no meaningful out of network benefits.
Check Out of Network Benefits
Ask the payer specifically about the provider’s network status and the patient’s out of network benefits.
The verification should identify:
- Out of network deductible
- Deductible remaining
- Out of network coinsurance
- Out of network copayment
- Out of pocket maximum
- Remaining out of pocket amount
- Allowed amount methodology
- Referral requirements
- Prior authorization
- Visit limitations
- Service exclusions
- Medical necessity requirements
Confirm the Benefit for the Actual CPT or HCPCS Code
A general statement such as “out of network services are covered” does not provide enough information.
The payer may treat different services differently.
For example, an office visit, diagnostic test, psychotherapy service, surgery, imaging procedure, and laboratory service may each have different benefit rules.
The billing team should verify the expected service whenever possible.
Why Out of Network Claims Get Denied
Out of network claims can fail for many of the same reasons as in network claims, but the financial consequences can become more significant.
Common causes include:
No Out of Network Benefits
The patient’s policy may exclude nonparticipating providers.
In that situation, the payer may deny the claim or process the service as noncovered.
Prior Authorization Was Required
Some plans require authorization even when the provider remains outside the network.
The absence of an authorization can results in a denial.
Referral Requirement
Certain plans require a referral from a primary care provider before specialty services receive coverage.
Incorrect Patient Information
Small registration errors can stop an otherwise valid claim.
Examples include:
- Incorrect member ID
- Wrong date of birth
- Incorrect payer
- Incorrect subscriber information
- Misspelled patient name
Coding Errors
Incorrect CPT, HCPCS, ICD 10 CM, or modifier information can trigger claim edits.
The provider’s out of network status does not excuse coding requirements.
Medical Necessity Problems
The payer may question whether the service meets its coverage criteria.
The billing team may need to submit medical records, clinical documentation, or an appeal.
Timely Filing
Payers establish claim submission deadlines.
An out of network provider should never assume that a claim has a longer filing window simply because the provider does not participate with the plan.
Can Out of Network Providers Bill the Patient?
Sometimes, but not always.
This question requires careful handling because federal and state rules can restrict balance billing.
Under the No Surprises Act, patients receive federal protections against certain unexpected out of network bills. These protections generally cover most emergency services, certain non-emergency services connected with visits to in network hospitals, hospital outpatient departments and ambulatory surgical centers, and out of network air ambulance services.
Therefore, a provider should never assume:
“The patient came to an out of network provider, so we can bill the entire remaining amount.”
The circumstances of the service matter.
What Is Balance Billing?
Balance billing occurs when a provider bills the patient for the difference between the provider’s charge and the amount the health plan allows or pays.
For example:
- Provider charge: $500
- Plan allowed amount: $300
- Difference: $200
Whether the provider can collect that $200 from the patient depends on the applicable law, payer relationship, plan, and circumstances surrounding the care.
CMS specifically identifies balance billing as the difference between the actual billed amount and the allowed amount, and notes that it most commonly occurs with out of network providers.
When Can an Out of Network Provider Balance Bill?
Providers need to distinguish ordinary voluntary out of network care from situations covered by surprise billing protections.
A patient may knowingly choose an out of network provider and, where legally permitted, accept higher financial responsibility.
However, the No Surprises Act restricts balance billing in certain situations.
Emergency Services
When the No Surprises Act applies, emergency services generally receive in network cost sharing protections even when the provider remains out of network.
The rules generally prohibit requiring prior authorization for emergency services and prohibit certain higher out of network cost sharing.
Certain Services at In Network Facilities
A patient may choose an in-network hospital or ambulatory surgical center but receive services from an out of network anesthesiologist, radiologist, pathologist, assistant surgeon, or another provider.
The patient may not have selected that individual provider.
The No Surprises Act provides protections for many such services.
Patient Consent Can Matter
In certain circumstances, an out of network provider may provide notice and obtain patient consent before delivering services on an out of network basis.
However, federal rules restrict when providers can use this exception.
CMS notes that certain ancillary services, including specified anesthesiology and radiology services at in network facilities, generally cannot use patient consent to waive the surprise billing protections.
Providers should therefore use the correct federal notice and consent process rather than relying on a generic financial responsibility form.
The No Surprises Act and Out of Network Providers
The No Surprises Act changed how providers handle certain out of network claims.
The law took effect January 1, 2022.
For providers, the rules can involve:
- Restrictions on balance billing
- Patient notice requirements
- Consent requirements
- Emergency service protections
- Certain facility-based service protections
- Good faith estimates for uninsured and self-pay patients
- Payment dispute procedures
- Independent dispute resolution
- Provider directory requirements
CMS maintains specific provider resources covering these requirements.
Why This Matters to Billing Departments
A billing department can create compliance problems by treating every out of network balance as patient responsibility.
Before transferring an unpaid amount to the patient, staff should determine:
- Was the provider out of network?
- Was the facility in network?
- Was the service emergency care?
- Did the service fall under federal surprise billing protections?
- Did the patient receive the required notice?
- Did the patient provide valid consent where permitted?
- Does state law provide additional protection?
- Does the payer’s EOB correctly process the claim?
That review can prevent inappropriate patient statements and collection activity.
How Should Providers Bill Out of Network Insurance?
A practical out of network billing workflow starts before the patient’s appointment.
Step 1: Verify Eligibility
Confirm that the patient’s policy remains active on the date of service.
Step 2: Verify Out of Network Benefits
Determine whether the plan actually covers the provider’s services outside the network.
Step 3: Confirm Authorization and Referral Requirements
Do not assume out of network services bypass utilization management.
Step 4: Explain Financial Responsibility
Tell the patient that out of network coverage may create higher costs.
Avoid guaranteeing a specific final amount unless the payer confirms the amount under the applicable benefit structure.
Step 5: Document the Verification
Record:
- Date of verification
- Payer representative or electronic verification source
- Reference number when available
- Benefit details
- Deductible
- Coinsurance
- Authorization requirements
- Network status
- Any special restrictions
Step 6: Provide the Service
Document the clinical encounter according to normal coding and documentation requirements.
Step 7: Submit the Claim
Use the appropriate claim format and submit accurate patient, provider, diagnosis, procedure, and billing information.
Step 8: Review the EOB or ERA
Do not post the payment and automatically transfer every remaining amount to the patient.
Review how the payer adjudicated the claim.
Step 9: Resolve Incorrect Payment Decisions
If the payer processed the claim incorrectly, determine whether the practice should submit a corrected claim, reconsideration request, or formal appeal.
Step 10: Bill the Patient Only After the Balance Is Validated
The final patient balance should reflect the EOB, applicable contract or law, and any federal or state restrictions.
How Much Do Out of Network Providers Get Paid?
There is no single national out of network reimbursement rate.
Payment can depend on:
- Patient’s insurance plan
- State law
- Provider’s specialty
- CPT or HCPCS code
- Payer’s reimbursement methodology
- Patient’s deductible
- Coinsurance
- Allowed amount
- Medical necessity
- Prior authorization
- Negotiated settlement
- Applicable No Surprises Act requirements
In some situations, the provider and payer can negotiate payment.
For certain disputes under the No Surprises Act, federal rules provide an independent dispute resolution process. CMS maintains an IDR system for resolving eligible out of network payment disputes.
Out of Network Allowed Amount vs. Billed Charge
Billing teams must understand the difference between these figures.
- Billed charge is the amount the provider submits.
- Allowed amount represents the amount the health plan recognizes for the covered service under the applicable payment rules.
- Insurance payment represents what the payer actually pays.
- Patient responsibility represents the amount properly assigned to the patient.
These four figures can differ significantly.
For example:
- Provider charge: $400
- Allowed amount: $250
- Insurance payment: $150
- Patient responsibility: $100
The provider should not automatically treat the $150 difference between the charge and allowed amount as patient responsibility.
The EOB and applicable billing rules determine what the provider can collect.
Out of Network Claims and the EOB
The Explanation of Benefits provides critical information after claim adjudication.
A billing team should review:
- Total billed amount
- Allowed amount
- Insurance payment
- Deductible
- Coinsurance
- Copayment
- Noncovered amount
- Adjustment
- Denial reason
- Patient responsibility
- Remark codes
An EOB may show a patient responsibility amount, but billing staff should still review the claim when federal or state surprise billing rules could apply.
CMS recommends checking medical bills and related paperwork carefully when patients receive unexpected out of network bills.
How Providers Can Improve Out of Network Collections
Out of network billing requires more than sending statements.
A strong revenue cycle process should connect front end verification with claims management and patient collections.
Improve Benefit Verification
Create a standardized verification checklist.
Do not allow staff to record only “active coverage.”
Capture the patient’s actual out of network benefits.
Estimate Patient Responsibility Carefully
Use verified benefit information to create a reasonable estimate.
Avoid presenting an estimate as a guarantee.
Collect Permitted Amounts at the Right Time
If your legal and payer requirements allow a pre service deposit or payment, communicate the amount clearly.
Do not collect amounts that federal or state law prohibits the provider from charging.
Track Out of Network Denials Separately
Create denial categories such as:
- No out of network benefits
- Authorization missing
- Referral missing
- Noncovered service
- Medical necessity
- Coding error
- Timely filing
- Incorrect payer
- Incorrect patient information
- No Surprises Act issue
This helps management identify recurring problems.
Monitor Payer Payment Patterns
Compare billed charges, allowed amounts, payments, adjustments, and patient responsibility across payers.
A provider may discover that certain plans consistently produce low reimbursement or frequent administrative denials.
That information can support payer contracting decisions.
Should a Provider Join an Insurance Network?
Not every provider needs to participate with every payer.
The decision depends on specialty, market demand, payer mix, reimbursement, administrative burden, and patient volume.
An out of network strategy may work for practices with:
- Strong patient demand
- Specialized services
- Limited local competition
- Patients with meaningful out of network benefits
- Higher reimbursement expectations
- A clear financial policy
- Strong eligibility verification
However, the practice must understand the financial consequences before choosing an out of network model.
Common Out of Network Billing Mistakes and How to Avoid Them
Treating Active Insurance as Proof of Out of Network Coverage
One of the most common mistakes happens during eligibility verification.
A staff member checks the patient’s policy and sees that coverage remains active. The team then assumes the payer will cover the service.
Active coverage doesn’t tell you whether the patient has out of network benefits.
Some plans provide both in network and out of network benefits. Others limit or exclude coverage outside the network. Some plans apply separate deductibles and coinsurance levels.
How to Avoid It
Verify the patient’s actual out of network benefits before providing scheduled services.
Check:
- Out of network coverage
- Out of network deductible
- Deductible remaining
- Coinsurance
- Copayment
- Out of pocket maximum
- Out of pocket amount remaining
- Service limitations
- Authorization requirements
- Referral requirements
Document the verification date and reference number when available.
A simple note such as “active insurance” doesn’t give the billing team enough information to estimate reimbursement or patient responsibility.
Ignoring Prior Authorization
Some providers assume that out of network services don’t require authorization because the payer doesn’t have a contract with them.
That assumption can lead to denials.
A patient’s plan may require prior authorization for certain procedures, imaging services, therapies, behavioral health services, surgeries, or other covered services.
How to Avoid It
Ask the payer whether the specific service requires authorization.
Verify:
- CPT or HCPCS code
- Diagnosis
- Place of service
- Provider type
- Number of authorized services
- Authorization dates
- Referral requirements
Keep the authorization number with the claim documentation.
For emergency services, special federal protections can apply. Providers should distinguish emergency care from scheduled services rather than applying one authorization rule to every encounter.
Using the Provider’s Charge as the Expected Reimbursement
An out of network provider can charge $500 for a service, but that doesn’t mean the payer will reimburse $500.
The payer may establish an allowed amount under the patient’s benefit plan.
For example:
- Provider charge: $500
- Payer allowed amount: $300
- Insurance payment: $180
- Patient responsibility: $120
The remaining $200 doesn’t automatically become a patient balance.
How to Avoid It
Separate these figures in your billing system:
Billed charge
The amount submitted by the provider.
Allowed amount
The amount the payer recognizes under its applicable payment methodology.
Insurance payment
The amount the payer actually pays.
Patient responsibility
The amount properly assigned to the patient.
Always review the EOB or ERA before posting the final balance.
Billing the Patient for Every Difference Between Charges and Payment
This mistake can create serious compliance problems.
Suppose the provider bills $600 and receives $250 from insurance.
The billing team might see the $350 difference and send it to the patient.
That approach doesn’t work in every situation.
Federal and state laws can restrict balance billing. The No Surprises Act protects patients from certain unexpected out of network bills, including many emergency situations and certain services delivered by out of network providers at in network facilities.
How to Avoid It
Before billing an out of network balance, ask:
- Does the patient’s plan permit the charge?
- Does a provider contract apply?
- Does the No Surprises Act apply?
- Did the patient receive the required notice?
- Did the patient provide valid consent where applicable?
- Does state law impose additional restrictions?
- Does the EOB correctly identify patient responsibility?
Only bill the amount that the practice can legally and contractually collect.
Overlooking the No Surprises Act
The No Surprises Act changed how providers handle many out of network situations.
A practice can create problems by treating every out of network patient as responsible for the entire unpaid amount.
Federal protections can apply to emergency services and certain non-emergency services provided by out of network providers at participating facilities.
How to Avoid It
Create a separate workflow for claims that may fall under federal surprise billing protections.
Staff should identify:
- Emergency services
- In network facility status
- Out of network provider status
- Ancillary services
- Notice requirements
- Consent requirements
- Applicable payment dispute procedures
Don’t use a generic waiver as a substitute for the required process.
Assuming a Generic Patient Waiver Solves Balance Billing Issues
Some practices use a financial responsibility form that says the patient agrees to pay all charges.
That document doesn’t automatically override federal or state protections.
A patient’s signature doesn’t give a provider unlimited authority to balance bill.
How to Avoid It
Use the correct notice and consent documents when federal rules require them.
Train front office and billing employees on when the process applies.
Keep documentation showing what information the patient received and when the patient provided consent.
Submitting Claims Without Checking Payer Requirements
Out of network status doesn’t eliminate normal claim submission requirements.
The payer can still reject or deny claims because of:
- Incorrect member ID
- Wrong payer
- Invalid CPT code
- Incorrect ICD 10 CM code
- Missing modifier
- Incorrect place of service
- Missing authorization
- Incorrect provider information
- Missing documentation
- Timely filing
How to Avoid It
Run the claim through your normal claim quality checks before submission.
Confirm patient demographics, payer information, provider identifiers, diagnosis codes, procedure codes, modifiers, units, place of service, and authorization details.
A clean claim gives the payer fewer administrative reasons to delay payment.
Posting Insurance Payments Without Reviewing the EOB
Payment posting errors can create incorrect patient balances.
A billing employee may enter the insurance payment and move the remaining balance to the patient without reviewing adjustments and denial codes.
That can produce an inaccurate statement.
How to Avoid It
Review the EOB or ERA before finalizing the account.
Check:
- Allowed amount
- Insurance payment
- Deductible
- Coinsurance
- Copayment
- Adjustment
- Noncovered amount
- Denial reason
- Remark codes
- Patient responsibility
If the payer’s processing looks incorrect, send the claim for review instead of immediately billing the patient.
Failing to Recognize Incorrect Payer Processing
Insurance companies make processing errors too.
An out of network claim may process as if the patient had no benefits, even though the plan includes out of network coverage.
The payer may also apply the wrong deductible or coinsurance.
How to Avoid It
Compare the EOB against the benefit verification record.
If the payer applied benefits incorrectly, determine whether the claim needs:
- Reconsideration
- Corrected claim
- Documentation
- Appeal
- Payment dispute
Keep the original verification information. It can support the practice’s position during payer follow up.
Sending a Potentially Protected Balance to Collections
This mistake can become more serious when staff don’t identify surprise billing protections.
A practice might send an unpaid out of network balance to a collection agency before confirming whether the amount qualifies as patient responsibility.
How to Avoid It
Add a compliance review before collection placement.
The review should confirm:
- Insurance adjudication
- Patient responsibility
- Network status
- Facility status
- Service type
- Applicable federal protections
- State requirements
- Notice and consent documentation
Only move the account forward after the billing team validates the balance.
Not Tracking Out of Network A/R Separately
When practices combine all claims into one A/R category, management may not see the problems affecting out of network revenue.
How to Avoid It
Track out of network accounts separately.
Useful metrics include:
These numbers can show whether the practice’s out of network strategy actually makes financial sense.
Final Takeaway
Out of network insurance requires careful coordination between eligibility verification, coding, claims submission, payment posting, denial management, and patient billing.
The biggest mistake providers can make involves treating every unpaid portion of an out of network claim as collectible.
Instead, billing teams should determine how the patient’s plan processes out of network services, verify the allowed amount and benefit structure, review every EOB carefully, and check federal and state balance billing restrictions before billing the patient.
The No Surprises Act adds another important layer. Providers and facilities must understand when federal protections apply, when notice and consent requirements matter, and when an out of network payment dispute may qualify for the federal dispute resolution process.
For practices that handle a large out of network payer mix, strong verification and disciplined revenue cycle follow up can prevent avoidable denials, incorrect patient balances, and collection problems.
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Frequently Asked Questions
Can an out of network provider bill insurance?
Yes. If the patient’s plan provides out of network benefits, the provider can generally submit a claim for covered services. The payer then processes the claim according to the patient’s benefit structure and applicable rules. Some plans provide no out of network coverage, so eligibility verification alone does not establish that the claim will receive payment.
Do out of network providers always charge more?
Not necessarily, but patients often face higher costs when they use out of network providers. Plans may apply higher deductibles, coinsurance, or other cost sharing. The provider’s billed charge and the plan’s allowed amount can also differ significantly. The patient’s specific plan determines the financial impact.
Can an out of network provider balance bill a patient?
An out of network provider may be able to balance bill a patient in certain circumstances, but federal and state laws restrict balance billing in many situations. The No Surprises Act protects patients from certain unexpected out of network bills, including most emergency services and certain services provided by out of network providers at in network facilities.
Does the No Surprises Act apply to every out of network service?
No. The law covers specific situations rather than every out of network encounter. Coverage generally includes most emergency services, certain non emergency services connected with visits to specified in network facilities, and out of network air ambulance services. Certain plans and services fall outside these federal protections, and state law may provide additional protections.
Can an out of network provider require prior authorization?
Yes, depending on the patient’s health plan and the service. Providers should verify authorization requirements before treatment whenever possible. Emergency services receive special protections under the No Surprises Act when the law applies, including restrictions on prior authorization requirements.
How should providers handle an out of network denial?
First, identify the exact denial reason. Then determine whether the provider needs to correct the claim, submit missing documentation, request reconsideration, or file an appeal. The billing team should also check whether the payer applied the patient’s out of network benefits correctly. A denial should not automatically become a patient balance.
What should providers verify before treating an out of network patient?
Verify active coverage, out of network benefits, deductible, coinsurance, copayment, out of pocket maximum, authorization requirements, referral requirements, service limitations, and applicable billing protections. Document the verification details so staff can reference them during claim processing and patient billing.
