Out-of-Network (OON) Billing: Claims & Reimbursement

Out-of-network (OON) billing occurs when a healthcare provider delivers services to a patient whose insurance plan the provider does not have a contracted reimbursement agreement with. 

OON does not mean the patient is uninsured — it means the provider is non-participating with that specific payer, so there are no pre-negotiated rates governing what the insurer will pay. 

The provider bills their full charge, the insurer reimburses based on its own methodology (typically UCR or a percentage of Medicare rates), and the gap between the two creates the financial complexity that defines OON billing.

Since the No Surprises Act took effect in 2022, OON billing rules have fundamentally changed. Providers can no longer balance bill patients for most emergency services or for certain non-emergency services at in-network facilities. 

Disputes over OON payment amounts now route through a federal Independent Dispute Resolution (IDR) process — and the volume has been staggering. CMS expected approximately 17,000 annual IDR disputes; the actual number exceeded 490,000 in the first full year.

In this guide, let’s uncover:

• Medicare and Medicaid OON rules
• How providers submit OON claims and use superbills
• No Surprises Act compliance requirements and IDR process
• How OON reimbursement works (UCR, allowed amounts, patient responsibility)
• Common OON billing mistakes and how to prevent them
• Coverage rules by plan type (PPO, HMO, POS, EPO)

How does out-of-network reimbursement work?

When a provider bills an OON claim, the insurer doesn’t pay the full billed charge. 

The payer applies its own reimbursement methodology to determine the allowed amount — the maximum it will pay for that service from a non-contracted provider.

UCR (Usual, Customary, and Reasonable) is the traditional methodology most commercial payers use for OON reimbursement. 

“Usual” reflects what the provider typically charges. “Customary” reflects what providers in the same geographic area charge for the same service. “Reasonable” reflects what’s justified given the complexity. 

In practice, insurers set their own UCR benchmarks — some use FAIR Health data, others use internal databases, and the allowed amount can vary dramatically between payers for the same procedure in the same zip code.

Under the No Surprises Act, the Qualifying Payment Amount (QPA) — generally the median of the insurer’s contracted in-network rates — has become the central reimbursement benchmark for NSA-protected services and the starting point for IDR arbitration.

How do different insurance plan types handle OON coverage?

The plan type determines whether OON billing produces partial reimbursement (PPO, POS) or a complete denial (HMO, EPO). 

Verifying the patient’s plan type and OON benefits before delivering services prevents the most financially damaging OON scenario — performing a high-dollar procedure for an HMO patient who has zero OON coverage.

What does the No Surprises Act require for OON billing?

The No Surprises Act restructured OON billing for emergency and certain facility-based services. Providers must understand which services are protected and what happens when a payment dispute arises.

Protected services where balance billing is prohibited

Emergency services regardless of network status, non-emergency services provided by OON physicians at in-network facilities (anesthesiology, radiology, pathology, neonatology, assistant surgery), and air ambulance services. 

For these, the provider must accept the insurer’s initial payment or in-network cost-sharing amount from the patient, then pursue the payment dispute with the insurer directly — not the patient.

Independent Dispute Resolution (IDR) process

When the provider and insurer can’t agree on OON payment for a protected service, either party can initiate IDR arbitration after a 30-day open negotiation period. 

An independent arbitrator selects either the provider’s proposed payment or the insurer’s — no splitting the difference. 

The QPA (insurer’s median in-network rate) is a required factor but not the only consideration; the arbitrator also weighs provider training, market share, patient acuity, and prior contracting history.

Multiple provider organizations — including the Texas Medical Association and AMA — have challenged QPA calculation methods in federal court, arguing insurers improperly weight the QPA to favor lower reimbursement. This litigation is ongoing and continues shaping how IDR decisions are made.

Notice and consent exception

For non-emergency OON services at in-network facilities, providers may balance bill the patient if proper notice is given and the patient signs a written consent form at least 72 hours before the service (or on the day of service for appointments made within 72 hours). Without valid consent, balance billing is prohibited.

How do providers submit OON claims?

OON claims follow the same submission mechanics as in-network claims — CMS-1500 (professional) or UB-04 (institutional) submitted electronically via clearinghouse or payer portal. The difference is in reimbursement expectations and patient financial responsibility.

For practices that routinely see OON patients, the superbill becomes a critical document. 

A superbill is a detailed invoice the provider gives the patient containing CPT codes, ICD-10 diagnoses, provider NPI, date of service, billed charges, and practice information — everything the patient needs to submit a claim to their insurer for OON reimbursement. Some providers submit OON claims directly to the insurer; others provide the superbill and let the patient file.

When the provider submits directly, the insurer sends the EOB and reimbursement to the provider (if assignment of benefits is in place) or to the patient. 

When the patient submits via superbill, the reimbursement goes to the patient — and the provider collects from the patient. The workflow choice affects cash flow, patient collections complexity, and administrative burden.

What are the Medicare and Medicaid OON rules?

Original Medicare does not operate through a traditional provider network. 

Program / Plan Type	Out-of-Network (OON) Rules	Key Billing Implications
Original Medicare	Does not use traditional provider networks. Beneficiaries may see any Medicare-participating or non-participating provider nationwide.	OON status is generally not a network issue; reimbursement depends on Medicare participation and assignment status.
Original Medicare – Participating Providers	Accept Medicare’s approved amount as full payment.	Patients are responsible only for applicable deductibles, coinsurance, and copayments.
Original Medicare – Non-Participating Providers	May charge up to the Medicare limiting charge (115% of the approved amount).	Balance billing is capped at 15% above the Medicare-approved amount, unlike most commercial OON arrangements.
Medicare Advantage PPO	Typically allows OON care but with higher patient cost-sharing.	Services may remain covered, but beneficiaries generally pay more when using OON providers.
Medicare Advantage HMO	Usually restricts coverage to in-network providers except for emergencies and certain approved circumstances.	Non-emergency OON services are often denied unless plan rules permit coverage.
Medicaid	OON policies vary by state Medicaid program and managed care organization (MCO).	Coverage and reimbursement rules differ significantly across states and plans.
Medicaid Managed Care Plans	May maintain provider networks and establish their own OON requirements and restrictions.	Providers must verify plan-specific OON policies before rendering services.
Emergency Services (Medicare Advantage & Medicaid Plans)	Emergency care is generally covered regardless of network status, subject to applicable regulations and plan rules.	Emergency services are less likely to be denied solely due to network participation status.

What OON billing mistakes cause the most revenue loss?

Here are some of the most common OON billing mistakes:

Behavioral health deserves specific mention — psychiatrists and behavioral health providers remain among the most likely to practice out-of-network across all specialties. 

A New England Journal of Medicine study found psychiatrists have significantly higher OON rates than other physician specialties, driven by lower insurer reimbursement, administrative burden, and network participation challenges. 

Practices in behavioral health that bill OON should build superbill workflows and patient education into their standard intake process.

OON billing requires a different revenue cycle approach than in-network

Out-of-network billing combines variable reimbursement rates, plan-type coverage restrictions, federal compliance requirements, and patient financial responsibility in ways that standard in-network billing workflows don’t address. 

A practice that treats OON claims like in-network claims — submitting at contracted rates, skipping eligibility verification for OON benefits, ignoring balance billing restrictions, or accepting initial payments without dispute review — leaves significant revenue unrecovered.

MedHeave operates as an embedded revenue cycle department inside medical practices, with billing teams that verify OON benefits and plan-type coverage before every encounter, submit OON claims at appropriate charge levels, review underpayments against UCR and FAIR Health benchmarks, and push eligible NSA claims into IDR when payer payments fall below fair market rates.

• Claims submitted within 24-48 hours with full charge capture
• Performance-based pricing (4-7% of collections) with no lock-in
• Underpayments reviewed against market benchmarks before acceptance
• Dedicated account managers with direct access (Monday-Friday, 9-5 EST)
• IDR filings managed for eligible NSA disputes (75-85% success rate)
• Eligibility and OON benefits verified before every appointment

If OON reimbursement disputes and underpayments are affecting your collections, contact MedHeave to see how structured OON billing closes those gaps.

Frequently asked questions

Here are some commonly asked questions on this topic: 

Behavioral health deserves specific mention — psychiatrists and behavioral health providers remain among the most likely to practice out-of-network across all specialties. 

A New England Journal of Medicine study found psychiatrists have significantly higher OON rates than other physician specialties, driven by lower insurer reimbursement, administrative burden, and network participation challenges. 

Practices in behavioral health that bill OON should build superbill workflows and patient education into their standard intake process.

OON billing requires a different revenue cycle approach than in-network

Out-of-network billing combines variable reimbursement rates, plan-type coverage restrictions, federal compliance requirements, and patient financial responsibility in ways that standard in-network billing workflows don’t address. 

A practice that treats OON claims like in-network claims — submitting at contracted rates, skipping eligibility verification for OON benefits, ignoring balance billing restrictions, or accepting initial payments without dispute review — leaves significant revenue unrecovered.

MedHeave operates as an embedded revenue cycle department inside medical practices, with billing teams that verify OON benefits and plan-type coverage before every encounter, submit OON claims at appropriate charge levels, review underpayments against UCR and FAIR Health benchmarks, and push eligible NSA claims into IDR when payer payments fall below fair market rates.

• Claims submitted within 24-48 hours with full charge capture
• Performance-based pricing (4-7% of collections) with no lock-in
• Underpayments reviewed against market benchmarks before acceptance
• Dedicated account managers with direct access (Monday-Friday, 9-5 EST)
• IDR filings managed for eligible NSA disputes (75-85% success rate)
• Eligibility and OON benefits verified before every appointment

If OON reimbursement disputes and underpayments are affecting your collections, contact MedHeave to see how structured OON billing closes those gaps.

Frequently asked questions

Here are some commonly asked questions on this topic: