A patient calls the office. They had surgery six weeks ago at a hospital that was in their network. They paid their copay. They thought they were done. Now there is a $3,800 bill sitting on their kitchen table from the anesthesiologist. They had no idea the anesthesiologist was out of network. Nobody told them. And they want to know why they owe nearly four thousand dollars for something they never agreed to.
That phone call happens in billing offices across the country every single day. And depending on when the service happened and what type of insurance was involved, that bill might be perfectly legal or it might be a federal violation. Balance billing is one of those topics where the rules changed dramatically in the last few years, and a lot of practices are still operating under assumptions that no longer hold up.
This guide is for providers. It covers what balance billing actually is, where the law draws the line today, what the No Surprises Act actually changed for practices, how state laws stack on top of all that, and what a billing department needs to do operationally to stay clean while protecting revenue.
Let’s Start With the Basics: What Balance Billing Actually Is
Balance billing is when a provider charges a patient the difference between what the provider billed and what the insurance company paid, beyond any normal cost-sharing the patient owes under their plan.
Walk through a real example. A surgeon charges $8,000. The patient’s insurer, based on their out-of-network benefit, pays $3,200. The patient owes a $500 deductible under their plan. In a balance billing situation, the surgeon then sends the patient a separate bill for the remaining $4,300. That gap between what insurance paid and what the provider charged is the balance. And billing the patient for it is balance billing.
For a long time this was standard practice for out-of-network providers. The provider had no contract with the insurer, so they were not bound by any contracted rate. They charged what they charged. The insurer paid what it paid. The patient got stuck with whatever was left. Most patients had no idea this was coming when they scheduled the appointment. They had no way to know their surgeon was in network but their anesthesiologist was not. They did not get to choose which radiologist read their scan or which hospitalist walked into their room.
That dynamic is what drove the federal legislation that changed this entire conversation.
Balance Billing vs. Normal Patient Cost-Sharing: Not the Same Thing
Before getting into what the law prohibits, it is worth being precise about what it does not prohibit. Because this is a point where both patients and providers sometimes get confused, and the confusion causes real problems in both directions.
Cost-sharing is what a patient owes under their own insurance plan. Their deductible. Their copay. Their coinsurance percentage. These are amounts the patient agreed to when they enrolled in the plan. They represent the patient’s contracted share of covered services. Collecting cost-sharing is not balance billing. It is appropriate, expected, and in most provider agreements it is required.
Balance billing is collecting amounts above and beyond what the patient’s plan says they owe. Billing the gap between billed charges and the allowed amount, on top of legitimate cost-sharing. That is the piece that has been increasingly restricted.
The reason this distinction matters so much is that some providers misread the No Surprises Act as preventing them from billing patients at all. That is not correct. Copays are still collected at check-in. Deductibles are still billed after insurance pays. Coinsurance is still the patient’s responsibility. What changed is the ability to tack on an additional bill for the insurer-provider payment gap and hand it to a patient who never had a say in the matter.
Where Balance Billing Was Already Off the Table Before 2022
Medicare Participating Providers
Any physician who has signed a Medicare Participation Agreement already agreed not to balance bill Medicare patients on covered services. That has been the rule for decades. The participating provider accepts Medicare’s approved amount as full payment for covered services. Medicare pays its 80 percent. The patient owes their 20 percent coinsurance or their applicable deductible. That is the complete transaction. Sending a Medicare patient an additional bill for the gap above the Medicare-allowed amount is a federal violation, not just a contract issue.
Non-participating Medicare providers have slightly different rules. They can charge up to 115 percent of the Medicare non-participating fee schedule rate. That is the limiting charge. Anything above that ceiling cannot be collected from the patient under any circumstance. And even non-par providers have to decide whether to accept assignment on each claim, which affects whether they collect directly from the patient or Medicare pays them directly.
The point is that Medicare balance billing restrictions are not new. Providers who have been in the Medicare program for any length of time should already have these rules built into their billing practices.
Medicaid Enrolled Providers
Medicaid is even more restrictive. Enrolled Medicaid providers accept the state fee schedule as payment in full. Period. No balance billing of Medicaid members for covered services under any circumstances. The rates Medicaid pays are often genuinely painful, and plenty of providers limit their Medicaid participation precisely because of that. But for those who do participate, the tradeoff is access to that patient population in exchange for accepting the fee schedule as the final word on payment. There is no mechanism to collect more from the patient.
In-Network Commercial Contracts
When a provider signs a network contract with a commercial insurer, the contract sets a fee schedule. The provider agrees to accept the contracted rate as payment in full. Billing the patient for the difference between billed charges and the contracted rate is a violation of the provider agreement, not just a legal issue. Most commercial contracts have explicit language on this, though it can be buried deep in the provisions about member billing rights or covered person financial responsibility.
Every provider in an insurance network should know what their contracts say about patient billing. Not a vague understanding. Specific knowledge of the relevant language. Because the balance billing prohibition in most commercial contracts is a contract termination ground if violated repeatedly or egregiously.
The No Surprises Act: The Biggest Shift in Balance Billing Law in US History
The No Surprises Act took effect January 1, 2022. It was passed as part of the Consolidated Appropriations Act of 2021 and represented the first federal law to directly restrict surprise billing across most of the commercial insurance market. Before this law, balance billing protections existed only in a handful of states and were entirely absent in the federally regulated ERISA self-funded plan market. This law closed most of those gaps.
Who It Covers and Who It Does Not
The No Surprises Act applies to most group health plans and individual market health insurance plans. That includes self-funded employer plans, which was a significant expansion because state balance billing laws generally cannot reach those plans due to ERISA preemption. It does not apply to Medicare, Medicaid, or TRICARE, which have their own separate balance billing rules already in place.
Ground ambulance services were explicitly carved out. That was a deliberate decision by Congress because the ground ambulance market is so complex, with municipal, fire department, hospital-based, and private commercial providers all operating under different cost structures and contracting realities, that a one-size-fits-all rule was seen as impractical. That carve-out is still being worked through at the federal level, and state laws remain the primary framework for ground ambulance billing right now.
Emergency Services: No Balance Billing, Full Stop
For emergency services, the rule is clean. An out-of-network provider who treats a patient in an emergency setting cannot bill that patient more than the in-network cost-sharing amount under the patient’s plan. It does not matter if the hospital itself is out of network. It does not matter if the emergency physician group has no contract with any insurer. The patient pays what they would have paid if every provider involved were in-network. The provider and payer work out the rest through the payment dispute process.
This was the scenario that drew the most public outrage before the law passed. A person has a heart attack. An ambulance takes them to the nearest ER. They have no ability to check whether the cardiologist on call is in their network. They wake up after surgery with a $45,000 bill from a physician group they never chose. That specific scenario is now prohibited.
Non-Emergency Services at In-Network Facilities
This provision catches a huge volume of what were previously surprise bills. The scenario is common. A patient schedules an elective procedure at an in-network hospital. Their surgeon is in-network. But the anesthesiologist covering that operating room that day has no contract with the patient’s insurer. Under the old system, the patient got a balance bill from the anesthesiologist weeks later and had no recourse.
Under the No Surprises Act, the out-of-network anesthesiologist can only collect the patient’s in-network cost-sharing amount from the patient. Same rule applies to the radiologist reading the post-op imaging, the pathologist analyzing the surgical specimen, the assistant surgeon, the neonatologist at an in-network delivery hospital, any provider who renders care at an in-network facility without their own network contract. The payment gap between the provider’s bill and the insurer’s payment gets resolved between the provider and payer directly, not on the patient’s kitchen table.
The Good Faith Estimate Requirement
The law also created a new obligation that catches many practices off guard. Before any scheduled service, providers must give uninsured patients and self-pay patients a Good Faith Estimate of expected costs. This estimate has to be delivered in writing at least three business days before a scheduled appointment. It needs to be itemized and cover the primary service plus any co-providers expected to be involved.
If the final bill ends up more than $400 higher than the Good Faith Estimate, the patient can dispute it through the Patient-Provider Dispute Resolution process. The provider then has to justify why the actual charges exceeded the estimate. Practices that routinely under-estimate or skip the GFE process entirely face civil monetary penalties from CMS of up to $10,000 per violation.
That is per violation, not per patient. For a practice that handles 300 self-pay patients a month and has never built a GFE workflow, the exposure is significant. CMS increased audit activity around GFE compliance starting in 2023, particularly for elective procedure providers.
The Independent Dispute Resolution Process
The No Surprises Act did not just take revenue away from out-of-network providers and hand it to payers. It created a mechanism for providers to dispute payer payments directly. When an out-of-network provider disagrees with what an insurer paid under the surprise billing framework, either party can initiate the federal Independent Dispute Resolution process, called IDR.
A certified IDR arbitrator reviews submissions from both sides and selects one party’s offer. The arbitrator is supposed to lean toward the qualifying payment amount, which is roughly the median in-network rate for that service in that geographic market. In practice, providers have done well. Federal reports published in late 2023 showed that arbitrators sided with the provider’s offer in roughly 70 to 77 percent of decided cases, awarding payments above what the payer had initially offered.
The IDR process costs $350 per dispute, though multiple disputes can be batched together to bring the per-claim cost down. For high-dollar out-of-network claims, particularly in emergency medicine and hospital-based specialties, the IDR process has become a real revenue recovery tool. Practices that simply accept whatever a payer pays on out-of-network claims without ever disputing them are leaving money behind.
State Balance Billing Laws: The Layer on Top of Federal Rules
Federal law sets the floor. States can go further, and many do. As of 2024, more than 30 states have enacted their own balance billing protections. Some cover situations the No Surprises Act does not. Some have stricter rules than what federal law requires in the scenarios they both cover. Understanding which framework applies to any given patient and service requires knowing both layers.
States That Went Further Than Federal Law
California, New York, Texas, and Illinois all passed their own balance billing laws before the No Surprises Act took effect. New York’s Health Care Reform Act and California’s Assembly Bill 72 are two of the most cited examples. Some state laws extend protections to non-emergency services at out-of-network facilities in certain circumstances, which federal law does not address in the same way. Several states cover ground ambulance services with their own surprise billing protections, filling the gap that federal law left open.
The interaction between state and federal law follows a basic principle: whichever rule gives the patient more protection applies. So if a state law is more restrictive on balance billing than the federal standard for a particular scenario, the state rule governs. Providers operating in states with strong balance billing laws need to know the specifics of those state requirements, not just the federal baseline.
The ERISA Problem and Why Federal Law Had to Step In
ERISA, the federal law governing employer-sponsored benefit plans, preempts state insurance laws for self-funded plans. Most large employer group health plans are self-funded. That means state balance billing laws, no matter how strong, simply could not reach the majority of commercially insured Americans whose coverage came through large employers.
That is exactly why the No Surprises Act was written to apply specifically to group health plans and self-funded arrangements. State laws covered what they could. Federal law covered the rest. Together they close most of the loop, though providers still need to understand which regulatory framework applies to each patient’s specific plan type.
What Providers Can Still Legitimately Collect From Patients
After all of this, a straightforward question remains: what can a practice actually bill a patient for?
Cost-sharing is always collectable. Deductibles, copays, and coinsurance as the patient’s plan defines them are the patient’s financial responsibility. Collecting those amounts is appropriate and expected. Nothing in the No Surprises Act or state balance billing laws changes this.
Services that are not covered by the patient’s insurance are also billable, but with a critical condition. The patient has to be informed before the service that it is not covered, given a reasonable estimate of what they will owe, and they have to agree in writing to be financially responsible for it. A generic financial consent form at registration is not enough. The notice has to be specific to the service, confirm the patient understands their insurer will not pay, and include a realistic estimate of the cost. That is the advance notice and consent standard, and it matters enormously for what happens if a dispute arises later.
For non-emergency services at out-of-network facilities, out-of-network billing to patients is still permissible under the No Surprises Act, but again only with proper written consent. The patient must receive specific notice at least 72 hours before the scheduled service. The notice must explain in plain language that the provider is out of network, what the patient is expected to pay out of pocket, and that they have the right to seek in-network care instead. The patient signs voluntarily. And certain services, emergency care and the situations already covered by the surprise billing protections, cannot use this consent pathway at all. The patient cannot waive those protections.
Building a Compliance Framework That Actually Holds Up
Knowing the rules is step one. Having operational processes that consistently follow them is what actually keeps a practice out of trouble. A compliance policy sitting in a binder nobody reads is not a compliance program. What follows is what a functional approach looks like across the areas that matter most.
Know What Every Payer Contract Actually Says
Every commercial payer contract has language about patient billing and balance billing. Most practices signed these contracts without reading that section carefully, and have never gone back to review it. That needs to change. The balance billing provisions in your contracts define what you can and cannot collect from covered patients, and violating them is a contract termination ground with major commercial payers.
Pull the contracts. Find the member billing sections. If the language is unclear, contact your payer relations representative and get a written clarification. Document what you learn. And review the contracts again every time they come up for renewal, because payers sometimes slip in additional billing restrictions during routine renewals.
Build Good Faith Estimate Delivery Into Every Self-Pay Intake
The GFE requirement for self-pay and uninsured patients is not going away. CMS enforces it, audits for it, and penalizes violations at $10,000 each. The only way to be consistently compliant is to make GFE delivery automatic, not something staff remember to do when they have time.
When a patient self-identifies as uninsured or self-pay at scheduling, a GFE preparation step should trigger automatically in the workflow. The estimate gets prepared, reviewed for accuracy, and delivered to the patient in writing before the three-business-day deadline. A copy goes in the chart. The delivery date and method get documented. That is the process. It is not complex. It just has to happen every time.
Train the Front Desk on What They Can and Cannot Say
Patient financial conversations mostly happen at the front desk, not with the billing manager. Receptionists and check-in staff are the ones telling patients what they owe. They need to know the difference between collecting a copay and collecting a balance that is not permitted under the patient’s plan.
Training should cover the basics: what cost-sharing is and how to collect it correctly, what balance billing looks like and why it is prohibited in certain situations, what to say when a patient asks about out-of-network billing, and when to escalate a patient financial question to the billing team rather than guessing at an answer. Front desk staff who give patients inaccurate information about their financial obligations create complaint and compliance risk that is entirely preventable.
Use the IDR Process as a Revenue Tool, Not an Afterthought
Out-of-network providers whose revenue took a hit from the No Surprises Act have a mechanism available to them. The IDR process exists specifically to resolve payment disputes between providers and payers without putting patients in the middle. For practices with significant out-of-network revenue, ignoring IDR is leaving money behind.
Assign someone in the billing team to track every out-of-network payment, compare it against the qualifying payment amount or your market-rate expectation, and flag disputes worth filing. Batch smaller disputes to bring the per-claim cost of IDR down. File within the 30-business-day window after the payment period ends. Keep records of every dispute filed and every outcome. That data tells you which payers are consistently underpaying and gives you leverage in future contracting conversations.
- Review every payer contract annually specifically for patient billing and balance billing provisions.
- Make Good Faith Estimate delivery a triggered step in self-pay scheduling, not a manual task.
- Train front desk staff on cost-sharing collection versus prohibited balance billing.
- Document every out-of-network patient consent with the required 72-hour advance notice and voluntary signature.
- Track IDR-eligible disputes and file within the allowed window. Do not accept low payer payments passively.
- Run a quarterly audit of patient accounts to catch any impermissible balance billing before a complaint or CMS audit does it for you.
The Bigger Revenue Picture for Out-of-Network Providers
The financial reality for providers who built their practice model around out-of-network billing has genuinely changed. In emergency medicine and hospital-based specialties especially, the leverage that out-of-network status used to provide is gone for the scenarios the No Surprises Act covers. The question now is what to do about it.
Some specialty groups have moved toward in-network contracting with major commercial payers in their markets. The tradeoff is accepting contracted rates that are lower than what IDR might award but getting predictable payment volume, faster adjudication, and the end of the administrative friction that comes with managing out-of-network claims at scale. For groups that were collecting 140 or 160 percent of Medicare out-of-network and now have to fight through IDR to get there, the math on in-network contracting looks different than it did five years ago.
Others have leaned into the IDR process aggressively, treating it as the revenue recovery mechanism it was designed to be. When arbitrators are siding with providers at a 70 to 77 percent rate and awarding payments above initial payer offers, providers who use IDR consistently do better than those who simply accept whatever shows up on the remittance.
There is no single right answer for every practice. The right strategy depends on the specialty, the local market, the payer mix, and how the practice is structured. But doing nothing, continuing to operate as if the rules from 2019 still apply, is the one approach that clearly does not work anymore.
Balance billing has been one of the most contentious financial issues in US healthcare for a long time. The legal framework around it shifted fundamentally with the No Surprises Act and the various state laws that either preceded it or built on top of it. Practices that understand exactly where the law draws the line today, what can still be collected from patients, and how the IDR process works as a revenue tool, are the ones that come out of this environment financially intact. The rules are complex but they are knowable. And knowing them is the difference between a compliant, functional billing operation and one that is one patient complaint away from a CMS investigation.