In the billing world, commercial payers have a lot of power. They set their own billing rules and guidelines; they choose how much they’ll pay providers; and they are under no obligation to unify their billing processes with other payers. When it comes to in-network billing, sometimes the game feels a little rigged. So, what happens when rehab therapists decide they don’t want to play ball? What options do they have? Well, it turns out they have a few. Enter the world of out-of-network billing.
What is out-of-networking billing?
Before we talk about out-of-network billing, let’s back up and touch on what it means to be in-network. When you are in-network with an insurance company, that means you’ve been vetted and credentialed by—and signed a contract with—that particular payer. If a patient covered by the payer seeks care from you, then you’re bound by the stipulations of your contract; you must adhere to the payer’s treatment guidelines and accept its payment rates. In return, covered patients pay less for their care.
If you’re out-of-network with a payer, you’re not contracted with it—and you may not be credentialed, either. That means you’re not bound by any of the payer’s rules, and you can choose to:
- bill the patient directly (i.e., collect cash); or
- bill the payer on a patient’s behalf for what you consider fair payment.
While you can set your out-of-network prices as you see fit, payers tend to foot less of the bill for out-of-network care, often saddling patients with large service charges. (Depending on the patient’s coverage—HMO versus EPO, for example—the carrier may even decline to pay altogether.) So, while you can avoid rock-bottom contract rates as an out-of-network provider, your higher prices may scare away patients.
How do I bill out-of-network?
Before billing out-of-network, you must first decide (either on a case-by-case or clinic-wide basis), whether you want to accept or decline assignment. I hear you—you’re asking, “What the heck does it mean to accept assignment?” Well, it usually means that you’re playing ball with payers—even though you’re not an in-network provider. When you accept assignment, you’re indicating that:
- the patient’s case belongs to you and you should receive payments from the patient’s payer, and
- you “[accept] the payer's rate for the services rendered, even if it is lower than your CPT Fee Schedule.”
On the other hand, if you decline assignment, the payer will not pay you. You may still end up billing the payer on the patient’s behalf—but you will collect all of your payments directly from the patient.
If you choose to accept assignment, then you’ll fill out a claim form to send to the payer on the patient’s behalf indicating as such. (If you’re manually filling out a CMS-1500, mark “YES” in box 27). Then, you can either:
- collect a fee from the patient at the time of service and wait for the payer to cover the rest of your bill, or
- bill the payer first and then send a statement to the patient for the remaining balance.
Both methods have their pros and cons. On the one hand, if you collect a fee from patients at the time of service, you may run the risk of overcharging them. And when patients make overpayments, you must pay them back—a very costly error. On the other hand, if a payer first reimburses you—and then you send the patient a statement for their remaining balance—then you’re doing something called balance billing. Some states have legally restricted balance billing, so be sure to brush up on your state laws before using this method.
If you choose to decline assignment, you have two avenues for monetary recompense. First, you can bill the insurance company on behalf of the patient. But this time, you would indicate on the claim that you’re not accepting assignment. If you choose to do this, then collect your full fee from the patient at the time of service. If the carrier does pay part of the bill, then it’ll send that payment directly to the patient.
Alternatively, you can create a superbill for the patient and collect your full fee upfront. The patient is then responsible for seeking reimbursement from the payer.
As a note, please remember that all commercial payers have their own unique rules. Some payers, for instance, will mail payments directly to the patient if you are out-of-network—whether or not you accepted assignment. When you check your patients’ benefits, be sure to verify these rules with the payer.
How do I prepare patients for out-of-network billing?
Out-of-network visits are, as a rule, almost always more expensive for patients than in-network visits. That doesn’t necessarily mean that patients won’t be willing to spend more money—but you should prepare them for that possibility. The fewer surprises for the patient, the better.
Embrace communication best practices. You want to ensure that the patient is fully informed and prepared to see an out-of-network bill. Before you schedule the patient, confirm that the patient knows you’re out-of-network. There’s always a small chance that patients think you’re contracted with their insurer, and this will help you (and those patients) sidestep an uncomfortable situation. Additionally, if you can, verify each patient’s benefits before that patient’s first appointment, and communicate that status—along with the cash price of your services—so the patient has a rough idea of what the visit will cost. Keep in mind that not all payers offer out-of-network benefits; if that’s the case for your patients, they’ll want to know!
It’s also best practice to avoid telling patients that you’ll waive fees or offering them forgiveness on their bills. This sets a poor financial precedent for your practice—and it could land you in some legal hot water, to boot.
Finally, clearly communicate the billing process you intend to follow with the patient. Patients need to know if they’re responsible for billing their insurance company—or if they simply need to watch for a bill. And for those who will receive a bill, let them know who it’s coming from.
Are out-of-network rates better than in-network rates?
When billing payers out-of-network, providers can sometimes get more money out of them than they would under contract. Usually, a payer will reimburse an uncontracted provider with “the usual, customary, and reasonable amount” (UCR) for the provided service in that locality. But, the UCR is not ironclad; an uncontracted provider can negotiate with payers by showing them data that proves the UCR is too low.
Does any of this apply to Medicare?
When it comes to out-of-network billing, our federal healthcare program has its own unique set of rules—especially for rehab therapists. PTs, OTs, and SLPs cannot fully opt out of Medicare like they can with commercial payers, and while they do not have to accept assignment from this federal payer, they are still contractually bound to follow its rules (e.g., charging within limit). (Learn more here!)
The billing game might feel a little rigged, but therapists can still learn to come out on top. Out-of-network billing can totally change the game—especially for therapists who need to combat declining reimbursements.
Have questions about out-of-network billing? Feel free to drop them below.