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This article is based on an extended and updated version of a PPS Taskforce Project that both authors participated in 2019-2021. It explicitly addresses new regulations related to balance billing, the No Surprises Act, and Good Faith Estimates. It is intended to provide general information and education about commercial insurance coverage for outpatient therapy services billing out-of-network (OON). The information provided is not intended to address the requirements or guidance for any specific commercial insurance plan or any applicable state laws. It does not constitute legal advice or legal representation.  For legal advice, members should consult an attorney in their state.

Frequently used terms are defined below:

“assignment of benefits” refers to when an Out-of-Network (OON) provider has agreed (with the patient) to submit the claim for payment directly to the commercial insurance plan on the patient’s behalf.  If the plan accepts the assignment of benefits, the plan will, in most cases, send the payment for the services directly to the OON provider (instead of the patient).

“balance billing” refers to when an OON provider bills the patient for the remainder of what the patient’s insurance does not pay to the OON provider.

“commercial plans” refers to group health plans or group or individual health insurance coverage. However, this article does not include programs like Medicare, Medicare Advantage, Medicaid, Indian Health Service, Veterans Affairs Health Care, or TRICARE. The Private Practice Section has a very comprehensive publication on Medicare Advantage Billing Rules, which addresses the numerous variances to consider when billing a Medicare Advantage Plan as an out-of-network provider.

“good faith estimate” refers to a notification that is required to be provided by healthcare providers to uninsured (or self-pay) patients regarding the individual’s expected charges for scheduled or requested items or services.

“surprise billing” refers to when the patient unknowingly receives services from an OON provider and receives an unexpected medical bill for such services.

Can an OON outpatient therapy provider ‘balance bill’ patients enrolled in a commercial plan?

Prior to the passage of the No Surprises Act, most federal references about surprise billing in healthcare focused on emergency care and procedures delivered in the emergency department or other hospital settings. However, from a federal law perspective, surprise billing may also occur when a patient receives certain non-emergency services from an OON provider at an in-network hospital (including a hospital outpatient department) or ambulatory surgical center without signing a notice and consent form, when applicable.

Effective as of January 1, 2022, the No Surprises Act established several new requirements for insurers and providers, which included, among others, prohibitions on balance billing under certain circumstances and an obligation to provide uninsured or self-pay patients with “good-faith estimates” of charges upon scheduling care or upon request, as well as the establishment of a patient-provider dispute resolution process to allow uninsured or self-pay patients to contest charges. For instance, OON providers of non-emergency services (including outpatient therapy providers) at an in-network hospital or ambulatory surgical center are prohibited from balance billing a patient insured under a commercial plan unless the patient notice and consent requirements are met. In addition, the No Surprises Act clarified that an OON provider may not bill or hold the patient liable for a payment amount greater than the in-networking cost-sharing requirement for such services absent appropriate notice and consent.

In addition, over half of the states have adopted laws providing balance billing protections for patients to restrict or regulate some level of balance billing.  As consumer concerns about rising costs and price transparency in the healthcare industry continue to increase, providers must regularly check their state laws to stay abreast of any limitations or prohibitions related to balance billing that may apply to particular circumstances.

Can an OON provider have various levels of discounted fees for services which is applicable only to OON patients?

We would recommend against this. Any discounts on services themselves should be consistent and based on a current charge master, and charging differing prices for the same services based solely on payer source can create potential issues for many reasons. In addition, the No Surprises Act requires that providers give uninsured and self-pay patients a good faith estimate of the expected charges for services in advance of scheduling or upon patient request.

Can an OON provider “forgive” the OON patients co-share and still file the Insurance claim? If so, does the provider need to disclose the waiver of payment?

 No, an OON provider should not “forgive” the OON patient’s co-pay, deductible, or other cost-sharing obligation and proceed to file the insurance claim as if the patient had paid the amount forgiven.

If a discount or waiver of payment is provided for any reason, such as financial need, the provider should disclose any modification of payment when submitting the insurance claim, regardless of whether the parties agree that the claim should be billed by the provider or given to the patient to submit directly to the commercial plan. All documentation submitted to the commercial plan must accurately reflect the amount billed by the OON provider and the payment received from the patient for services. The

insurance claim should always reflect the exact amount the patient has paid the OON provider for services and any cost-sharing obligation.

Is an OON provider required to file a claim for OON patient services?

No, if the provider is OON, the patient is the only one with an agreement with the commercial plan. Unless the OON provider and the patient have agreed to an assignment of benefits to the OON provider (and the commercial plan has accepted the assignment), the OON provider has no obligation to submit the claim for payment to the commercial plan on behalf of the patient. Note that when a provider chooses to be in-network, the provider and the health plan typically agree to allow the assignment of benefits for the health plan’s patients. The health plan will pay the in-network provider directly based on agreed-upon rates for the provider’s services. When a provider is OON, patients may attempt to assign their benefits to the OON provider, but health plans may exercise the right to decline to accept the assignment of benefits and choose to pay the patient for the services directly.

 Can a commercial plan refuse to verify a patient’s benefits or restrict the release of plan information to an OON provider? 

In-network providers have a contractual relationship with the health plan, allowing them to obtain health plan information on their patients. OON providers have no contractual right to obtain a patient’s health plan information. If an OON provider has trouble getting the commercial plan to verify coverage, the patient’s submission of a completed Assignment of Benefits form may allow the OON provider to obtain the coverage information. However, if the plan accepts the Assignment of Benefits, the OON provider may be obligated to submit the claim to the plan directly. Ultimately, the patient is responsible for ensuring that the commercial plan will cover the services, so consider having the patient contact the commercial plan directly to obtain the information needed. If the patient pays the provider directly and submits claims to the commercial plan for reimbursement, the OON provider is not obligated to verify the patient’s benefits.

Does an OON provider have to comply with the commercial plan’s coverage policies, including specific documentation requirements that are out of the norm?

An OON provider has no contractual obligation to follow specific payer policies. That said, most commercial payers have required documentation policies as a condition of payment, and the plan may apply those policies when adjudicating the patient’s claims. Regardless of whether a provider is in or out of the network or accepts or does not accept an assignment of benefits, it is in the patient’s best interest for the provider’s documentation to meet professional standards and support the medical necessity of the claim at a minimum.

If the commercial plan requests documentation from the patient on an out-of-network claim, it is more than likely that the patient will request the documentation from the provider. If the commercial plan auditor determines the documentation is insufficient, the claim will be denied, but the patient should have a right to appeal. Upon appeal, the patient may be able to request clarification about what documentation is needed to “perfect the claim,” and the commercial plan is typically obligated to provide such information. The OON provider may be able to include an addendum to the original documentation submission to support payment to fortify the patient’s appeal.

Regarding coding, we recommend that outpatient therapy providers use CPT codes and apply the AMA’s CPT coding definitions and policies when choosing the codes to bill for the services for consistency, regardless of the provider’s in-network or OON status. If an OON provider’s billing statement does not use CPT codes to identify the services provided, most commercial plans will be unable to identify the specific services rendered to the patient and are, therefore, more likely to deny the claim for payment.

If the commercial plan has additional coding or documentation policies (i.e., it applies Medicare’s bundling rules or other unique policies outside the scope of AMA’s policies) as a condition of payment, those conditions should be identified in the commercial plan’s documents. If a claim is denied based on additional coding or documentation requirements not specified in payment or coverage policies, the patient should appeal the denial if the provider’s documentation meets standard medical necessity standards.

Can a commercial plan deny authorization for services to an OON provider? 

Commercial plans must authorize services in accordance with their published coverage benefits, which may or may not include coverage for OON benefits. Therefore, if the commercial plan does not offer OON  benefits, the plan may deny authorization for services by an OON provider. However, if the commercial plan provides for OON benefits, it is improper for the plan to refuse to authorize medically necessary, covered benefits by an OON provider merely because the provider is OON. A provider can review the patient’s Summary Plan Description of their benefits (if the commercial plan is sponsored by the employer) or the patient’s Certificate of Insurance to review the patient’s coverage benefits.

Can an OON provider appeal claim denials?
Yes, but OON providers are not obligated to appeal — absent an agreement between the patient and the provider to such an arrangement. While OON providers are not obligated to appeal a denial of claims on behalf of the patient, the provider may exercise the option to appeal as the patient’s Authorized Representative. When the provider appeals as the designated Authorized Representative, the provider steps into the patient’s shoes and has all the legal rights that the patient has for a full and fair review.

The patient has to designate an Authorized Representative in writing. Most commercial plans have their own form for the patient to fill out and sign to appoint an Authorized Representative. Providers who accept such a designation should include this form with their request for an appeal.

If an OON provider files a claim for his patient and indicates that he has an assignment of benefits on file, will he get paid directly from the commercial plan?

Most commercial plans retain the right to accept or reject a patient’s request to assign benefits to an OON  provider. When the provider is in-network, the commercial plan honors the assignment, typically based on the terms and conditions outlined in the provider agreement. But when the provider is OON, the health plan may reject or not honor the assignment and send the payment for services directly to the patient. It would be prudent for OON providers to require patients to sign-over payments from their commercial plan for services rendered or enforce a prompt payment policy within a specified period if timely payment is not received.

If an OON provider files a claim for the patient, does that constitute an agreement to accept the commercial plan’s contractual rate?

No, filing a claim does not constitute an agreement to accept the contractual rate of the commercial plan. However, many commercial plans refuse to accept the assignment of benefits submitted by OON providers. They include anti-assignment clauses in their policies to prohibit payment from being made directly to the OON provider. Providers should obtain a payment agreement with the patient in case the commercial plan does not honor the assignment of benefits.

How are OON providers able to collect more from the commercial plan than in-network providers?
In-Network providers have a contractual relationship with the commercial plan. They must accept the amount reimbursed under the contract as total payment for services (subject to any co-pay, deductibles, or other cost-sharing to be collected from the patient). Commercial plan contracts also typically prohibit in-network providers from balance billing the plan’s patients.

Because OON providers have no contractual relationship with the commercial plan, OON providers have more leeway in determining the amount to charge for services, which are typically based on “usual, customary, and reasonable” (UCR) charges to the extent that a patient’s plan covers OON services. UCR charges can be more or less than those paid for the same services by in-network providers. However, OON providers have the additional option to balance bill patients for the remaining UCR charges to the extent allowed under state and federal law.

While OON providers typically obtain more reimbursement than in-network providers for the same services for these reasons, OON providers also have to accept certain risks by not having a contractual relationship with the commercial plan. For instance, because OON providers have no contract with the payer, the plan may issue payments for services directly to the patient, leaving the OON provider to seek all payments directly from the patient. Payment processing times for OON providers may also be delayed compared to the processing time for in-network provider claims.

An essential factor to consider at the outset is that most health plan payers incentivize patients to choose in-network providers by setting higher premiums and higher cost-sharing obligations for plans offering OON benefits and other financial disincentives, to encourage patients to use in-network providers.

Prepared by Mary R. Daulong, PT, CHC, CHP, and Lanchi N. Bombalier, Esq.