Balance billing occurs when a healthcare provider charges a patient the difference between the provider’s billed amount and what the patient’s health insurance plan pays. According to the Centers for Medicare & Medicaid Services (CMS), this practice is now restricted under federal law in several care settings. For healthcare providers, understanding where balance billing is permitted, where it is prohibited, and what compliance requires is no longer optional. It directly affects your revenue, your legal standing, and your patients’ trust.
What Is Balance Billing and Why Does It Matter for Providers?
Balance billing is the practice of billing a patient for the remaining cost after their insurer’s payment, beyond the patient’s standard cost-sharing obligations. As defined by CMS, it happens when an out-of-network provider bills a patient for the gap between the provider’s full charge and the amount the health plan covers.
For providers, this matters for 3 core reasons: regulatory compliance, revenue integrity, and patient relations. Violating balance billing rules under the No Surprises Act exposes your practice to federal enforcement action, patient complaints, and disputes through the Independent Dispute Resolution process.
According to CMS, 1 in every 6 emergency room visits and inpatient hospital stays involves care from at least 1 out-of-network provider, which means balance billing disputes are far more common than most practices anticipate.
Balance Billing vs. Surprise Billing
Surprise billing is a specific type of balance billing that occurs when a patient unknowingly receives care from an out-of-network provider. According to CMS, this typically happens during emergencies or during a visit to an in-network facility where an out-of-network provider such as an anesthesiologist, radiologist, or pathologist delivers care without the patient’s knowledge.
Balance billing, by contrast, is the broader term. It refers to any situation where a provider bills a patient beyond their in-network cost-sharing amount. Surprise billing is the unexpected version. Both are now regulated under the No Surprises Act, effective January 1, 2022.
Where Balance Billing Still Applies and Where It Does Not
Balance billing is prohibited for emergency services, certain non-emergency services at in-network facilities, and air ambulance services from out-of-network providers. According to CMS, the No Surprises Act bans balance billing in the following 3 settings:
- Emergency services are provided at any facility, regardless of network status
- Non-emergency services provided by out-of-network providers at in-network facilities, such as ancillary services from radiologists, anesthesiologists, and pathologists, when the patient has not provided written consent to waive protections
- Air ambulance services from out-of-network providers
Note that ground ambulance services are not covered under the No Surprises Act’s balance billing prohibitions, as confirmed by CMS. In these cases, out-of-network providers retain the ability to bill patients for the full balance.
Balance billing is still permitted when the care takes place at an out-of-network facility, when the patient is enrolled in programs like Medicare, Medicaid, TRICARE, or Veterans Affairs Health Care, which have their own separate protections, or when the patient provides written informed consent to waive protections in applicable scenarios.
The No Surprises Act for Providers
The No Surprises Act, enacted as part of the Consolidated Appropriations Act of 2021, establishes federal protections against surprise medical bills and sets binding compliance requirements for healthcare providers and facilities. Most provisions took effect January 1, 2022, and are enforced primarily by CMS.
For providers, compliance is not passive. It requires active systems, proper documentation, and trained staff.
3 Key Provider Obligations Under the No Surprises Act
Providers have 3 primary obligations under the No Surprises Act: disclosure, good faith estimates, and notice-and-consent documentation.
- Patient Disclosure: According to CMS, providers and facilities must make a one-page notice publicly available, posted on their website, displayed in the office, and provided to patients, that explains their protections against balance billing. CMS has published a model disclosure notice that providers can use. Patients are not required to sign an acknowledgment of receipt.
- Good Faith Estimates: Providers must issue a Good Faith Estimate to uninsured or self-pay patients when a service is scheduled at least 3 business days in advance, or when a patient requests one. According to CMS, the Good Faith Estimate must include an itemized list of all items and services reasonably expected to be furnished during that period of care, including facility fees, procedures, labs, and supplies. Good Faith Estimates must be retained in the patient’s medical record. Note that they are not required for emergency or unscheduled walk-in services.
- Notice-and-Consent for Applicable Scenarios: In limited non-emergency situations where balance billing is permitted, providers must use CMS’s standard notice-and-consent forms to obtain written patient consent. According to CMS, signed consent documents, whether physical or digital, must be retained for at least 7 years. Providers cannot use a physician group name in place of an individual provider’s name on these forms.
What Is the Independent Dispute Resolution Process?
The Independent Dispute Resolution process is a federal arbitration mechanism that allows providers and health plans to resolve out-of-network payment disputes without involving the patient. Now, if a provider disagrees with an insurer’s payment determination, the process follows 3 steps:
- The insurer must pay the provider within 30 days and indicate the total amount it believes it owes
- The provider and insurer enter a 30-day open negotiation period to reach a fair payment
- If no agreement is reached, either party may initiate the federal IDR process, where a certified IDR entity issues a binding payment determination
CMS issued a final rule on December 21, 2023, establishing updated administrative fee amounts and certified IDR entity fee ranges for disputes initiated on or after January 22, 2024. Providers should review current fee guidance on CMS.gov before initiating any IDR dispute.
How to Protect Your Revenue Without Risking Compliance
Providers can protect revenue under the No Surprises Act by building 3 internal systems: accurate billing workflows, staff training, and a clear dispute resolution strategy. Compliance and revenue protection are not in conflict. When managed correctly, both reinforce each other.
3 Common Balance Billing Mistakes That Cost Providers Money
The 3 most common balance billing errors that expose providers to financial loss are failure to issue timely Good Faith Estimates, incomplete disclosure notices, and improper use of notice-and-consent forms.
Mistake 1: Missing or Late Good Faith Estimates
Providers who fail to issue Good Faith Estimates within the required timeframes, or who do not provide them at all to self-pay patients, risk patient-provider disputes through CMS’s dispute resolution process. A patient who receives a bill substantially greater than their Good Faith Estimate can challenge it, leading to delayed or reduced reimbursement.
Mistake 2: Non-Compliant Disclosure Notices
According to CMS, disclosure notices must be posted on the provider’s website, displayed on-site, and provided directly to patients. Providers who only complete 1 or 2 of these 3 requirements are out of compliance, even if they have a notice in place.
Mistake 3: Improper Notice-and-Consent Documentation
CMS requires providers to use standard notice-and-consent forms in all applicable scenarios. Using non-standard forms, listing a physician group instead of the individual provider’s name, or failing to retain signed documents for 7 years are all compliance violations that can result in the provider being unable to collect the additional billed amount.
Best Practices for Staying Compliant While Maximizing Reimbursement
Providers can maximize reimbursement while maintaining compliance by implementing 4 billing practices: systematic Good Faith Estimate workflows, staff training, IDR readiness, and accurate disclosure management.
- Train scheduling staff to identify uninsured and self-pay patients at the point of scheduling for any appointment booked 3 or more business days in advance. CMS provides a model Good Faith Estimate template that practices can adapt. Retain all copies in patient records.
- Assign a compliance lead responsible for ensuring that disclosure notices are current, correctly posted online and in the office, and distributed to patients. CMS’s model disclosure notice is available for download and should be reviewed whenever practice details or regulations change.
- Review CMS’s published IDR guidance, understand current administrative fee amounts, and establish an internal protocol for the 30-day open negotiation window so your practice responds quickly and accurately to any payment dispute.
- The No Surprises Act continues to evolve. CMS regularly publishes FAQ updates, rule amendments, and enforcement guidance. Assign a staff member to monitor CMS.gov/nosurprises for changes that could affect your billing practices.
Conclusion
Balance billing is one of the most regulated areas of healthcare billing. The No Surprises Act has created clear rules that providers must follow, and a structured pathway for resolving payment disputes and protecting revenue through the IDR process. Providers who stay compliant are the ones who build the right internal systems before a dispute arises, not after.
Managing balance billing compliance on top of running a practice is a significant operational burden. Our billing team specializes in helping healthcare providers build billing workflows that are fully compliant with the No Surprises Act, dispute-ready, and designed to protect every dollar of reimbursement you have earned. Get in touch today to learn how we can support your practice.
FAQs
Can a provider legally balance bill a patient?
Providers can legally balance bill patients when care is delivered at an out-of-network facility or when the patient signs a written consent form waiving their protections. Emergency services, certain non-emergency services at in-network facilities, and air ambulance services are exempt.
What happens if a provider violates balance billing rules?
Providers who violate the No Surprises Act face federal enforcement action and mandatory reimbursement corrections. Patients can file complaints through the federal No Surprises Help Desk.
How does balance billing affect a provider’s revenue cycle?
Balance billing errors trigger payment disputes and delayed reimbursements. According to CMS, a patient billed $400 more than their Good Faith Estimate can formally dispute the charge, placing a hold on payment until resolution.
What is the difference between balance billing and cost sharing?
Balance billing is the amount charged beyond what insurance pays. Cost sharing is the fixed amount a patient owes under their health plan. Copayments, coinsurance, and deductibles are not balance billing.