Did you know that insurers of qualified health plans (QHPs) sold on HealthCare.gov denied nearly 34% of out-of-network (OON) claims in 2025? That represents a significant revenue risk for healthcare providers, directly impacting cash flow and operational stability.
So, what’s really behind these denials?
In most cases, it comes down to one issue: a lack of clarity around payer-specific billing rules—especially as plans have tightened OON coverage since 2024.
Out-of-network billing is not impossible, but it now requires more precision, stricter documentation, and payer-specific workflows than ever before. In this guide, we’ll walk you through OON billing basics, recent regulatory updates, common mistakes, and how to improve reimbursement outcomes.
In-Network vs. Out-of-Network Insurance Billing
Before diving deeper, it’s important to understand the core difference.
In-network billing: Providers have signed agreements with insurers. These define reimbursement rates, reduce patient financial responsibility, and simplify claims processing.
Out-of-network billing: No contract exists. Providers have more flexibility in pricing but face payment uncertainty, higher patient responsibility, and increased administrative work.
In short:
In-network = predictable, structured, lower patient costs
Out-of-network = flexible, but complex and often unpredictable
Providers who choose to stay out-of-network must be ready for manual workflows, patient balance billing (where still permitted), and payer negotiations.
Types of Out-of-Network Coverage Plans
Not all insurance plans treat OON services the same way. Understanding plan types is critical.
1. Preferred Provider Organization (PPO)
-
Most flexible for OON care
-
Patients can see both in-network and out-of-network providers
-
Reimbursement based on a percentage of the allowed amount after the deductible
-
Remains the most common plan type for OON billing
2. Health Maintenance Organization (HMO)
-
Typically, no OON coverage except emergencies
-
Gap exceptions rarely approved unless no in-network specialist exists
-
Billing HMOs OON without prior approval → almost always denied
3. Point of Service (POS)
-
Requires referral from a primary care physician
-
Allows OON care at a higher cost
-
No referral → significantly higher patient responsibility
-
Always confirm whether a referral exists before billing
How Out-of-Network Reimbursement Works
OON reimbursement follows a distinct workflow:
-
Patient receives care from a non-contracted provider
-
Provider generates a superbill
-
Claim submitted by the provider or the patient
-
The insurer reviews the claim and determines the allowed amount based on UCR (usual, customary, reasonable)
-
The patient’s deductible and coinsurance are applied
-
Payment is issued to the provider or the patient
-
Patient is responsible for the remaining balance
Note on balance billing: Allowed in many non-emergency OON scenarios but heavily restricted under the No Surprises Act (NSA) for emergency services and certain post-emergency care. Since 2024, NSA enforcement has expanded, and providers must provide advance notice of OON balance billing in non-emergency settings.
Common Denial Codes in Out-of-Network Billing (2025–2026 Trends)
Some of the common denial codes that out-of-network billing triggers are listed below:
| Denial Code | Description | Example |
|---|---|---|
| CO-16 | This denial occurs when the claim has missing, incomplete, or invalid information. | In OON billing, providers don’t have electronic data interchange (EDI) links with every payer. Thus, imagine that a staff member manually types a superbill into a portal. However, he forgets to include the specific modifier or the NPI number for an out-of-network surgeon. |
| CO-27 | You get this denial when the patient’s insurance coverage has expired. | You rendered a service to a patient on the third day of the month as an OON provider. However, the patient’s employer canceled their out-of-network PPO plan on the first day of that same month. |
| CO-45 | It is triggered when the billed amount exceeds the allowed amount. | The non-participating clinician bills $450 for a complex consultation based on the internal charge master. However, the payer only allows 220 based on their regional UCR rates. |
| CO-96 | The OON provider receives this denial code when the charges are not covered. | Suppose an out-of-network podiatrist performed nail debridement and sent the bill to the payer. The payer rejected the claim because the provider was OON. Hence, his service will not be covered. |
| CO-197 | It is triggered due to missing precertification, authorization, or notification that the payer requires. | A patient undergoes an elective MRI at your facility. However, you are an OON provider, and your billing team failed to secure a gap exception or prior approval from the insurer. |
| CO-242 | It occurs when service is not rendered by the network or primary care provider. | Assume a patient with a closed-network HMO plan visits your out-of-network clinic for a non-emergency specialist visit. The payer will deny the claim because you are not the preferred provider. |
| CO-256 | This denial code is issued when the service is not payable by the managed care contract. | Imagine that a patient received skin allergy treatment from an out-of-network dermatologist, but because of a contract exclusion, the payer will deem the service non-reimbursable and deny the claim with code 256. |
Out-of-Network Billing Rules by Major Payers
Blue Cross Blue Shield (BCBS)
-
Prior authorization often required for OON services
-
Payments based on allowed amounts (usually lower than billed charges)
-
Balance billing is allowed in most non-emergency cases
-
As of 2025, several BCBS plans now require electronic OON pre-authorization through Availity or similar portals
Medicare (Out-of-Network / Non-Participating)
-
Non-participating providers can charge up to 115% of the Medicare-approved amount (limiting charges).
-
The provider must still submit claims.
-
Two approaches: assigned claims (provider accepts Medicare rate) or unassigned claims (patient receives payment and pays provider)
-
2026 update: Medicare has reduced average OON allowed amounts for certain surgical codes. Verify quarterly fee schedules.
Medicaid (State-Based – Updated)
Medicaid OON rules vary by state, but generally:
-
Patients must be informed before the service
-
Written consent is required
-
Alternative in-network options must be explained
New for 2025–2026: At least 14 states have passed laws limiting OON balance billing for Medicaid enrollees in non-emergency settings. Check your state’s specific regulations.
Telehealth & Out-of-Network Billing
Many providers overlook telehealth OON rules. Key updates:
-
Most PPO plans now treat telehealth OON services under separate policies
-
Some payers require different modifiers for OON telehealth (e.g., -95 with a specific place of service)
-
Medicare OON telehealth: As of 2026, non-participating providers billing Medicare for telehealth must use specific POS codes (typically 02) or face automatic denial
Always verify: Does this payer cover OON telehealth at all? Many reduced coverage after 2025 flexibilities expired.
Major Challenges in Out-of-Network Billing
-
Lower reimbursement rates – Insurers cap payments based on UCR, often well below billed charges
-
High denial rates – Now approaching 35%+ for initial OON submissions
-
Patient payment responsibility—A larger portion of revenue comes directly from patients, increasing collection complexity
-
Administrative burden – Manual claims, superbills, and appeals require trained staff
-
Compliance risks – No Surprises Act (NSA) + state-level balance billing laws create legal exposure
Best Practices to Improve Out-of-Network Billing (2026)
To succeed with OON billing today:
✅ Verify patient benefits before every visit (especially OON telehealth coverage)
✅ Provide written NSA-compliant OON disclosure before non-emergency services
✅ Clearly explain costs to patients upfront
✅ Use accurate coding and complete documentation
✅ Obtain prior authorizations – many plans now require them for OON
✅ Track claims closely and appeal denials within 30 days
✅ Train staff on payer-specific 2025–2026 rule changes
✅ Use OON billing software to reduce manual errors
Small process improvements can significantly increase OON reimbursement.
How XyberMed Helps You Simplify Out-of-Network Billing
Out-of-network billing doesn’t have to slow you down.
At XyberMed, we help healthcare providers streamline revenue cycle management with:
-
Accurate claim submissions tailored to 2026 payer rules
-
Faster reimbursement turnaround
-
Reduced denial rates (typically 20–30% improvement)
-
Expert handling of complex OON and NSA compliance cases
Our team tracks payer-specific rule changes so your claims get processed the first time.
Ready to Take Control of Your Revenue?
Let XyberMed handle the complexity so you can focus on patient care.
📞 Book your free demo today and see how we can help you improve your out-of-network billing performance even under 2026 rules.
Add a Comment