Balance billing is when a provider bills a patient for the gap between the provider’s charge and the amount the patient’s insurance plan allows (and pays). It’s “insurance paid part, now the patient owes the rest.” That can happen most often when you’re out of network, because there’s no contract rate that limits what you can charge. This matters because balance billing creates write-offs and compliance headaches if the rules aren’t followed.

Why do patients get balance billed in the first place?

Patients usually assume that “having insurance” means costs are predictable, but insurance is built on allowed amounts and network contracts, so it’s a lot less predictable in reality. When there’s no contract, the insurer may pay a smaller “usual and customary” style amount, and the remaining balance becomes the conflict zone. If your billing team doesn’t catch out-of-network status early, balance bills can show up weeks later, right when patients feel blindsided and trust drops.

Is balance billing the same as surprise billing?

They definitely overlap, but they aren’t identical. Balance billing describes the math of the bill (the difference). Surprise billing, however, describes the experience of getting a bill you didn’t expect, often because you didn’t knowingly choose an out-of-network clinician. So this matters from a practice-owner standpoint because there are laws that focus on “surprise” situations, even when the underlying billing mechanics look like normal out-of-network processing.

When is balance billing illegal under the No Surprises Act?

The No Surprises Act bans balance billing for certain out-of-network situations, especially when patients don’t actually have a real choice. This could be for emergency services or some non-emergency services provided at in-network facilities by out-of-network clinicians. If you bill in one of these protected scenarios and still send a balance bill, you’re inviting disputes and regulatory attention!

What situations does the No Surprises Act not cover?

The protections don’t apply to everything – for example, if a patient chooses an out-of-network facility for non-emergency care, federal protections may not apply the same way. Also, certain non-emergency out-of-network care can involve a waiver when proper notice and consent are done correctly. What this means is that your front desk workflow and billing workflow have to match. If your team can’t prove the patient received the right notice, you may end up eating the balance.

How common were surprise balance bills before the law changed?

Before the No Surprises Act, surprise out-of-network bills were a big problem in emergency settings. It’s been found in about 1 in 5 emergency room visits. That stat is useful when training staff because it shows this wasn’t rare or hypothetical. It was common enough that lawmakers stepped in.

What does balance billing look like on an EOB?

Patients often call after reading an Explanation of Benefits and thinking it’s a bill. The EOB usually just shows:

– The billed charge

– The allowed amount

– The plan payment

– Patient responsibility

The balance billing part starts when the provider pursues the portion above the allowed amount. Now, if your statements don’t clearly match the EOB logic, patients assume you’re billing incorrectly, even when you’re technically allowed to bill.

Why does balance billing create collection risk for small practices?

Because it increases those “emotionally disputed” balances. Patients may refuse to pay on principle or leave negative reviews, which will obviously affect your reputation as a small practice. Even when you’re within your rights, the collection cost can outweigh the recovery. There’s also timing risk. Long delays between care and billing can trigger angry calls and slow down collections, even when the claim itself is processed correctly.  

How do state laws affect balance billing?

Federal rules are the baseline, but state laws can add restrictions, especially for fully insured plans regulated at the state level. Some states had surprise billing protections before 2022, and enforcement details can differ. When you operate in multiple states, this gets messy fast. The more practical move here is to build billing policies around the strictest common rules your payer mix touches, then document exceptions.

How can PMN help? 

Balance billing problems usually show up as denied claims and patient balances that turn into time-consuming calls, but our team at PMN has been helping small practices tighten the front-to-back process for over 20 years – making sure your billing matches the rules and your statements make sense to patients.

If you want support with cleaner claims and fewer patient balance disputes, start with our medical billing services for small practices and revenue cycle management in medical billing. 

Get in touch by calling (949) 215-5055 or visiting our office in Laguna Hills, Orange County, California!