Dan Nandan is the CEO of Staffingly, Inc. With 25+ years in IT consulting and a decade leading healthcare BPO operations across India, Latin America, and Pakistan, his team now serves 800+ U.S. healthcare providers across medical, dental, pharmacy, and post-acute care verticals.
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Bincy Shiiju Kuriakose is a U.S.-licensed Registered Nurse (MSN, RN), NCLEX-RN certified, with expertise in hospital nursing, telehealth, and nursing education. She reviews every publication for medical accuracy, YMYL compliance, and evidence-based clinical context.
What Is Out of network claims revenue cycle management?
Out-of-network claims happen when a patient receives care from a provider who does not have a contract with their health plan. The payer has no negotiated rate, so reimbursement becomes a dispute over what constitutes a fair payment.
Understanding Out-of-Network Claims and Why They Drain Revenue Cycles
Out-of-network claims happen when a patient receives care from a provider who does not have a contract with their health plan. The payer has no negotiated rate, so reimbursement becomes a dispute over what constitutes a fair payment.
The numbers tell the story. Insurers denied 37% of OON claims in 2025, compared to 19% of in-network claims (Experian Health). When OON claims are denied, the dollar amounts are significant: average denied inpatient claim amounts rose 220% over three years to $10,000 per claim (MDaudit, via Fierce Healthcare). Hospital outpatient OON denial amounts increased 33% to an average of $825 per claim in the same period.
For revenue cycle teams, OON claims are disproportionately expensive to manage. They require more documentation, more follow-up, more appeals, and more staff time than in-network claims. Billing managers report that OON claims can consume 40% or more of staff time while representing only 10-15% of total claim volume. Every hour spent chasing an OON payment is an hour not spent on the other 85% of claims.
The challenge is compounded by a patchwork of federal and state rules. The No Surprises Act sets a federal floor, but New York, New Jersey, and California have their own OON protections that predate the federal law and, in some cases, offer stronger safeguards for both providers and patients.
Eligibility Verification and Pre-Authorization for OON Services
The single most effective way to reduce OON claim denials is to catch the network status problem before the patient is treated.
Eligibility verification for OON services goes beyond confirming active coverage. Your team needs to know: Is the rendering provider in-network for this specific patient’s plan (not just the payer — the specific plan)? Does the plan have OON benefits, and if so, what is the OON deductible, coinsurance, and out-of-pocket maximum? Is prior authorization required for OON services under this plan? Has the patient been informed in writing that the provider is OON and what their estimated financial responsibility will be?
Experienced billing managers recommend verifying network status at two points: at scheduling and again 48 hours before the procedure. Contracts between providers and payers change mid-cycle. A provider who was in-network last month may not be today.
For practices with high OON volume, automating the OON flag in your practice management system is worth the setup time. When the system automatically identifies a claim where the rendering provider is out-of-network for the patient’s plan, your team can intervene before a surprise bill goes out. Practice management systems increasingly use AI to cross-reference provider network directories in real time to make this flagging automatic.
Negotiating with Payers on Out-of-Network Reimbursement
Payer negotiation is where most of the revenue recovery happens on OON claims. Without a contract, payers default to their own internal rate schedules, which often pay 50-65% of usual and customary charges (FAIR Health). That gap between what you billed and what the payer paid is the negotiation battlefield.
Three tools that strengthen your position:
Know your data before you call. Build a payer-specific OON rate sheet for your top 20 procedure codes. Track what each payer actually paid over the last 12 months. When you can say “Aetna paid us 58% of UCR on code 99213 across 47 claims last quarter,” you are negotiating from evidence, not from frustration.
Use FAIR Health benchmarks. FAIR Health maintains the largest database of privately billed health insurance claims in the U.S. Their benchmark data is referenced by IDR entities and state regulators when evaluating whether a payer’s reimbursement is reasonable. Citing FAIR Health data in appeal letters gives your position credibility that a payer’s internal review team cannot easily dismiss.
Understand the Qualifying Payment Amount (QPA). Under the No Surprises Act, the QPA is the basis for determining patient cost-sharing and is one of the key factors IDR entities consider when resolving payment disputes. For 2026, the IRS set the QPA indexing factor at 1.0265311701 (IRS Notice 2025-65). If a payer’s QPA calculation seems low, request their methodology in writing. Federal regulators extended enforcement discretion on QPA calculations into 2026, meaning there is room to challenge how a plan arrived at its number.
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Filing and Tracking OON Claims to Prevent Revenue Leakage
OON claims need tighter tracking than in-network claims because the margin for error is smaller and the follow-up cycle is longer.
Pre-submission. Confirm OON benefits and patient financial responsibility before the visit. Collect any required patient consent and disclosure forms — these are mandatory under the No Surprises Act for non-emergency services. Verify correct coding with the highest specificity, since OON claims receive extra scrutiny from payer review teams.
Post-submission. Set follow-up intervals at 14 days, not 30. OON claims that sit in payer queues without follow-up are more likely to be downcoded or denied. Track each OON claim through a dedicated worklist, separate from your in-network AR, so they do not get buried in the general queue. Document every payer interaction: who you spoke with, the reference number, what they said about claim status, and the expected payment timeline.
When a payer responds with a payment below the expected rate, do not accept it as final. This is where structured underpayment detection and recovery pays off. Request an Explanation of Benefits (EOB) that shows the allowed amount calculation. If the payer used a questionable methodology — a dated UCR database or a Medicare-based rate without the contractual multiplier — that EOB becomes your evidence for appeal.
Managing Out-of-Network Denials and Appeals
With 37% of OON claims denied, a structured appeals process is not optional.
MGMA data shows that up to 90% of all claim denials are preventable. For OON claims specifically, the most common denial reasons are: no prior authorization obtained (even when the plan does not clearly communicate OON PA requirements), services deemed not medically necessary, insufficient documentation submitted with the initial claim, and patient not informed of OON status (a No Surprises Act compliance failure).
First-level appeal (internal, within 30 days of denial). Include clinical documentation, a letter of medical necessity from the treating provider, FAIR Health benchmark data showing the billed amount is within the usual and customary range for the geographic area, and applicable state law citations (NY, NJ, or CA balance billing protections where relevant).
Second-level appeal (external/IDR). If the internal appeal fails, the No Surprises Act’s independent dispute resolution process is available for eligible claims. Both the provider and the payer submit a payment offer, and the IDR entity selects one. The QPA is a key factor, but the IDR entity also considers the provider’s training and experience, the complexity of the service, patient acuity, and market rates. CMS reports that IDR entities have largely cleared the 2023-2024 backlog and are now processing disputes at a sustainable pace.
State-level options. In New York, file a complaint with the Department of Financial Services. In New Jersey, use the DOBI OON arbitration process. In California, OON providers can invoke AB 72’s Independent Dispute Resolution Process if they believe the payer’s reimbursement is below the statutory floor (125% of Medicare or the average contracted rate, whichever is higher).
No Surprises Act Compliance in 2026: What Your Practice Must Know
The No Surprises Act covers emergency services from OON providers or facilities, non-emergency services from OON providers at in-network facilities, and OON air ambulance services. Four years after passage, compliance gaps remain — particularly around when the law applies and how to calculate patient cost-sharing correctly.
2026 updates. The QPA indexing factor is 1.0265311701 (IRS Notice 2025-65) for items and services furnished January 1 through December 31, 2026. Federal regulators extended enforcement discretion on QPA calculations, giving plans flexibility but also giving providers grounds to challenge questionable methodologies. The IDR web form now includes Service Code Modifier(s) as an optional field for improved claim specificity. A proposed IDR Operations Rule from November 2023 may be finalized in 2026, introducing standardized claim codes, modified batching rules, and revised negotiation timelines.
State overlap rules. If your practice operates in New York, New Jersey, or California, comply with both the federal NSA and the applicable state OON protection law. Where state law offers stronger protections than the federal law, state law generally applies for state-regulated plans. Self-funded ERISA plans fall under the federal NSA exclusively.
For California specifically, AB 72’s reimbursement floor (125% of Medicare or the average contracted rate) may be more favorable to providers than the federal QPA in many cases. Know which law applies to each claim based on the patient’s plan type.
State-Specific OON Rules: New York, New Jersey, and California
All three states enacted OON protections before the federal No Surprises Act, and each handles disputes differently. New York bans balance billing for emergency OON services and OON services at in-network facilities, with enforcement through the Department of Financial Services. New Jersey’s OON Consumer Protection Act (P.L. 2018, c. 32) bans balance billing and created state-level arbitration through DOBI. California’s AB 72 sets a reimbursement floor at the greater of the average contracted rate or 125% of Medicare, with disputes resolved through its Independent Dispute Resolution Process. State laws apply to state-regulated plans; self-funded ERISA plans fall under the federal NSA exclusively, so know which rule governs each claim before you appeal.
When to Outsource OON Claims Management
OON claims are among the most labor-intensive items in any revenue cycle. When your in-house team is spending disproportionate hours on OON follow-ups, appeals, and payer negotiations, the cost of handling those claims internally may exceed the recovery.
Outsourcing OON claims management makes sense when: your OON denial rate exceeds 30% and your team lacks capacity for structured appeals; OON claims represent 10%+ of your volume but consume 30-40% of billing staff time; you operate across multiple states (NY, NJ, CA, or others) and need staff who understand each state’s balance billing and dispute resolution rules; your average days in AR for OON claims exceeds 60 days; or you need dedicated payer negotiation specialists who track OON reimbursement patterns by payer and procedure code.
Staffingly provides trained OON claims specialists across 50+ EHR platforms at $399/week (volume discounts to $299/week), maintaining a 99.2% clean claim rate. New accounts go live in 48-72 hours. All operations are SOC 2 Type II certified, HITRUST-mapped, ISO 27001 compliant, and HIPAA compliant. 800+ providers currently trust Staffingly with their revenue cycle operations, saving approximately 70% compared to in-house staffing.
Frequently Asked Questions (FAQ)
What is the No Surprises Act’s qualifying payment amount (QPA) and why does it matter for OON claims? The QPA is the median contracted rate a health plan has with in-network providers for the same service in the same geographic area. It sets patient cost-sharing for covered OON services and serves as a primary factor in IDR disputes. For 2026, the IRS set the QPA indexing factor at 1.0265311701 (IRS Notice 2025-65). If you believe a payer’s QPA is calculated incorrectly, request the methodology in writing and challenge it through the IDR process with supporting FAIR Health data.
How do NY, NJ, and CA OON protections differ from the federal No Surprises Act? All three states enacted OON protections before the federal NSA. New York bans balance billing for emergency OON services and OON services at in-network facilities; enforcement runs through the Department of Financial Services. New Jersey’s OON Consumer Protection Act (P.L. 2018, c. 32) bans balance billing and created state-level arbitration through DOBI. California’s AB 72 sets a reimbursement floor at the greater of the average contracted rate or 125% of Medicare. State laws apply to state-regulated plans; self-funded ERISA plans fall under the federal NSA.
What is the average denial rate for out-of-network claims? Insurers denied 37% of OON claims in 2025, compared to 19% of in-network claims (Experian Health State of Claims 2025). MGMA reports that up to 90% of all claim denials are preventable with proper eligibility verification, documentation, and coding. Average denied inpatient OON claim amounts rose 220% over three years to $10,000 per claim (MDaudit, Fierce Healthcare).
How do I appeal an out-of-network claim denial effectively? Start with a first-level internal appeal within 30 days of the denial. Include clinical documentation, a letter of medical necessity, FAIR Health benchmark data showing your billed amount is within the usual and customary range, and citations to applicable state law for NY, NJ, or CA cases. If the internal appeal fails, use the No Surprises Act’s IDR process. Both parties submit a payment offer and the IDR entity selects one based on the QPA, provider qualifications, service complexity, and market rates.
When should a practice outsource out-of-network claims management? Consider outsourcing when OON claims consume 30-40% of billing hours for 10-15% of volume, your OON denial rate exceeds 30%, you operate across multiple states with different balance billing rules, or your average OON days in AR exceeds 60 days. Staffingly provides OON claims specialists at $399/week (volume discounts to $299/week) with a 99.2% clean claim rate, SOC 2 Type II and HIPAA compliance, and go-live in 48-72 hours.
What Did We Learn?
Out-of-network claims will not disappear. Payer networks shift constantly, patients move between plans, and providers rotate in and out of contracts. The practices that protect their revenue are the ones with systems in place: pre-service eligibility verification at two points (scheduling and 48 hours prior), automated OON flagging, structured payer negotiation tied to FAIR Health data, denial appeal frameworks that use the IDR process correctly, and compliance workflows that account for both federal and state rules.
The No Surprises Act brought structure to OON billing, but it also added complexity. With the QPA, IDR process, and overlapping state laws in New York, New Jersey, and California, your billing team needs specialized knowledge to handle OON claims correctly. Denial amounts are rising — up 220% over three years for inpatient OON claims. The cost of not having a repeatable system is measurable.
Reviewed by Bincy Kuriakose, MSN, RN (IL RN License 041.577729).
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