The last medical billing article in this series discussed the potential benefits of medical billing out of network with a high fee schedule.  We concluded that billing a higher fee schedule out of network generated more revenue per encounter for physicians and other providers with the limiting factor being high patient balances and balance billing.  In this article we will discuss one of the ways in which a provider can lessen the impact on patients of billing a high fee schedule OoN.

High Fee Schedule, High Patient Impact

Most patients choose doctors in network because this limits the financial impact on them as a result of lower deductible and coinsurance with contracted providers.  There are typically higher deductibles, as well as the OoN deductible is typically less utilized and so more of it is unmet when choosing a provider, and the coinsurance is also higher OoN.  Both of these are exacerbated when billing a higher fee schedule, so there is effectively a double whammy for the patient.

High Fee Schedule, Low Patient Impact

A recent trend in medical billing for out of network providers is to treat patients as if they are “In Network”.  The idea is to have patients have a similar financial share of cost to what they would have if they are saw an in network provider.  We will discuss potential legal questions and implications in a future article.  If patients are not significantly penalized for seeing an out of network provider, then the patient is more likely to choose that provider.

Which Doctors and Facilities

We see most often medical billing out of network with high fee schedules in order to optimize revenue along with treating patients “in network” for laboratory billing, ASC billing, and imaging center billing.  These facilities often have a harder time getting contracted, and in the case of ambulatory surgery center billing, the doctors that own the facility often control their own referrals from their respective physician practices.

Typically anesthesia billing, radiology billing, ER, and hospitalist billing do not proactively adjust patient balances because they are not as dependent upon referrals, and therefore are not at the same risk of losing referrals if patients end up with large balances.  In a recent trend we have seen some hospitals putting pressure on or even mandating rules governing patient balance billing for anesthesiologists, ER doctors, and hospitalists as part of their staffing contract.  Most office based providers are predominantly contracted, so this is not an issue for them.

Treating As If “In Network”

Following is a general guideline and an example of how to treat patients as if they are in network while billing out of network.  Someone needs to obtain the patient’s benefits information, calculate what they would have paid in network for a similar service, and then proactively write down the patient balance to this in network equivalent level.

Contracted OoN
MCR rate $1,000
Physician fee schedule 6x $6,000
Avg UCR 3x $3,000
Contracted rate 1.2x $1,200
In network unmet deductible $500 ($500)
In network coinsurance 20% ($240)
Out of network unmet deductible $1,000 $1,000
Out of network coinsurance 40% $1,200
Insurance payment $460 $800
Patient balance $740 $5,200

In the above example, you can see that the insurance payment was nearly double for the OoN claim, but the patient balance was also over $5,000.  To treat the patient as if they are “in network” the provider would proactively adjust the patient balance and write off more than $4,000 so that the remaining balance would be $740, which is billed to the patient.


Calculating the prospective in network equivalent a patient would pay can be very complicated and challenging to get exactly right, in part because it depends upon the unmet portion of a deductible, which is constantly in flux.  If the in network deductible get consumed between the time of checking benefits and billing the patient, should that count towards the adjusted patient balance?

Many providers opt to simplify this and simply come up with a reasonable or negotiated rate with the patient, i.e. a flat $500 patient balance, or a not to exceed where it will be the lesser of the in network equivalent and not to exceed a fixed dollar threshold.


Although treating the patient as if they are in network for medical billing can solve the patient financial responsibility and allow them to choose an out of network provider, this must be communicated effectively to referring providers.  A complete marketing and sales strategy is often employed to market to referring physicians and communicate that the patients will be treated as if they are “in network”.

While this addresses the actual patient financial burden associated with seeing an out of network doctor, there is still the issue of referrals and EOBs confusing patients.  We have seen many clients educate their referring doctors that they will treat patients as if they are in network, and should they ever receive a call from a patient, to tell them there must be some mistake and to contact the rendering provider directly who will make sure they are treated as if they are in network.  Many have also counseled patients ahead of time that they will receive an EOB from their insurance company and that this is NOT A BILL, and they should not panic if the amount shown by the insurer is large.  This is not what they will be billed.  They will treat them as if they are in network and can calculate what that will be before the service is provided.

The patient is now in theory indifferent to whether they see an in network or out of network provider.  They now have the choice to see the provider for whom they believe they will receive the best quality of care and service, regardless of network status.


Legal disclaimer: Apache Health is engaged in the business of healthcare revenue cycle management analytics.  We offer information about regulations, rules, and industry practices relating to compliance.  Apache has researched that subject and has set forth the results of that research herein.  Apache Health is not a law firm and we do not offer legal advice.  Apache does not guarantee the completeness nor the accuracy of its research.  You should consult with your qualified healthcare attorney.