The Hidden Revenue Risks of Out-of-Network Claims

Handling out-of-network (OON) claims is one of the most complex parts of Revenue Cycle Management (RCM) for healthcare providers. When a patient receives care from a provider who is not part of their insurance network, it creates several financial challenges for both the practice and the patient. These claims often lead to lower reimbursement rates, complicated billing procedures, delayed payments, and a higher chance of denials.

Without a robust strategy in place, out-of-network claims can significantly impact your clinic’s cash flow and patient satisfaction. In fact, every step from understanding payer policies and verifying insurance to securing preauthorization and submitting accurate claims requires careful attention.

In this blog, we will explore the hidden revenue risks tied to OON claims and share best practices to help you manage them effectively.

Revenue Risks of OON Claims

When an urgent care clinic is not part of a patient’s insurance network, it faces several money-related problems. These problems can make it hard for the clinic to get paid on time and stay profitable.

The following are the main risks that come with billing out-of-network:

1. Slow Credentialing

Starting a new urgent care or adding a new location without being fully credentialed can lead to serious payment delays. Credentialing means getting approval from insurance companies to treat their patients and get paid. This process can take 9 to 12 months for a new clinic and 90 to 120 days for a new doctor. If the clinic sees patients before getting approved, insurance companies usually will not pay for those services. This can lead to cash flow problems in the early stages of the business.

2. Compliance Risks

Sometimes clinics try to bill using the name of another provider who is already credentialed. This is a huge mistake as it signifies the breaking of the billing rules with serious penalties, especially when full credentialing is required. The Department of Justice (DOJ) has issued multi-million-dollar settlements for such violations, and private payers have also implemented strict policies. Practices that engage in these billing practices risk claim denials, demand for repayments (recoupments), and even termination of payer contracts.

3. Limited Billing Alternatives for New Providers

There are very few ways to bill for services while waiting for new providers to be credentialed. Doctors cannot use fee-for-time billing (also known as Locum Tenens) once they start the credentialing process. Non-physician providers, like nurse practitioners, also cannot use "incident-to" billing in urgent care settings as most patients have new health problems, instead of follow-up visits. This means the clinic may not be able to bill for their work until the credentialing is done, which can hurt revenue.

4. Uncertain Reimbursement

Out-of-network (OON) claims are usually unpredictable. Payers may process claims in three ways:

• Paying the patient directly – Practices may not receive the payment, or experience delays in collecting it from the patient.
• Applying payment to patient deductibles – If the patient has OON coverage, the claim may count toward their deductible, resulting in no immediate payment to the practice.
• Full denial of the claim – Patients without OON benefits may be fully responsible for the bill, leading to decreased collections and increased bad debt.

All these options make it hard for clinics to collect money from insurance or patients.

5. Lower Patient Visits

Some clinics ask patients to pay cash at the time of their visit if insurance won’t cover it. Though this might help avoid billing problems, it can scare patients away. Even if the clinic offers great care, patients may not return if they feel the bill is too high. Fewer patients mean lower income and slow growth for the clinic. Many people may delay or avoid care if they cannot afford to pay upfront. This can also harm the clinic’s reputation if patients feel they were not given clear payment options.

Best Practices for Handling OON Claims

Handling out-of-network claims can be tricky, but following a few best practices can help your urgent care clinic avoid problems and get paid faster.

The following are some simple tips to manage OON claims effectively:

1. Understand Insurance Rules and Payer Contracts

Before submitting any out-of-network claims, make sure you understand how each insurance company handles them. Some may pay a portion of the costs, while others only pay for emergencies. Review your contracts to know about reimbursement rates and coverage rules. This will help you set the right expectations for your staff and patients.

2. Check Patient Insurance Early

Always verify the patient’s insurance coverage before the visit. This helps you find out if their plan covers out-of-network services and what costs the patient might need to pay. In fact, knowing this information early helps avoid billing surprises and denied claims later.

3. Get Preauthorization if Needed

Some insurance companies ask for preauthorization before they will pay for out-of-network care. If this is required, be sure to request it before treating the patient. Even if it is not required, having preauthorization can still help you get paid. Keep a record of any approvals or communication with the insurer.

4. Submit Claims Accurately

Out-of-network claims need to be filled out very carefully. Any small mistake in the coding or missing documents can lead to delays or denials. It is important to ensure you use the correct medical codes and provide clear notes about the services provided. Also, check if the payer needs any special forms for OON claims.

5. Explain Costs Clearly to Patients

Always talk openly with patients about your out-of-network status. Let them know how it affects their bill and what they might have to pay. Moreover, try to give them a cost estimate before the visit. If they need help paying, offer flexible payment plans or financial advice to make things easier for them.

Additional Tip: Use Experts for Billing Support

Since out-of-network billing can be complicated, it may help to outsource some tasks to professionals Medical billing and coding companies like 24/7 Medical Billing Services offer expert guidance and advice. They can handle claim submissions accurately and confirm insurance details ahead of time. This helps reduce mistakes, speed up payments, and gives your in-house staff more time to focus on patient care.

FAQs

Q: What is the difference between out-of-network and in-network claims?

In-network claims involve providers contracted with the insurer, while out-of-network claims are from providers outside the insurance network and often result in lower reimbursements.

Q: Why are out-of-network claims more complicated?

They involve lower payments, more paperwork, and stricter requirements from payers, making the billing process harder.

Q: Will patients pay more for out-of-network services?

Yes, patients often face higher out-of-pocket costs with out-of-network providers.

Q: What happens if an out-of-network claim is denied?

Review the denial reason, correct any issues, and resubmit with proper documentation.

Q: Can I get paid directly for out-of-network services?

Sometimes the insurance pays the patient directly, so collecting from them becomes necessary.

Q: Are there extra forms for out-of-network claims?

Some payers require additional forms or documentation, so always check their guidelines.

Q: Should I tell patients about out-of-network status before their visit?

Yes, clear communication about coverage and costs helps prevent billing surprises.