The Practice That Cost Americans Billions — Until the Law Changed
Balance billing is one of the most unfair practices in American healthcare, and for years it was perfectly legal in most states. Here is how it works: you go to the hospital, an out-of-network doctor treats you (often without your knowledge or consent), your insurance pays what it considers a reasonable amount, and then the doctor bills you for the balance — the difference between what they charged and what your insurance paid.
That balance can be staggering. I worked with a patient in New Jersey who had knee replacement surgery at an in-network hospital. Everything was in-network — the hospital, the surgeon, the pre-op team. But the anesthesiologist, whom the patient never met before being wheeled into the operating room, was out-of-network. The anesthesiologist charged $12,000. Insurance paid $3,200 (the in-network rate). The anesthesiologist then sent the patient a balance bill for $8,800.
The patient had done everything right. She chose an in-network hospital. She verified her surgeon was in-network. She had no way of knowing — and no ability to choose — her anesthesiologist. Yet she was stuck with an $8,800 bill for a provider she never selected.
This is balance billing, and understanding how it works — and how to fight it — is essential for every patient.
How Balance Billing Works
To understand balance billing, you need to understand how insurance pricing works:
In-network providers have a contract with your insurance company that sets agreed-upon rates for every service. The provider agrees to accept the insurance company's payment (plus your cost-sharing) as payment in full. They cannot bill you for the difference between their charge and the contracted rate.
Out-of-network providers have no contract with your insurance company. They can charge whatever they want. Your insurance company will pay what it considers a "reasonable" amount (often based on Medicare rates or a percentage of the "usual and customary" rate), and the provider can bill you for the rest.
Example:
| In-Network | Out-of-Network | |
|---|---|---|
| Provider's charge | $5,000 | $5,000 |
| Insurance contracted/allowed amount | $2,500 | $1,800 (no contract — insurance decides) |
| Insurance pays (after your cost-sharing) | $2,000 | $1,440 |
| Your cost-sharing (copay/coinsurance) | $500 | $360 |
| Balance bill to you | $0 (prohibited by contract) | **$3,200** (provider's charge minus insurance payment) |
| Your total out-of-pocket | $500 | **$3,560** |
In this example, the out-of-network scenario costs you seven times more than the in-network scenario for the exact same service.
The No Surprises Act: Your Primary Protection
The No Surprises Act (NSA), effective January 1, 2022, provides the strongest federal protection against balance billing. It protects you in three specific situations:
1. Emergency Services
All emergency services are protected, regardless of whether the facility or providers are in-network. You can only be charged your in-network cost-sharing amount. The provider and insurer must work out the rest between themselves.
2. Non-Emergency Services at In-Network Facilities
If you go to an in-network facility for a scheduled procedure and are treated by an out-of-network provider you did not choose (anesthesiologist, radiologist, pathologist, etc.), you are protected from balance billing. Again, you only owe your in-network cost-sharing.
3. Air Ambulance Services
Out-of-network air ambulance providers cannot balance bill you. You only owe your in-network cost-sharing.
The consent waiver exception: For non-emergency services, an out-of-network provider can ask you to sign a written notice waiving your NSA protections. If you sign, you lose your protection and can be balance billed. My advice: never sign a balance billing waiver unless you fully understand the financial consequences and have no alternative.
State Balance Billing Laws
Many states enacted their own balance billing protections before the federal No Surprises Act, and some state laws provide protections that go beyond federal law. Here is an overview of states with notable protections:
States with comprehensive balance billing protections (beyond federal law):
California — Prohibits balance billing for emergency and non-emergency services; uses a payment standard based on the greater of the average contracted rate or 125% of Medicare
Colorado — Prohibits balance billing for emergency services and out-of-network providers at in-network facilities; includes ground ambulance protections
Connecticut — Comprehensive surprise billing law with binding arbitration
Florida — Prohibits balance billing for emergency services and certain non-emergency services
Georgia — Surprise billing protections for emergency and non-emergency services
Illinois — Prohibits balance billing for emergency services; requires disclosure of out-of-network status
Maryland — Comprehensive balance billing protections with payment standards
New York — One of the strongest state laws; prohibits balance billing for emergency and surprise out-of-network services; uses independent dispute resolution
Oregon — Prohibits balance billing for emergency services and out-of-network providers at in-network facilities
Texas — Prohibits balance billing for emergency services and out-of-network providers at in-network facilities; uses mediation for disputes
Washington — Comprehensive balance billing protections with binding arbitration
States that rely primarily on federal protections (No Surprises Act only):
Alabama, Alaska, Arkansas, Idaho, Iowa, Kansas, Kentucky, Louisiana, Mississippi, Missouri, Montana, Nebraska, North Dakota, Oklahoma, South Carolina, South Dakota, Tennessee, Utah, West Virginia, Wisconsin, Wyoming
How to Fight a Balance Bill
If you receive a balance bill that you believe violates the No Surprises Act or your state's balance billing law, here is the step-by-step process:
Step 1: Identify the Situation
Determine which category your bill falls into:
Was it an emergency service?
Was it a non-emergency service at an in-network facility by an out-of-network provider you did not choose?
Did you sign a consent waiver?
If the answer to the first or second question is yes (and you did not sign a waiver), you are likely protected.
Step 2: Contact the Provider
Call the billing department and inform them that you believe the bill violates the No Surprises Act. Many billing departments will correct the bill at this stage once they realize you know your rights.
Step 3: Contact Your Insurance Company
Ask your insurance company to reprocess the claim as an in-network claim under the NSA. Request a reference number for your call.
Step 4: File a Complaint
If the provider does not correct the bill:
Federal complaint: — Contact CMS at 1-800-985-3059 or cms.gov/nosurprises
State complaint: — Contact your state Department of Insurance
CFPB complaint: — File at consumerfinance.gov if the bill has been sent to collections
Step 5: Send a Written Dispute
Send a formal dispute letter via certified mail citing the No Surprises Act (or your state's balance billing law) and requesting that the bill be adjusted to your in-network cost-sharing amount.
The Ground Ambulance Gap
One significant gap in balance billing protections is ground ambulance services. Neither the No Surprises Act nor most state laws protect patients from balance billing by ground ambulance providers. Ground ambulance bills can range from $1,000 to $10,000 or more, and many ambulance providers are out-of-network.
States that have enacted ground ambulance balance billing protections include Colorado, Delaware, Florida, Illinois, Maine, Maryland, New York, Ohio, Vermont, and West Virginia. If your state is not on this list, you may be vulnerable to ground ambulance balance billing.
What to do about a ground ambulance balance bill:
Request an itemized bill and check for errors
Negotiate directly with the ambulance provider
Apply for financial assistance (many ambulance services offer hardship programs)
Check if your city or county has a municipal ambulance service with regulated rates
Contact your state representative about supporting ground ambulance billing reform
Key Takeaways
Balance billing is when an out-of-network provider bills you — for the difference between their charge and what insurance paid
The No Surprises Act protects you — from balance billing in emergencies, from out-of-network providers at in-network facilities, and from air ambulances
Never sign a balance billing waiver — without fully understanding the financial consequences
Many states have additional protections — beyond the federal law — check your state's laws
Ground ambulance services are NOT protected — by the No Surprises Act — this is a significant gap
If you receive a balance bill — , contact the provider, your insurance company, and file complaints with CMS and your state
Send a written dispute — via certified mail citing the specific law that protects you
The average balance bill before the NSA was $1,200-$2,600 — these protections save patients billions annually