Out-of-Network Payment Disputes: What Employers Need to Know

Out-of-network payment disputes represent a growing headache for employers offering health benefits. When employees receive care from providers outside their plan’s network, the resulting billing complications can create friction between employers, insurers, and employees. Understanding your role in managing these disputes—and preventing them—is critical to maintaining a compliant, effective health plan.

The Growing Problem of Out-of-Network Disputes

Over the past five years, out-of-network payment disputes have increased significantly. These disputes occur when:

• An employee receives emergency or non-emergency care from a provider not in their plan’s network
• The insurance carrier and provider disagree on payment amounts
• Employees receive unexpected balance bills despite having insurance
• Network adequacy failures leave employees with limited local options

According to the American Medical Association, approximately 25% of in-network providers have disputes annually with major carriers over payment terms and network inclusion. For employers, this translates into employee frustration, potential compliance violations, and reputational damage.

The problem became more acute following the No Surprises Act (NSA), which took effect in January 2022. While this federal regulation addressed surprise billing for emergency care and certain non-emergency situations, significant gaps remain—and employers must understand how their health plan design either mitigates or exacerbates these issues.

Your Plan Design Role in Network Adequacy

Many employers believe network adequacy is entirely the insurance carrier’s responsibility. This misconception creates significant compliance risk.

What the Regulations Actually Require

Under the Affordable Care Act (ACA) and state insurance regulations, health plans must maintain networks that are “adequate” in terms of:

• Geographic accessibility: Sufficient providers within reasonable travel distances
• Specialty coverage: Adequate specialists across all major medical categories
• Timeliness: Providers accepting new patients with reasonable appointment availability
• Volume: Enough providers to handle plan membership without excessive wait times

However, the definition of “adequate” is intentionally vague, leaving room for interpretation. Insurance carriers have significant latitude in network development, and what they consider adequate may not match employee expectations or actual accessibility needs in your market.

As an employer, you have both a legal and practical obligation to:

1. Review network adequacy before renewing your health plan
2. Solicit employee feedback about network gaps and access issues
3. Benchmark against competitors in your geographic market
4. Document your due diligence in plan selection and monitoring

The Department of Labor, Internal Revenue Service, and state insurance commissioners increasingly scrutinize employer health plans for network adequacy compliance. A demonstrated history of employee complaints about network gaps could expose your organization to regulatory action or litigation.

Common Out-of-Network Dispute Scenarios

Understanding typical dispute patterns helps you identify problems before they affect your workforce.

Emergency Care Disputes

Despite the No Surprises Act, emergency care remains contentious. Disputes arise when:

• A hospital’s emergency department includes out-of-network physicians
• Air ambulance services aren’t covered at expected rates
• Emergency transfers occur between hospitals
• “Surprise” in-network hospital bills still include out-of-network radiology or anesthesia services

Your responsibility: Ensure your plan documents clearly explain emergency coverage provisions and that your carrier has protocols for handling emergency network gaps.

Elective Surgery and Specialist Care

These disputes are more complex because employees have time to verify coverage but may not understand network restrictions:

• Employees select out-of-network specialists recommended by their primary care physician
• A specialist refers to an out-of-network surgeon or facility
• Facilities list providers as in-network when they’re actually contracted with different carriers
• Pre-authorization processes fail to clarify network status before care

Your responsibility: Ensure your plan provides clear tools for employees to verify in-network status and requires pre-authorization processes that catch network issues before services occur.

Behavioral Health and Telehealth

Mental health and substance abuse treatment networks are frequently inadequate, leading to disputes:

• Limited in-network mental health providers create long wait times
• Employees resort to out-of-network care due to access issues
• Telehealth providers operate across state lines with unclear network status
• Carriers deny claims based on licensure technicalities

Your responsibility: Actively monitor behavioral health network adequacy, as this area faces particular scrutiny from regulators and employee advocates.

Protecting Your Organization from Disputes

1. Conduct Systematic Network Audits

Don’t rely solely on your carrier’s representations. Every two years, conduct an independent assessment:

• Survey employees about access to providers in their specialties
• Use CMS provider directories and third-party network adequacy tools
• Identify gaps in high-need areas (mental health, primary care, pediatrics)
• Document findings and carrier responses

2. Establish Clear Plan Language

Vague plan documents create disputes and regulatory exposure. Your Summary of Benefits and Coverage (SBC) and plan documents should explicitly address:

• How out-of-network situations are handled
• What balance billing protections apply under NSA
• The process for obtaining pre-authorization
• Emergency care coverage including surprise billing protections
• Consumer tools available to verify in-network status

3. Require Robust Employee Communication

Many disputes stem from employee confusion:

• Provide in-person or virtual benefits education during open enrollment
• Create simple, visual guides for verifying in-network status
• Establish a clear process for employees to report network gaps
• Communicate about plan changes that affect coverage

4. Monitor Dispute Patterns

Your carrier should provide quarterly reports showing:

• Out-of-network claim volume and trends
• Geographic areas with highest out-of-network utilization
• Specialty areas with network gaps
• Top reasons for out-of-network care

If patterns emerge (e.g., 15% of orthopedic care is out-of-network), this signals inadequacy requiring action.

5. Address Gaps Proactively

When inadequacies emerge, don’t wait for renewal. Options include:

• Requesting the carrier add specific providers or facilities
• Negotiating expanded mental health or specialist networks
• Implementing reference-based pricing or center-of-excellence programs
• Requiring pre-authorization for non-emergency out-of-network care
• Adjusting copays or coinsurance to incentivize in-network use

6. Evaluate Alternative Funding Models

Self-funded plans offer more control over network development and dispute management. While not appropriate for all employers, they eliminate the carrier as a middleman in dispute resolution and can include specific language addressing your industry’s unique needs.

The Role of Regulatory Compliance

Recent regulatory focus has intensified:

• State insurance commissioners now actively audit network adequacy
• The No Surprises Act expanded protections but created implementation gaps
• State balance billing laws add requirements beyond federal minimums
• ERISA litigation increasingly addresses network adequacy as a fiduciary duty

Your compliance documentation should demonstrate that you’ve made informed decisions about network adequacy and have monitoring processes in place. This protects both your employees and your organization.

Looking Forward

Out-of-network disputes won’t disappear, but employers who proactively manage network adequacy, maintain clear communication, and document their due diligence will minimize disputes and protect their employees from surprise bills.

The key insight: Your health plan is only as good as the network backing it. Don’t assume your carrier’s network meets your workforce’s needs. Verify, monitor, and adjust accordingly.

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Nexus Benefit Solutions is an independent employee benefits advisory firm based in West Michigan. Questions? Reach out at jason@nexusbenefitsolutions.com or call 616-425-9740.