In the ever-evolving healthcare landscape, one term continues to spark concern among patients and scrutiny from lawmakers—what is balance billing and is it legal in your state? This financial practice, which has historically placed undue burden on unsuspecting patients, varies significantly depending on state regulations, type of insurance coverage, and the specific circumstances under which care is delivered. At zmedsolutions, we believe that transparency and education around medical billing practices are essential, especially in an era where healthcare affordability is more critical than ever.

Balance billing, often associated with surprise medical bills, arises when a healthcare provider bills a patient for the difference between the provider’s charge and what the insurance company agrees to pay. Though this might sound straightforward, the legality and enforceability of balance billing are highly nuanced and deeply dependent on the intersection of state and federal laws.

Understanding Balance Billing in Healthcare

Balance billing occurs when out-of-network providers charge patients for costs not covered by their insurance plan. For example, if a provider charges $1,000 for a service and the insurer covers only $600 as part of their "usual and customary" rate, the provider may bill the patient the remaining $400. This practice is most common in emergency care or during procedures performed at in-network facilities by out-of-network specialists.

While some patients knowingly choose out-of-network providers and expect higher costs, many are surprised to receive a bill from a provider they assumed was covered—often because they were treated in an in-network hospital by an out-of-network anesthesiologist, radiologist, or other specialist.

Federal Regulations: The No Surprises Act and Its Impact

To curb exploitative balance billing practices, the federal government enacted the No Surprises Act, effective January 1, 2022. This legislation offers broad protections for patients covered under group and individual health plans by banning balance billing for:

  • Emergency services, regardless of network status

  • Non-emergency services provided at in-network facilities by out-of-network providers

  • Air ambulance services provided by out-of-network companies

The law also establishes an independent dispute resolution (IDR) process between insurers and providers for resolving payment disagreements, keeping patients out of the middle. However, the No Surprises Act applies primarily to insured individuals and does not override all state-level protections or apply to self-funded employer plans unless they opt in.

State-by-State Breakdown: Is Balance Billing Legal in Your State?

What is balance billing and is it legal in your state? The answer depends heavily on where you live. States have varying degrees of consumer protection laws—some robust and others lacking. Below is a categorized overview of state-level balance billing laws as of the latest available data:

States That Prohibit Balance Billing for Emergency and Non-Emergency Services

These states offer comprehensive protections against balance billing for both emergency and in-network facility non-emergency services:

  • California
     California’s AB-72 prohibits balance billing for non-emergency services at in-network hospitals and applies to HMOs and PPOs regulated by the state.

  • New York
     New York’s Surprise Bill Law protects patients from out-of-network charges in both emergency and non-emergency situations and mandates mediation between insurers and providers.

  • New Mexico
     Bans balance billing for emergency and non-emergency services, with an arbitration process for resolving disputes.

  • Connecticut, New Jersey, Washington, and Oregon
     These states offer similarly broad protections, including strict enforcement mechanisms.

States With Emergency-Only Protections

These states prohibit balance billing only for emergency care, leaving patients vulnerable for non-emergency services:

  • Texas
     Offers protection against surprise billing for emergency services and has a state arbitration process but limited protection for non-emergency cases.

  • Florida
     Bans balance billing for emergency services but only regulates providers and insurers licensed within the state.

  • Illinois, Georgia, Louisiana, and others
     Provide partial protections but do not fully eliminate balance billing in all settings.

States With Limited or No Balance Billing Protections

States in this category either have minimal regulations or leave the resolution entirely to provider-insurer negotiations or the courts:

  • Alabama, South Dakota, Wyoming, and Wisconsin
     Offer little to no statutory protection against balance billing, especially for non-emergency services.

  • Mississippi and North Dakota
     Have vague or limited statutes that don’t clearly define patient protections.

In states without comprehensive protections, patients can face significant financial exposure, particularly if treated by out-of-network providers in emergencies or unknowingly during hospital stays.

The Role of Insurance Type in Balance Billing Exposure

The legal landscape also depends on whether the patient is covered by:

  • Fully insured plans regulated by state insurance laws

  • Self-funded employer plans governed under the federal Employee Retirement Income Security Act (ERISA)

Self-funded plans are exempt from most state insurance regulations, meaning even in states with robust balance billing protections, self-funded plan members may not benefit unless their employer voluntarily adopts similar policies.

This distinction creates a complex web of protections where patients may or may not be shielded depending on their insurance source—not just their state.

Exceptions and Special Cases in Balance Billing

There are instances where balance billing may still occur legally, even under federal or state protections:

  • Ground ambulance services are notably excluded from the No Surprises Act and many state laws.

  • Non-covered services, such as cosmetic procedures, are outside the scope of most insurance policies.

  • Out-of-network providers not bound by state regulations, such as those operating across state lines or in federally regulated facilities, may not fall under state jurisdiction.

Additionally, some providers ask patients to sign consent forms agreeing to pay out-of-network charges. However, under the No Surprises Act, such consent must meet specific legal standards and cannot be used in emergency situations.

How to Protect Yourself Against Balance Billing

Patients can take several proactive steps to protect themselves, especially in states where balance billing is still permitted:

  • Verify provider network status before receiving care, even at in-network facilities.

  • Ask for a good faith estimate under the No Surprises Act, particularly if uninsured or self-paying.

  • File complaints with state insurance departments or invoke arbitration where available.

  • Utilize advocacy services provided by employers, insurers, or independent third-party firms.

At zmedsolutions, we assist providers and patients in navigating these challenges by ensuring transparent billing processes, compliant documentation, and timely appeals in cases of erroneous or disputed charges.

Technology and Billing Transparency Moving Forward

The future of balance billing regulation lies at the intersection of policy reform and technology integration. With increased demand for price transparency tools, such as CMS’s Hospital Price Transparency Rule and payer-mandated price comparison platforms, patients are gaining more visibility into expected costs.

zmedsolutions supports providers with real-time eligibility verification, out-of-network pricing estimators, and automated disclosures to minimize the risk of unintentional balance billing and build patient trust.

Moreover, ongoing litigation and rulemaking will continue to shape the applicability and scope of balance billing protections. As a result, healthcare organizations must remain vigilant in maintaining compliance while optimizing revenue cycle strategies that prioritize ethical billing.

Conclusion: Know Your Rights, Know the Law

Understanding what is balance billing and is it legal in your state? is essential for every healthcare consumer and provider. The legality hinges not just on geography but also on the nature of the care, the provider’s network status, and the type of insurance involved. As regulatory frameworks evolve, staying informed and advocating for transparency are the best defenses against unexpected medical expenses.

With expert billing support from zmedsolutions, healthcare providers can ensure compliance, protect patients, and streamline revenue processes—all while adapting to the growing demand for financial clarity in healthcare.