Like many questions regarding healthcare billing, there are a lot of subtleties to your question, and you haven't really given us exactly the information we would need to give you an exact answer. However, we can answer in a general sense. Before trying to determine why a provider would or would not bill a certain amount, you need to understand the background of how the system works. Scroll to the quote of your actual question near the end of this answer if you don't want the "Health Insurance 101" lesson.
You made a comment under your question that mentioned balance billing and networks. That's an important part of the context for your question, since being in (or out) of network impacts what a provider is allowed to do in terms of billing.
In the US, determining insurance payments and who is allowed what money is based on two concepts:
Providers and insurers can choose to work together ahead of time to determine a billing fee schedule, which is written into a contract, and describes what a provider will get paid for certain services. Providers who choose to do this with a specific health insurance plan are said to be "in network" with that plan. Providers who don't do this are "out of network." Technically, if a provider is out of network, that means there is no fee schedule, and insurers will typically assume a rate based on an industry-wide accepted rate (often referred to as UCR, usual/customary/reasonable). Providers have an incentive to be in-network because it gives them access to a captive audience of potential patients (since people are more likely to visit in network providers due to the better benefits). Insurers are motivated to participate since it gives them leverage to get good rates with providers, and to be able to know ahead of time what they'll have to pay, which is helpful when underwriting a plan.
Health insurance plans include benefits for certain services, which are typically described in terms of a cost sharing model, depending on if the provider is in network or not. "Cost sharing" refers to coinsurance (the plan only covers a portion of the agreed rate), copays (the member is responsible for a flat dollar amount for the visit or service), or deductibles (the member is responsible to pay until they've paid a certain amount in a given year). It's important to not that cost sharing doesn't change the agreed price for the service. If a provider is contracted for $150, they will get their $150, regardless of which other party pays it due to cost sharing.
When insurance plans adjudicate claims, they generate several outputs. The provider gets a payment and a document typically called an EOP (explanation of payment) or voucher, which describes to the provider what the insurance plan did with the claim. Similarly, an EOB (explanation of benefits) is generated and provided to the member, which describes what the insurance plan has decided to do with the claim. As is usually stated in bold letters on the EOB, it is not a bill and does not imply that anyone is billing you or attempting to collect from you.
When claims are submitted, the provider can technically bill any amount they want. The insurance plan will either look the service up in the fee schedule for that provider in that network, or will look up the generic UCR rate for that service if the provider is out of network. This is usually reflected as a line item on your claim, with a reason code stating that the discount is due to the provider contract (or UCR rate). So, if a provider bills $200, but the network rate is $150, there will be a $50 discount reflected as the contract rate. Provider contracts (in every case I've seen) explicitly forbid the provider from attempting to bill the patient for this discount. So - if your EOB shows a $200 charge with an in network discount of $50, the provider generally can't bill you for that $50.
Of the remaining $150, the plan benefits may specify a cost sharing arrangement. Say, of that $150, there is a $25 copay. In that case, the plan will pay the provider $125 and indicate that they should (if they have not already) collect the $25 from the patient. As a fraud prevention measure, there are several regulations (i.e. the FFCA, the Federal False Claim Act) in the US that effectively require the provider to collect cost sharing amounts from patients. Generally, the provider can only opt to not bill these amounts (or collect them at the time of service) if the patient has a legitimate financial hardship. So in our example, the provider will almost certainly attempt to collect the $25 copay.
In essence, providers who are under contract (and therefore in network) are generally not able to bill members for any amounts that are not part of cost sharing, and they are generally required to bill the cost sharing amounts. So, in your example, if the "outstanding amount" represents the network discount, they cannot bill you for it. If it represents a copay, coinsurance, etc then they are required to bill you for it.
So what about out of network providers? For them, effectively, all bets are off. Insurance plans will make a decision on what they're owed and pay them that amount (with the discount shown on your EOB), and then the provider will respond as they see fit.
In other words, the scope of your question is fairly narrow - it really only applies to out of network providers who have chosen to bill more than the industry-typical (UCR) rates. Regarding those providers, you've asked two specific questions:
What determines how a provider chooses to make this decision?
This is hard to answer in a general sense, but there could be many reasons:
- Sometimes out of network providers and plans will negotiate specific individual claims before the payment is made (especially large ones) and sometimes those agreements include language stating that balance billing is not allowed.
- Many plans will use third party "repricing" services which attempt to negotiate with out of network providers, or which route the claims through third party networks (not owned by your insurance plan) that the provider participates in. Generally, these arrangements also explicitly prevent the provider from balance billing.
- Many states enforce "surprise bill" laws which basically state that certain out of network providers aren't allowed to balance bill patients in certain circumstances, so if you're not billed, it may be because of these laws.
- The fee schedules that providers bill at are generally inflated as a self-protective measure, to ensure that a provider never unintentionally bills less than they might receive from an insurance plan or other payor. From a provider's side, things can be very complicated in terms of trying to understand what amount(s) they may get paid for the same service provided to different patients. If you've got a handful of contracts with different plans, and you're in network with medicare, and you've got all kinds of patients with atypical insurance or cost sharing arrangements, you don't want to unintentionally bill any of those various payors less than they may have intended to pay you, so you will likely write your fee schedule above what you think the highest amount you'll be paid is, with the intention of never actually trying to get paid that much. Effectively, they bill more than they budget to collect, because they know that the vast majority of their income is coming through channels where their billed amount will be higher than what they're paid. So the choice to "write off" an amount instead of billing it may be premeditated in that sense.
So - assuming an out of network provider is paid less than they bill, and it's not covered by a surprise bill law, and there is no one-time contract, and there are no disputes or negotiations under way with a payor, and the provider actually intended to try to get paid as much as they billed - at the end of the day, they can certainly choose to balance bill the patient, or just write it off.
Simply put, unless the amounts are large, many providers are very happy to just write off the difference.
