In-Network Care:
Health insurance plans contract with providers to create a network. When doctors, pharmacies, labs, hospitals, and other healthcare professionals enter such a contract, they negotiate rates with the insurance company to serve the company’s members. This type of contract is referred to as 'being in-network.' This is beneficial for all parties: providers get access to the plan’s members, insurance companies pay less to contracted providers, and patients get lower prices for services from the plan's providers.
If the service is in-network, the provider must accept the insurance company’s negotiated rate as payment in full. You may still owe payment to the provider, depending on whether you have met your deductible yet. If you have met your deductible, you should not have to pay for services for the rest of the year. If you haven't, the payment will never be for more than what the insurance company allows.
Your in-network doctor bills $100 for a visit — some people think of this as the “retail rate." Your insurance company has contracted for a rate of $60 for that visit — some people think of this as the “wholesale rate." The most you can be charged is $60.
Out-of-Network Care:
If you access care outside of your plan’s network, also known as ‘out-of-network (OON),’ you will lose the health plan negotiated discount. If your health plan makes a payment, you will have to make up the difference between what the health plan pays and what the provider billed. This practice is called balance billing. Some insurance plans may provide some payment to OON providers. However, because the provider is not obligated to accept your plan’s rates for reimbursement, balance billing can still apply.
Your OON doctor bills $100 for a visit. Your insurance company does not have a contract with this doctor but allows $70. You will be responsible for the $30 difference.
Accessing care from OON providers carries a financial risk that can be difficult to quantify. Some consumers choose to use OON providers because their preferred provider(s) do not contract with their insurance plan. Individuals with Health Savings Account balances can use those accounts to pay for any balance bills they receive. Otherwise, it is also possible to negotiate for a lower cash rate at the time of service with an OON provider.
Plans that are more likely to have OON benefits are called PPOs. Even then, your cost-sharing expenses (deductible, copays) may be significantly higher when you access OON care. To best optimize your healthcare costs, use providers that are in-network for your health insurance plan.
Check Your Coverage:
The best way to understand your in- or out-of-network benefits is to check your health insurance summary of benefits. You can go to your insurance plan’s online provider search tools, call your insurer’s customer service line, or ask your provider’s office to confirm if a provider participates with your plan. Remember to check the network status of ancillary medical services your doctor might use. This includes labs for bloodwork, physical therapists, labs, and pharmacies.
Sometimes, individuals didn’t know they accessed OON services. Before the No Surprises Act went into effect at the beginning of January 2022, this could result in getting a bill from a provider that you didn’t expect. For example, this could happen if you had surgery from a surgeon who was in-network but the anesthesiologist was not in-network. Because of the latter, you were billed for the balance between what your plan would pay and what the anesthesiologist charged. This is financially problematic if the health plan doesn’t provide any coverage for OON services. Choosing the anesthesiologist isn’t under your control. Another scenario when this occurs is when patients are taken to an emergency room of a hospital that isn’t in-network for the plan.
After January 2022, insurers are required to treat the care in both examples above as in-network and pay according to the in-network benefits. If there’s a dispute over what the provider is paid, the insurance company and the provider have to negotiate the payment. The patient will not have to get involved.
It’s important to note, that if you voluntarily go to an OON provider, balance billing may still occur. It is valuable to educate yourself on this new protection because it is still relatively new and not all surprise medical bills will be covered. For example, while air ambulance bills are included under this bill, ground ambulances are not.
Learn More:
What You Need to Know Before Getting Out-Of-Network Care | Verywell Health
What You Should Know About Provider Networks | Center of Medicare and Medicaid Services (CMS)
Last Revised June 27th, 2022
