In Network vs Out of Network Providers

Health insurance is essential to help cover medical costs. However, the patient can easily get confused when they need to determine which of their doctor visits and medical expenses will be covered versus those that won’t. It becomes even more confusing when the patient’s doctor is unexpectedly gone from their current health plan.

The question comes down to whether your doctors and other healthcare providers are in network vs out of network.

IN NETWORK VS OUT OF NETWORK: WHAT'S THE DIFFERENCE?

In-network vs out-of-network expenses indicate how much you will pay when you receive medical care. Health insurance plans have negotiated rates with a network of healthcare providers and facilities. These providers are considered in-network providers for the insurance plan.

Out-of-network simply means the healthcare provider does not have a contractual negotiated rate with the insurance company. Insurance companies prefer you to go to their in-network providers, as it costs less for them. It also costs less for you, as some plans will not cover out-of-network costs at any level. Plans that do cover out-of-network providers cover a smaller portion of the expenses than in-network providers. 

If your doctor’s office updated its list of accepted health insurance plans or you’ve changed insurance plans, it can affect your provider’s in-network vs out-of-network status. If your healthcare provider no longer accepts your plan, then he or she would be considered an out-of-network provider. If you switch insurance plans to a plan that your provider doesn’t accept, again, the provider would be considered out-of-network.

Doctors sometimes choose to be out-of-network because they feel the insurance’s negotiated rate is too low for quality care. Others choose not to accept insurance due to the administrative hassle. Instead, they will complete or provide the necessary paperwork for you to submit the bill to your insurance company for reimbursement. When this occurs, the provider will be considered out-of-network.

HOW DO IN NETWORK AND OUT OF NETWORK COSTS BREAKDOWN FOR DIFFERENT HEALTH PLANS?

In-network vs out-of-network coverage varies depending on the type of health insurance plan you have. The breakdown is different based on whether you have a Health Maintenance Organization (HMO), Preferred Provider Organization (PPO), Point of Service (POS), Exclusive Provider Organization (EPO), or High Deductible Health Plan (HDHP). 

HEALTH MAINTENANCE ORGANIZATION (HMO) PLANS

HMO plans are copay plans. They generally require you to select a primary care physician (PCP) and require you to obtain a referral to see a specialist. The referral must be approved by the HMO before you see the specialist. If you do not receive a referral to a specialist before you see one, you will be required to pay the specialist's costs out-of-pocket.

There is one exception. Women do not need to receive a referral to see an OB/GYN. Also, if you have a medical emergency and go to the emergency room, the expenses incurred in the emergency room are likely to be covered. For clarification, it is best to review your plan documents.

HMOs have a network of providers from which you can choose. The network of providers will vary based on the insurance company offering the HMO (e.g., Cigna, Blue Cross Blue Shield, and others). Location also impacts the list of in-network providers.

HMOs only cover expenses for in-network providers. They do not cover costs for out-of-network providers at any level. You will have a copay and/or coinsurance to see your healthcare provider. You will also have a deductible that must be met before coinsurance kicks in.

PREFERRED PROVIDER ORGANIZATION (PPO) PLANS

PPO plans work similarly to HMOs. However, you generally do not need to select a PCP with a PPO plan, nor do you need a referral to see a specialist.

PPOs offer a network of providers to utilize. Like HMOs, the network will vary based on the insurance company offering the PPO and the location of the plan participant or employer offering the plan.

PPOs generally have higher copays, coinsurance, and premiums than HMOs, but they also come with a lot more flexibility. With most PPOs, you are reimbursed for out-of-network providers, but not at the same level you are for in-network providers. Each plan varies as to how much it will cover for out-of-network providers, so you’ll need to refer to your plan documents for the details.

Most PPOs will have a deductible you must meet before coinsurance kicks in. Sometimes, the deductible for in-network vs out-of-network providers is different. 

POINT OF SERVICE (POS) AND EXCLUSIVE PROVIDER ORGANIZATION (EPO) PLANS

POS and EPO plans aren't as common as HMOs and PPOs, though they are utilized. Both are hybrids between an HMO and PPO.

A POS requires you to select a PCP who can refer you to HMO specialists. With a POS, you can see out-of-network providers with the same caveats as a PPO.

An EPO allows you to see a specialist without a referral. However, out-of-network costs are not covered with an EPO.

HIGH DEDUCTIBLE HEALTH PLANS (HDHPS)

HDHPs work similarly to HMOs and PPOs. The two primary differences are the high deductible and the fact that no cost-sharing kicks in until the deductible is met. In other words, you are responsible for all healthcare costs up-front until the deductible is met.

For a plan to be considered an HDHP, the deductible must be $2,700 or higher for a family and $1,350 or higher for an individual. That can be a hefty upfront cost for many families and individuals. As a result, many HDHPs are accompanied by a Health Savings Account (HSA), discussed later.

HDHPs offer a network of providers from which you can choose. Many HDHPs also cover the cost of out-of-network providers, though at a much lower percentage compared to in-network providers. The deductible for in-network vs out-of-network providers might also be different.

FLEXIBLE SPENDING ACCOUNT (FSA)

Flexible Spending Accounts (FSAs) often accompany HMO and PPO plans. An FSA allows you to use pre-tax dollars to pay for qualifying medical expenses. The IRS sets the amount you can put towards an FSA each year.

An FSA can help to off-set out-of-pocket costs associated with deductibles and out-of-network providers. The money contributed to an FSA must be used for the plan year. Otherwise, the money is lost.

HEALTH SAVINGS ACCOUNT (HSA)

HSAs work similarly to an HSA and often accompany an HDHP. An HSA allows you to put pre-tax dollars into a savings account to apply towards qualifying medical expenses. The IRS sets the limit that can be contributed to an HSA.

Unlike FSAs, employers can contribute to HSAs, and employees do not lose the money contributed to an HSA. HSAs can help off-set the high deductible and out-of-pocket costs for both in-network and out-of-network providers.

EXAMPLE:

DOCTOR'S BILL ($10,000)

• HMO, PPO, and HDHP Negotiated In-Network Rate ($6,000)

YOU PAY:

• If the doctor is in-network:
• With an HMO, PPO, or HDHP after the deductible is met* ($0 OR your % of coinsurance)
• If the doctor is out-of-network:
• With an HMO ($6,000)
• With a PPO ($4,000 [$10,000 - $6,000])
• With an HDHP (Depends on the plan)

*Assumes services are covered by insurance. Any deductible remaining would likely be due before coinsurance applies. FSA and HSA funds could be applied for any qualifying out-of-pocket costs, including deductible and coinsurance.

WHAT IF MY PROVIDER IS OUT OF NETWORK?

You might have a provider that you have been going to for years that suddenly ends up being out-of-network. It can be a pain to find a new provider and start over again with your medical history. There are some options to consider to help you cover out-of-network provider costs.

BALANCED BILLING

If you have a PPO plan, you can submit your claim to your insurance for reimbursement when the provider is out-of-network. They will generally pay the difference between their in-network rate and the cost of services billed by the out-of-network provider.

For example, if the billed amount is $1,000, and the insurance’s negotiated in-network rate for the same services is $500, you will be billed $500 to cover the difference. This is referred to as balanced billed.

PROVIDER CASH SAVINGS OR SLIDING SCALE OPTIONS

With in-network providers, your insurance company does the negotiating. With out-of-network providers, you’re the one negotiating. Speak with your provider about your insurance situation.

Many providers offer private pay clients with discounts when they pay up-front or with cash. Some healthcare providers also offer bundle pricing for services, such as for a knee or hip replacement.

Some providers offer sliding scale payment options, as well. Sliding scale options require you to meet certain income and family size criteria.

REQUEST IN-NETWORK LAB AND TEST PROVIDERS

There are several labs and test facilities to choose from for healthcare services. If your provider is out-of-network, request him or her to refer you to an in-network provider for blood work, X-rays, MRIs, and so on.

HOW DO I FIND IN NETWORK PROVIDERS?

Most medical insurance providers offer a provider search on their website. If the provider comes up in the search, then they’re likely in-network. You can also call the insurance provider’s customer service number provided on their website or the back of your insurance card.

However, there can sometimes be a lag between a provider updating their status and the insurance company receiving the information. So, be sure to call your providers, as well, to confirm that they are an in-network provider with your insurance company.

WHAT HAPPENS IF I’M TRAVELING?

Some insurance covers emergency health expenses while traveling. However, some do not cover any non-domestic costs. It is best to check with your insurance company to see what your plan covers if you have upcoming travel plans. Many providers offer supplemental travel plans you can purchase, as well.