In-network vs. Out-of-network

The term ‘network’ doesn’t just refer to your office computers. Your insurance company also has a network: a group of healthcare providers with whom it contracts to provide you service. These in-network providers (which include doctors, nurses, labs, specialists, hospitals, and pharmacies) agree to charge rates that are determined by your insurance company.

When you use in-network providers, you pay a certain set part of the bill: your copayment or coinsurance. For basic care like check-ups, you’ll probably pay the same amount for any in-network provider you see. Your insurance company then pays the rest of the bill.

Out-of-network providers are a different story. They have not agreed to a contract with your insurance company and may charge higher rates for the same services. However, this doesn’t mean your insurance company will pay these higher rates for you. Your insurance company will likely only pay the amount it would for an in-network service. As a result, you owe a greater percentage of your care in the form of higher copayments and coinsurance.

Copays: in vs. out

Let’s say, for instance, that your in-network doctor has contracted with your insurance company. They agree to charge $200 for a simple office visit. Your insurance company has agreed to pay $170 for that office visit. Your copayment will be the remaining $30.

However, consider the out-of-network doctor who has not made this contract with your insurance company. The doctor charges $300 for the same office visit. Your insurance company will probably still pay $170. This means you would pay the difference: $130.

Coinsurance: in vs. out

Let’s say you pay a coinsurance of 20% on in-network doctor visits. An in-network doctor has agreed to charge $200 for a simple office visit. 20% of $200 would leave you paying a coinsurance of $40 for that in-network provider. Your insurance company would pay the remaining 80%, or $160.

Now pretend an out-of-network doctor has not agreed to lower their prices for your insurance company. They charge $300 for the same visit. For the out-of-network doctor, your insurance company might charge you a higher coinsurance percentage (e.g. 30% rather than 20%). Plus, you may be responsible for the difference between the in-network and out-of-network bills ($100). So you might be stuck with 30% of a $200 charge ($60) plus the $100 difference in doctor’s fees. That would leave you with a hefty $160 bill.

Not all out-of-network services are covered

In some cases, your insurer may not pay for out-of-network care at all. HMOs often work this way. If you need a specialist who is outside your network, you may be able to appeal to your company and ask them to make an exception in your case—but there’s no guarantee it will be granted.

The fine print: In-network isn’t always less expensive

But like many aspects of health insurance, the difference between in-network and out-of-network providers isn’t always simple. Here’s why:

Even in-network care providers may charge different fees for the same services. Insurance companies negotiate different rates with different providers, and some have more influence than others. A major university teaching hospital may have more sway with your insurance company than a local, independently owned practice.

Because of this influence, the university hospital can charge more for, say, a gallbladder surgery than the small practice—sometimes a lot more. For instance, Consumer Reports collected data for procedure prices, and found that the cost for gallbladder surgery could range from $5,000 to almost $12,500. That’s a 150% increase!

So if different providers charge different amounts for the same service, is it possible for an out-of-network doctor to be as affordable as an in-network one?

The short answer: yes. Let’s examine the gallbladder surgery above, for example. Say an insurance plan pays half the cost of out-of-network surgeries, and you elect to have gallbladder surgery at an ambulatory care center that charges $5,000. You’re on the hook for $2,500.

Now say your insurance company charges you 20% for an in-network surgery, and you go to the expensive surgeon. You would still pay $2,500!

So even though it seems counterintuitive, it is possible for your out-of-network options to be more affordable than they first appear.

Do your homework

On top of all that, staying in-network isn’t always simple. It’s easy to step outside of your plan’s network if you have outdated information about provider networks. Moreover, if you pick a hospital that is in-network, you could be treated by doctors who aren’t!

This is why it’s so important to know the prices of your healthcare and the details of your plan, and to doctor-shop. Find out if your healthcare plan posts price information online. Comb through your benefits package, call your insurance provider with any questions, and be aware of your choices. You have the right to choose the doctor who will serve your needs best.

Other options to mitigate the cost of out-of-network care: supplemental insurance from HealthMarkets

So what if you have to see an out-of-network specialist in the future for a critical illness, like a cancer diagnosis? How can you help make your necessary, but out-of-network, specialist and other out-of-pocket expenses less of a financial burden to you?

That’s where HealthMarkets Insurance Agency comes in. We offer access to supplemental insurance plans that can help you pay your medical costs in case of events like major accidents or cancer diagnoses. In these situations, your supplemental plan can help pay your deductibles and other out-of-pocket expenses. But don’t delay. It’s important to purchase supplemental health insurance in advance. These plans will not provide coverage after you have encountered a critical illness or injury.

To find out more about your health insurance options, give us a call at (800) 304-3414. We have more than 3,000 licensed agents nationwide ready and waiting to answer your call.

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