Does Out of Network Mean Not Covered?

“Out-of-network” healthcare can be confusing, leading many to believe services won’t be covered by insurance. This is not always true; while out-of-network status impacts coverage, it doesn’t automatically mean a complete lack of it. This article clarifies what “out-of-network” signifies and how it influences a patient’s financial responsibility.

Understanding Network Status

Healthcare providers are categorized as “in-network” or “out-of-network” based on agreements with insurance companies. An in-network provider contracts with your health insurance plan, accepting a pre-negotiated, discounted rate for services. This means patients typically pay less. An out-of-network provider does not have such a contract, so no pre-negotiated rates are in place.

Providers may be out-of-network because they haven’t joined a plan’s network, perhaps due to inadequate negotiated rates, or the insurer prefers a smaller network. You might also receive out-of-network care for highly specialized services unavailable in-network or during emergencies while traveling. Before receiving care, verify a provider’s network status. You can check your insurer’s website, which usually has a “find a provider” tool, or call your insurance company directly using the number on your member ID card. You can also ask the provider’s office to confirm their participation in your plan.

Financial Implications of Out-of-Network Care

Receiving care from an out-of-network provider has distinct financial implications compared to in-network services. While not always completely uncovered, it nearly always results in higher out-of-pocket costs. Some restrictive plans, like Health Maintenance Organizations (HMOs) or Exclusive Provider Organizations (EPOs), might offer no coverage for out-of-network care outside of emergencies. Preferred Provider Organizations (PPOs) and Point-of-Service (POS) plans often provide some coverage, but with increased patient responsibility.

Patients face higher deductibles and coinsurance rates with out-of-network providers. A deductible is the amount you pay before insurance covers costs; out-of-network services often have a separate, higher deductible. Coinsurance is your percentage share of costs after your deductible is met, and this percentage is usually higher for out-of-network care. Out-of-pocket maximums, which cap your annual spending for covered services, can also be separate and higher for out-of-network care, or these costs may not count towards your in-network maximum.

A financial concept in out-of-network billing is the “allowed amount” or “usual and customary” (U&C) rate. This is the maximum amount your insurer will pay for a covered service. Out-of-network providers can charge more than this allowed amount. The patient is then responsible for the difference between the provider’s billed charge and the insurer’s allowed amount. This is known as “balance billing.” For example, if a service costs $1,000 and your insurer’s allowed amount is $600, you could be billed for the remaining $400 in addition to your regular coinsurance or deductible.

The No Surprises Act, effective January 1, 2022, protects against unexpected balance bills. This federal law bans balance billing for most emergency services, ensuring you are only charged your in-network cost-sharing amount. It also protects patients from balance billing when they receive non-emergency services from out-of-network providers in an in-network facility, such as an out-of-network anesthesiologist at an in-network hospital. In these scenarios, your cost-sharing is limited to the amount you would pay if the provider were in-network, and the provider cannot bill you for the difference.

Preparing for Out-of-Network Care

Proactive steps can reduce the financial burden of out-of-network care, especially for planned services. Before any appointments, contact your insurance company to understand your specific out-of-network benefits. Inquire about separate deductibles, coinsurance percentages, and out-of-pocket maximums that apply to out-of-network services. This also helps clarify if prior authorization is required for certain out-of-network procedures, which can improve coverage or prevent claim denials.

Discuss costs directly with the out-of-network provider’s office. Ask for a “good faith estimate” of the total charges for anticipated services. This estimate provides transparency regarding the expected cost before care. You can also inquire if the provider is willing to negotiate their fees or accept your insurer’s allowed amount as full payment.

What to Do After Out-of-Network Care

After receiving out-of-network care, manage billing and claims carefully. The first document you will likely receive from your insurer is an Explanation of Benefits (EOB). This document details what your insurer paid, what amount was applied to your deductible, and your remaining financial responsibility. Review your EOB to ensure accuracy and understand how your claim was processed.

If the out-of-network provider does not directly bill your insurance company, you may need to “self-file” a claim for reimbursement. This involves obtaining an itemized bill from the provider and completing your insurer’s claim form. If you receive a balance bill, especially for services protected under the No Surprises Act, verify its legitimacy. If the service falls under the Act’s protections (e.g., emergency care or care from an out-of-network provider in an in-network facility), you should not be balance billed. Contact the provider to discuss the bill, referencing the No Surprises Act if applicable, or contact your insurer for assistance.

If a claim for out-of-network care is denied or paid at a lower rate than expected, you have the right to appeal the insurer’s decision. Your plan documents will outline the appeal process, which involves submitting a written request for review and providing supporting documentation.