What Does It Mean If a Provider Is Out of Network?

Health insurance helps manage healthcare costs. Understanding what it means for a healthcare provider to be out of network is important for avoiding unexpected financial burdens.

Defining Provider Networks

Health insurance companies establish agreements with various healthcare providers, including doctors, hospitals, and specialists, to create what is known as a provider network. These networks are formed through contracts where providers agree to offer services to the insurer’s members at pre-negotiated rates. This arrangement allows insurance plans to manage costs and provide members with access to care at rates lower than what might be charged to uninsured patients.

When a healthcare provider is “in-network,” it means they have a direct contractual relationship with a patient’s specific health insurance plan. This contract dictates the fees for services, which are typically discounted. Conversely, an “out-of-network” provider does not have such an agreement with a patient’s insurance company. They have not agreed to the discounted rates established by the insurer, leading to different billing practices.

Insurers often incentivize the use of in-network providers by offering more favorable coverage terms. Choosing an out-of-network provider generally means the patient’s insurance plan will cover a smaller portion of the costs, or in some cases, none at all, shifting a greater financial responsibility to the individual.

Financial Implications of Out-of-Network Care

Receiving care from an out-of-network provider typically results in higher out-of-pocket costs for the patient compared to using an in-network provider. Insurance plans often apply separate, higher deductibles and co-insurance percentages for services obtained outside their network. For instance, an in-network co-insurance might be 20%, while out-of-network services could require a patient to pay 40% or more of the cost.

A financial consequence of out-of-network care is “balance billing.” This occurs when a provider bills the patient for the difference between their total charge for a service and the amount the insurance company pays. Out-of-network providers are not bound by agreements to accept the insurer’s allowed amount as full payment and can bill for any remaining balance.

Insurers determine what they consider a “usual and customary rate” (UCR) or an “allowed amount” for a medical service. If an out-of-network provider charges more than this UCR, the patient becomes responsible for the difference, in addition to their standard deductible and co-insurance. For example, if a doctor charges $300, but the insurer’s UCR is $150, the patient could be billed for the $150 difference, plus their co-insurance on the $150 allowed amount.

Some health plans, particularly Health Maintenance Organizations (HMOs), may offer no coverage for out-of-network services whatsoever, except in emergency situations. Preferred Provider Organizations (PPOs) generally provide some level of coverage for out-of-network care, but it comes with substantially higher patient cost-sharing. Patients may face higher deductibles and co-insurance amounts before their plan begins to pay, and the total out-of-pocket maximums for out-of-network care can also be considerably higher than for in-network services.

Steps to Take with Out-of-Network Providers

Before receiving medical care, especially for scheduled procedures or appointments, it is advisable to verify a provider’s network status. Patients should directly contact their insurance company using the phone number on their insurance card or by checking the insurer’s official online provider directory. This step helps confirm if the provider is in-network with their specific plan and avoids relying solely on information from the provider’s office. For planned out-of-network services, it is also important to inquire about pre-authorization requirements, as some insurers require prior approval for coverage.

In emergency situations, federal protections are in place to shield consumers from unexpected out-of-network bills. The No Surprises Act, which became effective on January 1, 2022, generally bans balance billing for most emergency services, even if the facility or provider is out-of-network. This law also protects patients from surprise bills for certain non-emergency services provided by out-of-network providers at in-network facilities, such as an out-of-network anesthesiologist at an in-network hospital. Under this act, patient cost-sharing for these protected services is limited to the in-network rate.

After receiving care, patients should carefully review the Explanation of Benefits (EOB) form sent by their insurance company. The EOB details how the insurer processed the claim, the amount they paid, and the amount the patient is responsible for. If an unexpected bill arrives from an out-of-network provider, especially if it appears to be a balance bill for services covered by the No Surprises Act, patients should contact their insurance company for clarification. It is often possible to negotiate directly with an out-of-network provider regarding the bill, as they may be willing to accept a lower amount.

If negotiation is unsuccessful and the bill appears to violate protections like the No Surprises Act, consumers have avenues to dispute it. This can involve appealing to the insurance company or engaging in the federal dispute resolution process. Understanding the specifics of one’s own health insurance policy is important, as policy documents outline out-of-network benefits, deductibles, co-insurance, and out-of-pocket maximums.