What Does Out of Network Provider Mean?

“Out of network” in healthcare refers to a provider who does not have a contract with your health insurance plan. This distinction is important for consumers, as it directly impacts out-of-pocket costs and healthcare choices. Understanding this term helps individuals navigate health insurance and manage medical expenses.

Understanding Out of Network

A healthcare provider is considered “out of network” when they have not signed an agreement with your health insurance carrier to accept a discounted rate for services. This stands in contrast to “in-network” providers, who have established contractual relationships with insurance companies. In-network providers agree to offer services at pre-negotiated, discounted rates to the insurer’s members.

Insurance companies establish “provider networks” to control costs. By contracting with doctors, hospitals, and specialists, insurers negotiate lower prices for services. When you choose an in-network provider, you benefit from these negotiated rates.

Different types of insurance plans handle out-of-network care with varying levels of coverage. Preferred Provider Organization (PPO) plans typically offer some coverage for out-of-network services, though at a higher cost share for the patient. Health Maintenance Organization (HMO) plans often provide no coverage for out-of-network care except in emergencies, requiring members to stay within the network for most services.

Costs of Out of Network Care

Using an out-of-network provider typically leads to higher out-of-pocket costs for the patient. This financial difference arises because out-of-network providers do not have pre-negotiated rates with your health plan, allowing them to charge their full price for services. Your insurance company then has less control over the charges, covering a smaller portion or nothing at all.

One reason for higher costs is that separate, often higher, deductibles may apply to out-of-network services. Unlike in-network care where your payments contribute to one deductible, out-of-network expenses might require you to meet a separate deductible before your insurance begins to pay. For example, your in-network deductible could be $1,000, while your out-of-network deductible might be $2,000 or more.

Coinsurance percentages are also usually much higher for out-of-network care. After meeting your deductible, you typically pay a percentage of the service cost, known as coinsurance. For in-network care, this might be 20% of the negotiated rate, but for out-of-network services, your coinsurance could jump to 40% or even 50% of the provider’s full charge, which is often higher than the insurer’s “allowed amount” for that service.

Balance billing occurs when an out-of-network provider bills you for the difference between their total charge and the amount your insurance plan pays. In-network providers cannot balance bill patients. Out-of-network providers are not bound by such agreements and can bill you for the remaining balance, leading to unexpected medical bills.

Navigating Out of Network Care

Determining if a healthcare provider is in your insurance network is a proactive step to manage costs. You can typically check your insurance company’s website, which usually features a provider directory. Calling the member services number on your health insurance ID card also provides information on a provider’s network status.

Seeking pre-authorization for out-of-network services helps clarify how much your insurer will pay and your estimated out-of-pocket responsibility. This process helps prevent unexpected financial burdens after treatment.

In situations where you must use an out-of-network provider, it may be possible to negotiate directly with them for a reduced rate. Providers might be willing to accept a lower cash payment, especially if it helps them avoid the complexities of insurance claims or if you are paying entirely out-of-pocket. This negotiation can lead to a discount from the provider’s standard charges.

The No Surprises Act, effective January 1, 2022, protects against surprise balance billing. It bans out-of-network providers from balance billing patients for emergency services, even if the facility is out-of-network. It also protects patients from surprise bills when they receive non-emergency services from out-of-network providers at an in-network hospital or ambulatory surgical center, such as an anesthesiologist.