Navigating the Insurance Maze: In-Network vs Out-of-Network Providers
June 6, 2023
In-network vs out-of-network: what's the difference?
The American healthcare system is a complex labyrinth of insurance companies, policies, and medical professionals. At the heart of this system is the need for patients to make informed decisions about their healthcare, particularly when it comes to choosing the right medical provider. Generally speaking, in-network providers are associated with lower costs than out-of-network providers, but out-of-network providers may offer a more specialized form of care you can’t get in your network.
Don’t worry, we’ll explain why this matters in the article. We'll also explore the critical differences between in-network vs out-of-network providers, discuss the implications of choosing each, and offer tips to help you make the best decision for your healthcare (and financial) needs.
What does in-network mean?
To begin, it's essential to understand the basic concept of insurance networks. Insurance companies contract with specific healthcare providers, including doctors, hospitals, and other medical facilities, to offer services to their policyholders at agreed-upon rates. These providers become part of the insurance company's "network."
In-network providers are healthcare professionals who have a contract with your insurance company. They've agreed to provide services at predetermined rates, often referred to as the "allowed amount" or "contracted rate."
Choosing an in-network provider typically results in lower out-of-pocket costs for patients, as the insurance company covers a more significant portion of the expenses. In addition, in-network providers have met the insurance company's quality and cost standards. They come, essentially, with your insurance payor’s stamp of approval.
However, depending on your insurance plan, your options for in-network providers may be limited. This is especially true when looking for specialists who do not always contract with insurance networks, like therapists, dietitians, chiropractors, and more. For a number of financial and/or regulatory reasons, these providers may choose to opt out of all insurance networks. Meaning the best specialist for your specific healthcare needs may be an exclusively out-of-network provider.
What does out-of-network mean?
Anytime you opt to see a provider who is not in your insurance network, you are “going out-of-network.” There are plenty of good reasons to go out-of-network, but there are often costs associated with it. Let’s break down how this works.
Unlike in-network providers, out-of-network providers have not entered into a contract with your insurance company. Out-of-network providers set their own rate. As a result, they may charge higher fees for their services, and your insurance may cover a smaller percentage of the costs, leaving you with higher out-of-pocket expenses.
Some insurance plans may not cover out-of-network care at all, except in cases of emergency or when there are no in-network providers available. So, it’s important to know your insurance plan’s details. HMO plans tend to reimburse fewer out-of-network services, while PPO plans offer more out-of-network coverage.
For a deep dive on the various plan types, read How to Choose a Health Insurance Plan. And for help understanding what’s covered in your plan, read How to Check Your Out-of-Network Benefits.
What does out-of-network mean for insurance reimbursement?
Because there’s no contract between healthcare provider and insurance provider, out-of-network payments are less streamlined than in-network ones. Out-of-network insurance providers cover your medical services through reimbursements. Meaning generally, you pay the full cost of out-of-network care upfront, and your insurer reimburses their portion of the cost after the fact.
This can involve more work on the patient’s end, because you may have to follow up with your insurer to get the full reimbursement you deserve. You also have a separate deductible and different fees associated with out-of-network care. Read about the difference between copays, coinsurance, and deductibles for a better understanding of what you might pay.
People often make the mistake of thinking out-of-network care cannot be reimbursed. But that’s not true! In fact, depending on your plan, your insurer may cover up to 80 or 90 percent of your out-of-network costs, once you’ve met your deductible. Try SuperBill’s free out-of-network benefits calculator to see how much your insurer might cover.
Why does the difference matter?
To sum up, here’s a breakdown of each in-network vs out-of-network difference and why it matters for patients.
- Cost: The most significant difference between in-network and out-of-network providers is the cost. As we discussed, in-network providers usually charge lower rates for services. Their rates are kept in check by insurance companies’ policies like allowed amounts. Out-of-network providers, on the other hand, can charge higher rates, resulting in more significant out-of-pocket expenses for you.
- Coverage: Insurance plans often cover a more significant percentage of the cost for in-network providers than out-of-network providers. Some plans may not provide any coverage for out-of-network services, except in emergencies or specific circumstances. It's essential to review your insurance policy to understand the extent of coverage for both in-network and out-of-network providers.
- Quality of Care: In-network providers must meet specific quality standards set by the insurance company, ensuring that you receive, at worst, a decent quality of care. While out-of-network providers may also provide quality care, there is no official guarantee that they meet the same standards as in-network providers. However, you have access to a much larger pool of out-of-network providers than in-network, so it is likely that the best providers (especially when it comes to specialized services) are somewhere outside your network.
Essentially, the floor is higher with in-network providers, but the ceiling is higher with out-of-network providers.
- Referrals and Authorizations: Insurance plans often require referrals or prior authorizations for certain services, especially when seeing a specialist. Obtaining a referral or prior authorization can be more straightforward if you choose an in-network provider, as they are more familiar with the insurance company's requirements. With an out-of-network provider, the process may be more complicated, and there's a higher risk of a service not being covered by your insurance.
Tips for choosing the right provider:
- Check your insurance plan: Review your insurance policy to determine which providers are in-network and what coverage is available for out-of-network services. This information can typically be found on your insurer's website or by calling customer service.
- Consider your healthcare needs: Think about the specific services you need and whether you require specialized care. If you need a particular service that is not available through an in-network provider, it may be worth considering an out-of-network provider, despite the potential added cost.
- Ask for recommendations: Speak with friends, family, and your primary care physician to gather recommendations for healthcare providers. Consider both in-network and out-of-network options, keeping in mind the potential cost differences.
We hope this post has helped you identify the differences between in-network vs out-of-network providers. If you decide to go out-of-network, SuperBill can help. We verify your benefits, then file and track your out-of-network claims so you don’t have to. Try SuperBill for insurance reimbursement and let us save you time and money!