In-Network versus Out-of-Network: What you need to know when selecting a medical provider

One of the first questions we ask clients calling about the denial of medical benefits is whether the provider (i.e. hospital, treatment center, doctor) was an in-network or ­out-of-network provider. Some insurers use different terms such as participating provider or contracted provider. These terms all mean that the insurance company, or its claims administrator, has negotiated with the provider for a certain rate of reimbursement. Insurance companies negotiate these rates of reimbursement with certain providers so that there is an expectation – from both the insurance company and the provider – of the amount that will be paid for medical services.

For patients who are seeking benefits for medical services, a provider’s network status is important because it affects how much the patient will pay out of pocket for treatment. When patients use an out-of-network provider, there is an additional coinsurance, or charge, that patients must pay out of pocket. This coinsurance can range from 20% to 50% of the eligible charges. Eligible charges are a lesser amount determined by any number of factors in the insurance policy, such as Medicare rates. So when patients receive bills from the provider, or statements from the insurance company, which show that only a fraction of the out-of-network provider’s charges were paid, the reason is that the eligible charge was determined to be less than the billed charges and a coinsurance applied. This can dramatically reduce what the insurance company will pay for an out-of-network claim.

Here are some tips for reducing out-of-pocket medical expenses:

  1. Select a provider that is in-network with your insurance company. Verify network status with both the provider by asking when you make an appointment and also by calling your insurance company for verification that the provider is in-network.
  2. If a patient requires a provider for a specialized service and your insurance company does not have such a provider in-network, ask for a single case agreement or network gap exception. These terms simply mean that for purposes of your treatment, the insurance company will agree to consider your provider in-network because the insurance company does not have such a provider already in its network.
  3. If you are seeking emergency medical care, most insurance policies permit you to receive emergency services from an out-of-network provider payable as though it were in-network because you did not have the ability to search out a network provider in an emergency.
  4. Balance billing is when an out-of-network provider charges you the difference between its bill and what the insurance company paid. An in-network provider may not balance bill – they must accept the reimbursement rate that was negotiated with the insurance company.

For more reading, here is an LA Times article that discusses the challenges of out-of-network bills



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