In-Network, Out-Of-Network, and Preferred Providers – Read This Before Buying a Health Plan

Kelley-Jensen2In-Network, Out-Of-Network, and Preferred Providers – Read This Before Buying a Health Plan:  One of the benefits of a health plan is decreased rates for services with certain doctors and health care providers.  The terms for these relationships are:

Preferred Provider Organization  – Insurance carriers establish a list of contracted health care providers that have agreed to a discounted fee schedule for their health plan members.  This PPO list is referred to as a provider directory of participating doctors and health care providers.

In-Network – The health care providers on a given carriers list are considered to be in-network, and the cost of services in this network are less than standard fees for services outside of the network.  The advantage of using in-network providers is that you will have predictable share of cost, (like fixed dollar co-payments and co-insurance) and the billing process tends to go smoother.

Out-of-network services – Under your health plan, you are probably still covered to use health care providers that are not part of your carrier’s network, but your share of cost will almost certainly be higher.  You may not have a set co-pay, services may be subject to a deductible and the provider may hold you the patient responsible for a portion of the services called a “balance bill.”  This is when your carrier’s reimbursement falls short of the providers fee.  Remember, out-of-network providers have not agreed to the network discount and will hold you responsible for the difference.

Here is some quick math:

Doctor X’s fee as a participating provider – $150 per visit

Doctor Z’s standard fee – $200 per visit

So, if you had a health plan that covered 70% of your expenses for in-network services, the carrier would pay Doctor X $150 x 70% = $105 and your share would be $45.  Doctor Z, who is out-of-network, would be reimbursed at the same rate as Doctor X which is $105, so your share of cost to see Doctor Z would be $95.  Note that these examples do not consider Copays or Deductibles that also might be associated with your plan.

IMPORTANT TIP:  Some health care services will send you a bill for the difference between their standard fee and their in-network fee.  YOU DO NOT HAVE TO PAY THAT HEALTH CARE PROVIDER MORE THAN YOUR PLAN IN-NETWORK’ RATE.  That is very important, because some doctors will send a bill to patients for more than they owe.  Scan the bill carefully for the rate of service and compare to your plan’s negotiated rate.

So to save money, you need to use the doctors in your network.  Some of the new health plans  sold in compliance with health care reform will offer less network doctors and providers, limiting who you can use for services.

This is not a big deal in the sense that all of the providers are certified and regulated by the medical boards in their states, every 1 to 3 years, in order to keep good standing with the insurance carriers.  That means that everyone in your network will be qualified, but if you have a certain preference to a doctor or a specialist, then you need to make sure that person is in-network for the health plan you buy.  Here are some examples:

1)    The gynecologist that has been your doctor for years

2)    The provider of behavioral services, such as ABA for an autistic child

3)    The asthma clinic close to your house

How to know if these doctors are in-network or out-of-network?  If you already have a health care provider that you like, start with them and ask what insurance plans they take and are providers for first.  Once you know the plans they accept, shop within those plans.

If you are uninsured and do not have a certain doctor, but know that once you have insurance, you will be using a certain doctor’s services, shop for the doctor first.  This is most important when looking for specialists that serve a chronic condition or ongoing behavior.

Lastly, if you do not have any chronic conditions, are healthy, and will only be using a doctor’s services in the event of an accident or infection, any health care provider in-network will be a good choice for you.  That is more value brought by health insurance:  doctor’s that have been vetted by carriers for discounted rates.  When you are insured, you have this peace of mind.  Get more tips on how to buy affordable health insurance.


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