In-Network vs. Out-of-Network: Understanding the Difference
Sep 26th 2019

In-Network vs. Out-of-Network: Understanding the Difference

Medical service costs can vary widely depending on if services performed are "in-network" or "out-of-network." Below, we've provided a breakdown of what this means for you, the patient, to help demystify some of the costs around treatment plans.

Remember: an in-network provider (like a doctor or hospital) is one whose services are accepted by your health insurance plan. An out-of-network provider is not part of your health care plan's network, so their services will cost more.

Each healthcare plan covers a percentage of treatment costs. How much is covered depends on a number of factors, including:

1) The type of healthcare plan

2) Your deductible

3) Whether the medical provider is in-network or out-of-network.

In-network doctors and hospitals have worked out negotiated fees with your healthcare plan provider, so their services can cost less. However, if you see a doctor outside of the network, the visit can cost more—sometimes a lot more.

Since the outside-network medical provider hasn't agreed to a negotiated fee, they'll charge full price. Your healthcare company, meanwhile, doesn't want to pay medical providers the full price. So, depending on the specifics of your plan, you may get stuck with the full bill.

Even if you understand how healthcare networks work, there's still a chance that you'll be hit with surprise out-of-network charges even if you thought your appointment was in-network. For example, sometimes an in-network doctor might send labs out-of-network, or a surgery might employ an anesthesiologist who is out-of-network.

Before making an appointment, call your healthcare plan provider (the number on the back of your card) and confirm your medical provider is in-network. Ask where labs are sent and if there are any chances for out-of-network charges.

How Different Health Plans Approach Networks

Exactly how much more an out-of-network visit will cost depends on the type of your health plan.

Health Maintenance Organization (HMO) plan comes with a lower premium—and a more restricted network. If you go outside the HMO network, the plan won't cover anything and you'll be on the hook for the full cost.

Preferred Provider Organization (PPO) plan is more flexible. You have to pay a higher monthly premium for these plans but PPO networks are typically larger than HMO networks. If you go out-of-network you'll still pay more than with an in-network PPO provider, but a percentage of the visit will be covered. The catch is that the percentage that's covered is less than if you visited an in-network provider.

An Exclusive Provider Organization (EPO) typically costs less than a PPO, while letting you choose doctors without a referral, unlike an HMO. But if you go outside the network, those visits aren't covered at all.

Sometimes new plans are created to try to bridge the network divide. For example, some self-insured employers are looking into reference-based pricing (RBP), which eliminates networks altogether. An RBP plan simply covers 120 to 300 percent of Medicare charges. The goal is to be more transparent in pricing.

Surprise Network Charges

If you do all your research and are still hit with unexpected out-of-network charges, your options aren't totally spent. In California, for example, surprise or balance billing is illegal in certain cases. Similar legislation has been passed in other states, including Oregon. So if you're hit with such a bill, you can contact your state's insurance department to find out if the bill was legal. You might be able to file a grievance with the state insurance board too.

If all else fails, ask the hospital or doctor's office about financial aid. Sometimes all or part of your bill will be forgiven if you pay a small portion up front, especially for patients in financial need. You can also call your insurance provider and see if they'll consider billing a service as in-network care, especially if you had a compelling medical emergency.

Finally, if you have a high-deductible plan, consider getting a Health Savings Account (HSA). Contributions are made tax free and the funds can be used to help with out-of-network charges and other medical costs.

The Bottom Line

In-network versus out-of-network charges can be confusing, and it pays to do some legwork before receiving medical services, wherever possible. While you might still get hit with out-of-network charges even when you do your research, knowing your options like contacting state insurance boards or trying a little negotiating can help you resolve or more effectively manage those situations.