How do I know if my hospital based providers are in-network or out-of-network, and why may this be important to me?

For folks in Medicare Advantage Plans, PPOs, HMs, and most any other health plan other than original Medicare or Medicaid you need to know and understand the healthcare provider network(s).  These networks are the providers who offer discounts to the insurer and you for accessing care from them. Providers not in the network are paid at a different level and those costs fall into your out of network costs bucket.

To help you understand your health plan and the importance of using network providers let’s look at a couple of examples. First most Health Savings Account based plans have a 2:1 ratio out of network to network costs in order to meet maximum out of pocket costs. Of course there is also the cost above what the insurance carrier allows that can take the out of network costs out of sight.   So if you have a $5000 family in-network deductible the out of network may be $10,000 for the family. Then you add on any above allowable costs before you get to the total out of pocket cost.

Network providers’ costs count towards the in-network (much lower) deductibles. Also, they are not allowed to bill for costs above the contracted rates. That aspect is one key piece of the puzzle that helps keep the total costs in check. Also, the networks help to assure quality of the providers within them, because in theory the providers are processed thru a series of checks and balances to ensure they meet requirements to join the network.

The insurance companies create or rent networks created by network development companies. They use the networks to contract rates with providers both facility and non facility. These contracts establish set reimbursement rates that help control the cost of care. The insurance companies can then model the reimbursement rates against their claims history over a normalized time period. This allows them to evaluate expected claims costs for periods of time going forward. This allows the setting of premiums by the carriers. Thus, all of the plan elements are based on in-network use.

When people use out of network providers it can due to unchecked quality lead to higher overall costs and over utilization in some cases.  For this reason because this can cost the insurer more money than expected they create more cost sharing for the insured to help cover these extra costs.  Thus it is key to know and understand your provider network.

Usually, the best place to check to see if a physician or any other provider is in the network is to go to the insurance company website and look up the provider. Most carriers update the provider list at least once per week, some as often as every night. Of course the provider should be able to answer the question about being in network as well. It is key though to specifically ask if they are In-Network, not just if they accept the insurance.  Most out of network providers will say yes they accept the insurance and you get a rude surprise when the bill comes showing it paid on an out of network basis.

Use of out of network providers will cost you more out of your own pocket, and in these days of high cost for healthcare most folks don’t want to spend any more than needed for quality care. You will also find that you are not protected from above the allowable amount dictated by the insurance company. Thus, if you get care and the charge is $500 and the allowable by the insurance company is $150, in addition to your cost share the provider may demand the $350 over and above the allowable which they are legally able to demand.

Networks are there to help control costs for the insurance company and the insured, so use out of network providers at your own risk.