What’s the Difference Between In-Network and Out-of-Network Doctors?

August 15, 2018

If you have medical insurance, you likely hear the terms ‘in-network’ and ‘out-of-network’ doctors. What does this mean? How does it affect you?

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While these terms might seem useless, they are very important to your budget. Your insurance may provide greater coverage if you choose an in-network doctor versus one that isn’t in the network. We discuss the details of both options below.

What Does In-Network Mean?

Your insurance company has a network of doctors or providers. These medical providers agreed to specific rates for each of their services. The insurance company and medical provider come to this agreement and then the medical provider becomes part of the insurance company’s ‘network.’

Because the insurance company has a contract with these medical providers, it may keep your costs lower than if you used an out-of-network provider. As an insured patient, you are only responsible for the in-network charges the provider requires. Because you used a provider within the network, your insurance company will generally pay the difference between your co-pay and/or deductible and the provider’s charges.

The Benefits of Using In-Network Providers

When you choose an insurance company, you should research their network of doctors. Choosing popular insurance companies, such as Blue Cross Blue Shield and Humana may give you a very large network. Choosing smaller insurance companies may limit your network, which could make it harder to find a doctor.

Even if you find it hard to find a doctor, you’ll realize several benefits by using an in-network doctor:

  • You’ll pay discounted rates. The provider cannot charge you more than the agreed upon rate with the insurance company. This could save you money on the services had you gone elsewhere.
  • You’ll have an easier time with billing. Using an in-network provider means the provider has arelationship with your insurance company. The provider will likely only ask you to pay your co-pay or deductible amount. They know the amount they will receive from the insurance company ahead of time and they won’t hold you liable.

What Does Out-of-Network Mean?

If your medical provider is out-of-network, it means they don’t have pre-negotiated rates with the insurance company. This may happen if the provider feels the rates required by the insurance company don’t adequately cover the cost of the service.

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If you see an out-of-network provider, you don’t have the protection of limited fees. The provider is free to charge you the full cost of the service because they don’t have an agreement with the insurance company. This means you could face ‘balance billing.’

Balance billing means the provider will require you to pay the full amount of the cost of the services. Here’s an example:

Joe went to an in-network doctor for a few services. Normally, the provider would charge $1,000 for the services. Because Joe used an in-network doctor and the insurance company contracted with them to charge only $600 for the services, $600 is the max Joe will owe. Joe has a co-pay of $10 to see the doctor and a $250 deductible. The insurance covers the remaining charges. Joe only pays $260 out of pocket.

If Joe went to an out-of-network doctor for the same services, he may pay more. Let’s say the provider also charges $1,000 for the services. He has a co-pay of $25 and an $800 deductible for out-of-network providers. This means right off the bat Joe must pay $825. He must also pay the difference between what the insurance covers and the remaining balance. If Joe used an in-network doctor, that difference would get written off and Joe wouldn’t owe it.

The Benefits of Using an Out-of-Network Doctor

It might seem strange to consider using an out-of-network doctor, but there are a few benefits.

If you are used to a specific doctor and it’s a specialty you can’t find elsewhere, you may want to stay with this doctor. Your health is important. You can always earn more money, but you may not be able to get the healthcare you need elsewhere. If you have a good relationship with the doctor, you may be able to work out a payment plan. The doctor understands that if you had in-network benefits, they would not receive the full amount of the charges. This may give you room to negotiate.

Doctors may offer cash discounts. If you know your out-of-network befits are minimal, consider talking to the doctor about a cash discount. Whether you can pay the balance in full at the time of service or you work out a payment plan, the doctor will likely make more when you pay in cash. This may allow him to give you some type of discount on the services you need.

If you have the option, it’s usually best to choose an in-network doctor. If you have to use an out-of-network provider, though, make the best of it by negotiating the rates and payment arrangements so you can afford the services that you need.

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