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Using health insurance provider networks will help to keep your healthcare costs down.

Health Insurance Networks

In-network and Out-of-network

What's the difference ?

♦ In-network equates to lower controllable costs. Out-of-network equates to higher unpredictable costs.

Most insurance plans contract with doctors, hospitals, urgent care clinics, laboratories, testing facilities, surgical centers and pharmacies.

They contract with just about everyone who provides healthcare services. These contracted people and facilities are called the plan’s provider network or preferred providers.

♦ The provider network has agreed in advance to accept the insurance plan’s contracted payment for services.

The providers in the network have agreed to accept as full payment the allowed amount and to not bill the patient for any charges over the allowed amount.

♦ If you use a provider in your plan’s network, you do not need to negotiate prices because the price have already been determined by the plan’s contract with the provider.

Most of the time, the allowed amount is heavily discounted from the initial charges.

Depending upon the services received you may have to pay a deductible, a copayment or a coinsurance.

If you use a provider that is not in your plan’s network that is called going out-of-network.

In that case, the provider is not under contract to accept what your insurance company determines is reasonable (allowed). 

♦ The provider is not obligated to accept your insurance company’s allowed amount as full payment.

The provider can and usually does bill the patient for the difference between their initial charges and the allowed amount. This is called balance billing. Most of the time, this difference is quite a lot.

Surprise Billing

Balance Billing

This is when a provider bills you for the difference between the provider’s charge and the allowed amount.

This can happened when the provider is not in your plan’s network (not a preferred provider).

Read more about Surprise Billing.


• The provider’s charge is $1000 and the allowed amount is $400. The balance is $600. The provider may bill you for the remaining balance of $600, hence the term balance billing.

• A preferred provider (in-network) may not balance bill you for the remaining $600. The provider must accept $400 as full payment and essence discount the remaining $600. Such is the power of network contracts.


Coinsurance is higher if you use an out-of-network provider.

Fewer and few plans are paying for out-of-network services. The plans that pay are PPO and POS type plans.

PPO and POS plans are becoming far less common as employers and insurance companies try to control healthcare costs.

♦ If you are fortunate to have a PPO plan you can received services from out-of-network providers but coinsurance percentages will be higher than if you used an in-network provider.

In-network coinsurance is typically 20 – 25%, while out-of-network coinsurance is 30 – 40%.


♦ An out-of-network doctor charges $6,000 and your insurance allowed $4,000. With an out-of-network coinsurance of 40% you would owe $1,600 on the allowed amount and your insurance would pay $2,400.

• The doctor will not want to accept $4,000 as full payment because and he is not obligated to do so. You can expect the doctor will balance bill you for the difference of $2,000. This is a large sum.

• You should ask the doctor to discount. Most of the time you can get a significant amount written off.

♦ If you had visited an in-network doctor, you would have paid less than $1,600 since your in-network coinsurance is less than out-of-network.

There would not have been an issue with balance billing because the difference of $2,000 would have been discounted.

Why you might use out-of-network ?

HMO and EPO type plans do not pay anything for out-of-network services, except for true emergency needs.

If you have an HMO plan you need to know who your network providers are.


♦ Accidentally using an out-of-network provider can quickly become very expensive.

HMO plans require you to have primary care physician (PCP). Should you need to see a specialist your PCP will refer you to one.

• A common mistake is to depend upon the PCP to send you to someone in your network.

If you are in a well-known network the risk of being sent accidentally to an out-of-network specialist is low.

If your plan has a limited network (which is becoming more and more common) the risk of being referred to a specialist that is not in your plan’s network is high.

It is imperative to confirm with your insurance plan and the specialist’s office that the doctor is in your plan’s network.

♦ Hospital’s in-network do not guarantee that all the doctors that might see you during an admission are also in-network.

A Kaiser Family Foundation analysis found that among private insured patients 1 in 5 emergency room claims and 1 in 6 in-network hospitalizations include at least one out-of-network bill.

♦ During the waning days of the Trump administration legislation was tacked onto a Covid relief bill to try to rein in Surprise Bills.

Starting in 2022, consumers won't get balance bills when they receive care at an in-network hospital but are unknowingly treated by an out-of-network physician or laboratory.

There are a number of exceptions that will allow providers to sneak in charges.  Like asking you to sign a release form giving them permission to charge you more.

♦ Individuals purchasing insurance through the various marketplaces can expect to find mostly HMO type plans. These plans do not provide protection from being charged by an out-of-network provider at an in-network hospital.

If you are having a planned procedure performed you should ask the hospital admissions if the people treating you are in your plan’s network.

♦ Anesthesiologists are the poster bad guys these days. A disproportionate number of anesthesiologists have refused to join provider networks.

If you run into this case there is one option you can pursue. It is referred to as the RAPS provision that many insurance plans have.

You may have to file a formal appeal to get your plan to consider it.

♦ RAPS stands for radiologists, anesthesiologists and pathologists.

The provision allows for these types of providers to be paid at network coinsurance levels, if treatment is rendered in a network facility.

• You may still be balance billed but at least your insurance paid something.

Best Care

The best hospital or the best specialist might not be in your network.

If you or your family have a serious illness or injury, cost is likely to be the last thing on your mind.

Using an out-of-network provider may be the only option.


Emergency situations do not allow the luxury of time to find an in-network facility.

♦ Insurance plans cannot make you pay more in copayments or coinsurance if you get emergency care from an out-of-network hospital.

However, the reason for the visit must be a true emergency.

Something that is severe or life-threatening, a broken leg or symptoms of a heart attack for example.

♦ A hospital and any doctors outside your plan’s network are not required to accept what your plan decides is reasonable and customary to pay for the services you received during the emergency.

They can and probably will bill you for the difference.

♦ Dealing with out-of-network bills is confusing, frustrating and extremely stressful.

It is something everyone encounters eventually.

♦ You can do a lot to avoid out-of-network charges by understanding your plan’s Summary of Benefits Coverage (SBC) and by carefully selecting only providers from your plan’s network.

Unfortunately, there may still be times when you will have to complain or say, “I’m sorry I cannot pay. Please reduce the bill.”

This is the nature of health care in America.

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