Many healthcare plans only cover in-network costs. But, there are situations where patients must seek care from a doctor or facility that isn’t in the plan’s network.
When this occurs, the doctors and facilities can balance bill patients for the remaining charges after the insurance company pays its portion. To help protect consumers, there are a few things to understand about how out of network insurance reimbursement works.
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The provider’s rate
Generally speaking, when you see an in-network medical provider, the doctor or hospital has agreed to a discounted rate with your insurance provider. This means the healthcare provider will not bill you for the services provided but instead rely on a “usual and customary” fee schedule to determine their charge. These fees are typically based on Medicare rates.
But sometimes, you must visit a healthcare provider not in your network. It could be an emergency, or using a provider specializing in the type of care you need might make sense. And if you have a health plan allowing you to go out of network for some or all of your health care, the provider will typically be legally required to balance you.
The reason is that, unlike in-network providers, the out-of-network provider has not signed a contract with your insurance company agreeing to accept a negotiated price as payment in full for services rendered. So, the out-of-network provider can and will usually balance bill you for their entire charge for services provided. Most health plans will reimburse for out-of-network care based on a percentage of the Medicare fee for that procedure in your area.
The patient’s responsibility
Patient responsibility is a term that describes the amount of money the patient owes for health care services. This includes any copayments or coinsurance payments that the insurance policy may require. The patient is responsible for ensuring they meet any deductibles or coverage limitations on their health insurance plan.
Choosing between in-network or out-of-network healthcare providers can affect the patient’s responsibility. Many healthcare plans have a network of doctors and facilities that they work with to negotiate a lower fee for their services. Providers not accepting the insurance provider’s negotiated rate are considered out-of-network.
Out-of-network charges can be significantly higher than in-network rates. The provider has no contract with the insurer to accept a negotiated fee. Many health insurance companies have their list of “usual, customary, and reasonable” charges to determine how much to pay out-of-network providers.
Sometimes it is necessary or even advisable for a patient to see an out-of-network healthcare provider. For example, a patient might need a life-saving procedure from a specialist in a field their current health insurance provider does not cover. In this case, finding a provider in their network who will agree to an affordable rate would take a lot of work.
The patient’s insurance plan
Many insurance plans have networks of doctors and facilities that they work with. These providers have contracts with insurance companies and agree to accept a discounted rate for their services. When you use a provider not part of your network, you’re called out-of-network (OON).
OON health care is often more expensive than in-network care. Generally, the insurance company will only pay up to the “allowed amount” for an OON service. Your specific policy determines this, so you must check your coverage.
If your physician charges more than the allowed amount, you will be responsible for paying the difference. This is why asking your physician what they charge you before treatment is essential.
Some patients choose to go to out-of-network doctors for a variety of reasons. Some are still looking for in-network providers for the care they need, while others may prefer out-of-network doctors due to reputation, familiarity, or convenience.
Regardless of the reason, it’s essential to understand how your health insurance plan handles out-of-network costs so you can make informed choices about your health care. Knowing how to avoid surprise medical bills and reduce out-of-pocket healthcare expenses is also helpful.
The patient’s deductible
The patient’s deductible plays a vital role in determining how much of the cost of medical services they will pay for that year. The deductible is the cost the policyholder must pay before the insurance company starts to chip in. Depending on the type of plan, the deductible may be met with copays, coinsurance, or a combination of both. Once the deductible has been completed, the patient will not be charged any out-of-pocket costs for the rest of the year.
The patient needs to know the difference between in-network and out-of-network providers. In-network providers contract with the health insurance provider to provide care at a discounted rate. Health insurance companies maintain directories of providers that are in-network with their plans. If a provider is not listed in the directory, they are likely out-of-network.
Some medical treatments, such as routine exams and cancer screenings, are exempt from the insurance deductible. Others, such as doctor visits, must be applied to the deductible before the insurance will begin paying for them. The deductible also contributes to the maximum out-of-pocket limit, the maximum amount the patient must pay for covered services before the insurance picks up the tab again.