What are Network Providers, and Should You Use Them?
When you pay your health insurance premiums, you may expect your insurer to pay benefits for the medical services you need, regardless of which doctor you choose. So why should it matter whether you choose an in-network provider or an out-of-network provider? Although you have the right to choose any doctor you wish, it pays to choose in-network health care providers whenever possible – not just to save the insurance company money, but to save yourself a lot of out-of-pocket costs as well.
What is a Network?
Health insurers contract with certain health care providers to pay for certain medical services at a reduced rate. Often, those reduced rates are dramatically less than the original cost of a service. For example, a $20,000 maternity hospital bill could be reduced by 75 percent or more for an individual covered by a contracted health care provider. Insurers accumulate lists of doctors, hospitals and specialists with whom to contract, and call them a "network." By encouraging insurance policy-holders to choose network providers, insurers ultimately pay significantly less for in-network claims than they would for services given by an out-of-network provider.
How Network Providers Benefit You, the Policy-Holder
When you file a claim against your health insurance, your insurer pays a pre-determined percentage of your medical bills to the provider on your behalf. Usually, the percentage your insurer pays depends on whether you choose an in-network or out-of-network health care provider. For example, it is not uncommon for health insurers to pay 80 percent of the covered costs for in-network services, but only 70 percent for those performed out-of-network.
If paying an extra 10 percent of your medical bills does not sound like that much more money, you are technically correct. But in reality, you will pay much more than an extra 10 percent for using an out-of-network provider. That is because network care providers heavily discount your medical bills, whereas out-of-network providers typically offer no discounts at all. In other words, your coinsurance for a $20,000 maternity bill in-network may only cost you $1,000 after network discounts and your insurer's 80 percent payment. On the other hand, the same bill at an out-of-network provider could cost you a whopping $6,000 after your insurer pays 70 percent of the non-discounted price.
How to Know if a Provider is In-Network
It is very important to find out whether a doctor or hospital is in-network prior to receiving services – even if you have previously visited the provider and filed an in-network claim. It is not uncommon for doctors to make changes to the health insurance companies they prefer to contract with. To find out whether your provider is in your network, ask your doctor's insurance and accounts manager when you make your next appointment or at the beginning of your next visit.
Your insurance company may also provide you with a list of network health care providers, but keep in mind that it may be out-of-date. Usually, it helps to use the insurance company's list of providers as a starting point for finding a doctor or hospital. Just be sure to verify network coverage with the health care provider prior to receiving services.
Is It Ever a Good Idea to Go Out of Network for Health Care?
Costs aside, your health is much more important than money. Sometimes, it makes sense to go to an out-of-network provider, such as when you are out of town or if you need to visit a specialist, and the closest in-network specialist is a couple of hours or more away from your home. Although out-of-network health care providers are under no obligation to discount your medical bills, it will not hurt to ask for the negotiated rate – especially if you explain that your circumstances do not allow for you to see an in-network provider.