What does ‘out-of-network’ mean?

You go for a routine appointment at a new doctor and—BAM! You’re hit with a larger than expected bill even with your health insurance coverage. You find out this high price is because the healthcare provider you used is out-of-network. But what does that mean? Let’s find out!

What does out-of-network mean?

Out-of-network describes a physician, hospital, or healthcare facility that is not a part of your health insurance company’s provider network. This means that your insurance hasn’t pre-negotiated a network rate with that physician, hospital, or facility, and you will be charged a larger percentage of the total medical bill or for the entire bill, depending on your particular health plan.

All managed health plans have a network, including Medicaid and Medicare.

Another blow from using an out-of-network provider is that typically these costs are not applied to your deductible if your plan does not cover out-of-network costs. They won’t count toward your out-of-pocket maximum either. 

Let’s break this down when comparing out-of-network to in-network.

In-network vs. out-of-network

When you sign up for a healthcare plan, the insurance company provides you with a list of doctors, hospitals, and healthcare facilities that are in-network. Visiting in-network providers for healthcare services will mean lower rates from as the insurance company and provider have negotiated rates. Unless your insurance company offers a generous out-of-network benefit, visiting out-of-network providers will mean your medical care expenses will increase as your insurance company will cover less or nothing at all.

For example, you see your primary care provider because your sinuses hurt. She takes a look and recommends that you see a specialist. The total charge for that trip to the doctor is $100. Since she’s in-network, a discount is applied to the total bill since your insurance has pre-negotiated a rate with that doctor. Let’s say, the discounted total is now $80. You could be responsible for the remainder of the bill depending on your coinsurance and copay.

However, after doing some research, you realize that the conveniently-located specialist you need to see is out-of-network. You decide to take the risk and book an appointment. A few weeks after the visit, you get a bill for $250. Since that specialist wasn’t in-network, no discount is applied to the total medical bill, and your insurance company either covers less, or worse, nothing at all since the provider was out-of-network and copays and coinsurance won’t apply. 

To see in- and out-of-network costs comparisons in your area, this calculator can help. It is often better to use an in-network healthcare provider, if possible, since the costs will be lower.

It is also important to note that there are typically differences in cost between health insurance plans when dealing with in-network and out-of-network fees.

• PPO stands for Preferred Provider Organization. These types of plans typically offer out-of-network benefits—although, they’re not as good as in-network benefits. The insurance company will help pay a portion of the bill and you will likely pay a larger portion of the coinsurance. 
• HMO is short for Health Maintenance Organization. These types of plans typically don’t offer any out-of-network benefits—which means you will have to cover all out-of-network costs out of pocket. 
• EPO (or Exclusive Provider Organization) is a type of health plan that only covers in-network services (except in an emergency).
• POS (aka Point of Service) is a plan that requires policyholders to get a referral from their primary care doctor in order to see a specialist. You’ll save money by using in-network providers, but unlike an HMO, you may receive care from an out-of-network provider.

Another exception to in-network vs. out-of-network costs is emergency services. Insurance companies cannot penalize you with higher copayments and coinsurance if you require emergency care from an out-of-network hospital. You also are not required to get pre-approval for emergency room services for out-of-network doctors and hospitals. However, If the out-of-network emergency room doesn’t have a contract with the insurance company, it is not obligated to accept their payment as payment in full. If they pay an amount less than the out-of-network emergency room bills, the emergency room can send the consumer a balance bill for the unpaid amount.

What do I do if my doctor is out of network?

Let’s say you’ve been visiting the same gynecologist for 10 years, but after starting a new job and changing your insurance, she becomes an out-of-network provider. You may no longer be able to visit her because you can’t afford the extra healthcare costs.

It will more likely be cheaper to change to a doctor who is in-network. However, if you do not want to leave your current doctor, talk to him or her to see if there are any options. Some doctors allow patients to pay the cash price, which can be cheaper than what insurance companies offer when compared to out-of-network prices—but it won’t count toward your deductible or out-of-pocket maximum.

You can also ask your health insurer for a network gap extension, where your insurance will cover the doctor as if they are in-network. However, these are typically only awarded for special circumstances, such as no other doctor in that specialty in that area, as it loses the health insurance companies’ money. 

Out-of-network alternatives

Out-of-network care benefits are costly. In some cases, it may be better to shop around for a new insurance plan with better in-network coverage during open enrollment or a Special Enrollment Period for major life events. 

One of the easiest ways to lower healthcare expenses is to use SingleCare to subsidize medication costs while you’re underinsured. Simply search for your medication and find the cheapest prices available, with or without insurance.