Out of network lien

In-Network vs. Out-of-Network

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Director of Content Marketing, MoneyGeek

Nathan Paulus is the Head of Content Marketing at MoneyGeek, with nearly 10 years of experience researching and creating content related to personal finance and financial literacy. Paulus has a bachelor's degree in English from the University of St. Thomas, Houston. He enjoys helping people from all walks of life build stronger financial foundations.

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Dr. Rae Osborn is a MoneyGeek content editor with over seven years of editing experience and over 20 years of experience in publishing and writing science content. She also works as a science researcher, writer and editor and a professional reviewer for Science Reviews and Advances in Entomology.

NP

NP

Director of Content Marketing, MoneyGeek

Nathan Paulus is the Head of Content Marketing at MoneyGeek, with nearly 10 years of experience researching and creating content related to personal finance and financial literacy. Paulus has a bachelor's degree in English from the University of St. Thomas, Houston. He enjoys helping people from all walks of life build stronger financial foundations.

RO

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Dr. Rae Osborn is a MoneyGeek content editor with over seven years of editing experience and over 20 years of experience in publishing and writing science content. She also works as a science researcher, writer and editor and a professional reviewer for Science Reviews and Advances in Entomology.

Updated: May 22, 2024

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• What Is In-Network?
• What Is Out-of-Network?
• Examples
• FAQ
• Related Content

• What Is In-Network?
• What Is Out-of-Network?
• Examples
• FAQ
• Related Content

In health insurance, medical services will either be in-network or out-of-network. An in-network provider has negotiated a contract with the health insurance company, agreeing to offer services at predetermined rates. This arrangement typically results in reduced costs for policyholders. Insurance companies also help cover the cost of in-network services through co-insurance.

Conversely, out-of-network providers don’t have such agreements with insurance companies, so patients will generally pay more for services. In addition, many health insurance plans don't cover out-of-network care outside of emergencies.

Knowing the difference between in-network and out-of-network providers can reduce out-of-pocket costs and prevent unexpected expenses. Here's a breakdown:

Key Differences Between In-Network vs. Out-Of-Network

Definition

Refers to providers that have a contract with your health insurance company to deliver medical services at predetermined rates.

Refers to providers that don't have specific rate agreements with your insurance company.

Cost and Coverage

You typically pay lower out-of-pocket costs due to the agreed-upon rates between providers and insurers. Your insurance also covers more of the cost of in-network care.

You often face higher out-of-pocket costs, as there are no negotiated rates, and your plan may not cover out-of-network care. Emergencies tend to be exceptions.

Billing

The provider often bills the health insurance company directly, and you then receive a bill from the insurance company if there is a remaining balance left to pay.

The provider often hands the bill directly to you, which you can submit to the insurance company for reimbursement if your plan includes out-of-network coverage.

Flexibility

Limited provider choices; you might need referrals for specialists.

You enjoy more flexibility in choosing providers and might not need referrals.

Specialized Care

Access might be restricted if the needed specialist isn't within the network.

Greater likelihood of accessing specialized care.

What Is an In-Network Health Care Provider?

An in-network health care provider has an agreement with an insurance company to offer services at set rates, typically lower than those of out-of-network providers. Using in-network health care providers is usually ideal, but there are also some disadvantages. All health insurance plans include a network of providers, but two types of plans generally cover in-network care exclusively: EPOs and HMOs.

In-Network Plan Types: HMO and EPO

The following plan types typically include coverage for only in-network services. The differences between them directly influence health care costs. Let’s look at these different types:

• HMO (Health Maintenance Organization): HMO plans strongly encourage you to use their network of doctors and hospitals. In-network services often come with lower out-of-pocket costs. HMO plans don't generally cover out-of-network care, except in emergencies, and they may require a referral if you need to see a specialist.
• EPO (Exclusive Provider Organization): Like HMOs, EPO plans only cover in-network care, except in emergencies. However, they generally offer a larger provider network than HMOs and don't usually require referrals. They offer no coverage for out-of-network care, making it crucial to use health care providers within the network to avoid high out-of-pocket expenses.

Pros and Cons of Using In-Network Health Care

In-network health care typically offers lower out-of-pocket costs and reduced paperwork but may limit provider choices. Below is a table detailing these benefits and drawbacks.

• Typically, lower out-of-pocket costs due to negotiated rates and higher co-insurance
• Predictable billing with alower chance of unexpected costs
• Reduced paperwork as the provider bills the insurance directly

• More limited choice of providers depending on medical need

What Is an Out-of-Network Health Care Provider?

An out-of-network health care provider has no rate agreement with your health insurance company. Choosing such providers alters billing and usually incurs higher costs than in-network services. The following are some reasons you might choose or inadvertently end up with an out-of-network provider:

You might need a specific treatment or specialist not in your insurance network.

Quality and Reputation

Certain out-of-network providers may offer superior care or have outstanding reputations.

Travel or relocation might necessitate visiting an out-of-network provider, especially in emergencies.

Not Knowing the Status of Every Doctor Who Treats You

You may choose an in-network facility but receive care from an out-of-network doctor or provider, leading to unexpected costs.

Out-of-Network Plan Types: PPO and POS

The following two plan types typically offer some out-of-network coverage in addition to in-network benefits:

• PPO (Preferred Provider Organization): PPO plans grant you more flexibility in choosing providers. They cover both in-network and out-of-network care, though the former typically at reduced rates and a higher percentage. While encouraged to use in-network providers, members can opt for out-of-network care if necessary.
• POS (Point of Service): A POS plan offers you a blend of PPO and HMO features. You'll pick a primary care physician (PCP) within the network, who can then refer you to specialists if needed — even if they’re out-of-network. While in-network care keeps your costs down, you can explore out-of-network care with a referral from your PCP.

Balance Billing

Balance billing is when a health care provider bills a patient for the difference between an out-of-network provider's charge and the amount allowed by the patient's insurance. Balance billing happens after the insurance company pays the provider the allowed amount for services rendered.

Example

John visits Dr. Thompson, an out-of-network cardiologist, for a consultation. Dr. Thompson's fee is $300. While John’s policy does cover out-of-network visits, his insurance only reimburses up to $180 for such consultations. Dr. Thompson then bills John for the remaining $120. This remaining charge is an instance of balance billing.