What an Out-of-Network Provider Means

There May Be Times When One Is Necessary

An out-of-network provider is one which has not contracted with your insurance company for reimbursement at a negotiated rate.

Some health plans, like HMOs and EPOs, generally do not reimburse out-of-network providers at all (except in emergency situations), which means that as the patient, you would be responsible for the full amount charged by your healthcare provider if they're not in your insurer's network. Other health plans offer coverage for out-of-network providers, but your out-of-pocket costs would be higher than it would be if you were seeing an in-network provider.

A patient presents a health insurance card
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In-Network Versus Out-of-Network Providers

An in-network provider is a healthcare provider or hospital that has signed a contract with your insurance company, agreeing to accept the insurer's discounted rates. For example, the healthcare provider might charge $160 for an office visit, but they've agreed to accept $120 as payment-in-full when a patient with XYZ insurance receives treatment (and they might have agreed to accept $110 as payment-in-full when a patient has ABC insurance). So if the patient has a $30 copay, the insurer pays $90 and the healthcare provider writes off the remaining $40 since it's above the network negotiated rate (that's the initial $160 charge, reduced by $40 to get it down to the network negotiated rate of $120; that amount is then split between the patient and their insurance, with the patient paying the $30 copay and the insurance plan paying the other $90).

An out-of-network provider, on the other hand, doesn't have any contract or agreement with your insurance company (in most cases, they'll be in-network with other insurance plans, even though they're out-of-network with your insurance). So if they bill $160, they'll expect to collect the full $160. Your insurance plan might pay part of the bill if the plan includes out-of-network coverage. But you'll be on the hook for whatever isn't covered by your insurance—which will be the full amount if your plan only covers in-network care.

Why Is Your Healthcare Provider Not in Your Insurer's Network?

Your healthcare provider may not consider your insurer's negotiated rates to be adequate—this is a common reason for insurers to opt not to join particular networks.

But in some cases, the insurer prefers to keep the network relatively small so that it has a stronger basis for negotiation with providers. If that's the case, it could be that your healthcare provider would be willing to join the network, but the insurer doesn't have any network openings available for the services that your healthcare provider provides.

Many states have implemented "any willing provider" laws, however, that prevent insurers from blocking providers from the network, as long as they're willing and able to meet the insurer's network requirements. States can impose "any willing provider" rules for health plans that are regulated by the state, but self-insured plans (which are typically used by very large insurers) are subject to federal regulation rather than state regulation, so the "any willing provider" rules don't apply to those plans.

How to Know Which Providers Are Out-of-Network

Health insurers maintain network directories that list all of the medical providers who are in-network. If a provider isn't on the list, they're generally going to be out-of-network. But it's also a good idea to call the provider directly and inquire about whether they're in-network with your insurance plan.

It's important to understand here that a particular insurance company will likely have different types of coverage available in your state, and the networks can vary from one type of coverage to another. For example, an insurer's employer-sponsored plans might use a more extensive network than their individual/family (self-purchased) plans. So if you're calling a healthcare provider's office to see whether they take your insurance plan, you'll need to be more specific than just saying you have "Anthem" or "Cigna," since it's possible that the healthcare provider is in some networks for those insurers but not all of them.

Reasons for Using Out-of-Network Health Care

Although it may initially cost you more money, there may be times when you might find it necessary, or even advisable, to use an out-of-network provider.

Sometimes you have no choice, or it just makes sense to choose a non-network healthcare provider. Below is a list of the scenarios in which you may be able to appeal for in-network coverage, or it may be automatically granted (depending on the circumstances, you can submit a network appeal before or after you seek medical treatment; here's an example of a network appeal letter sent after a claim is denied due to network restrictions):

Emergencies: In an urgent situation, you must seek the closest available help. The Affordable Care Act (ACA) requires insurers to cover emergency care as if it's in-network, regardless of whether the emergency care is obtained at an in-network or out-of-network facility. However, the out-of-network emergency room and healthcare providers can still send you a balance bill, and the balance billing is not restricted by the ACA. (Note that many prevent balance billing in this scenario, and federal rules will prevent this as of 2022, with the exception of out-of-network ground ambulance charges.) If it's not truly an emergency, your visit will not be processed as in-network treatment; you should go to a covered provider instead.

Specialized care: If you have a rare ailment for which no specialist is included in your plan, out-of-network care may be crucial.

Changing providers would jeopardize your health: If you're in the middle of treatment for serious or end-of-life issues and your provider leaves the network, it may be in your best interest to continue that care by going out of network. You can appeal for continued in-network coverage for a short period of time or a set number of visits.

Out-of-town care: If you need medical care while away from home, you may have to go out of network, but some insurers will handle your visit to a non-participating provider as if it were in-network. In-network providers may be available, however, so if it's not an emergency, it's best to contact your insurer first to find out.

Proximity issues: The ACA requires insurers to maintain provider networks that are adequate based on the distance and time that members have to travel to reach a medical provider, but the guidelines in terms of what's adequate vary from one state to another. If you live in a rural area and there is no realistic access to an in-network provider in your area, your continued health may depend upon using a non-participating healthcare provider. In these cases, you may be able to appeal to get coverage for an out-of-network provider in your area.

Natural disasters: Floods, widespread fires, hurricanes, and tornadoes can destroy medical facilities and force people to evacuate to other areas in which they must seek health care. Sometimes, these patients may be eligible for in-network rates as part of a declaration of emergency by the state or federal government.

Out-of-Network Providers Can Still Bill You Even if Your Insurance Covers Some of the Cost

It's important to note that even if your insurance company treats your out-of-network care as if it's in-network, federal law does not require the out-of-network provider to accept your insurance company's payment as payment in full. (As noted above, this will change in 2022, for emergency care as well as most scenarios in which a patient receives care at an in-network facility, but is treated by at least one out-of-network provider during the visit.)

For example, let's say your insurance company has a "reasonable and customary" rate of $500 for a certain procedure, and you've already met your in-network deductible. Then you end up in a situation where an out-of-network provider performs the procedure, but it's one of the scenarios described above and your insurer agrees to pay the $500. But if the out-of-network provider charges $800, they can still send you a bill for the other $300.

This is called balance billing, and it's generally legal if the provider isn't in your health plan's network.

Many states have tackled this issue for scenarios in which the patient was either seeking emergency care, or went to an in-network medical facility and didn't realize that some of the providers at the facility weren't in-network. This can happen with providers who don't interact with the patient at all, such as radiologists, or providers who might interact with the patient primarily when they're not aware of the services being performed, such as anesthesiologists or assistant surgeons.

Some states have already imposed very comprehensive reforms to protect patients in these scenarios, while others have imposed more modest protections, sometimes limited to simply informing the patient that balance billing could (and likely will) be an issue, but not prohibiting it. And other states haven't taken any action on this issue, leaving patients caught unawares and stuck in the middle of what essentially amounts to the payment dispute between a medical provider and an insurance company. As is always the case, state-based health insurance regulations don't apply to self-insured health insurance plans—which cover the majority of people who have employer-sponsored health insurance.

To fill in the gaps and provide protections to people with self-insured plans and people in states that haven't yet acted to prevent "surprise" balance billing, a new federal law will take effect in January 22. It will prevent balance billing in emergencies and in situations where an out-of-network provider performs services at an in-network facility.

Network Adequacy Regulations

The ACA and related regulations have implemented rules that apply to plans sold in the health insurance exchanges. These plans are required to maintain adequate networks and up-to-date network directories that are readily available online. But in 2017, the Trump administration began deferring to the states for network adequacy determinations, which weakened the enforcement of network adequacy standards. And in the years since ACA-compliant plans first became available, networks have narrowed in an effort to rein in healthcare costs. So for people buying coverage in the individual market, networks are generally smaller than they were in the past, making it essential for enrollees to double-check the network of any plan they're considering if they have a healthcare provider they want to continue to see.

In the small group and large group markets, states also have the ability to review plan filings to ensure that the networks are adequate. But especially in the large group market, the employers tend to have considerable leverage when working with insurers to make sure that the plans they'll be offering to their employees have adequate provider networks.

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8 Sources
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  2. U.S. Centers for Medicare & Medicaid. Affordable Care Act Implementation FAQs - Set 1.

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