The health insurance out-of-network bite
- Out-of-network providers may charge more, plus your share may be higher.
- The health care reform law is tamping down on some out-of-network costs.
- A doctor outside your plan might be willing to negotiate a lower bill.
Stepping outside your health insurance company's preferred providers list could take a toll on your bank account. Though there are certain circumstances where an insurance company will pay all or a portion of out-of-network costs, policyholders need to tread carefully. You can easily find yourself on the hook for massive bills. Here's what you need to know.
How health care networks work
Doctors, hospitals and other health care providers "give health insurance companies discounts on care in order to increase their volume by attracting plan members," explains health care economist Adam C. Powell, president of the consulting firm Payer+Provider Syndicate, in Boston. "When a health plan member goes out of network, the health insurance company is typically stuck paying retail prices rather than wholesale prices."
And those higher prices can be passed along to the patient.
Robin Gelburd, president of Fair Health Inc., a New York-based nonprofit dedicated to increasing the amount of transparency in health insurance, adds that insurance networks can be complicated. There may be multiple payment tiers or fee structures that can make it difficult for policyholders to understand their costs. Also, hospitals or other health care facilities may be included in an insurance company's network, but specific physicians, specialists or labs may not be.
"Oftentimes, consumers don't think about all the elements in the care," Gelburd says, adding that it's possible for a mother to deliver a baby in a hospital that's in-network but receive an epidural from a specialist who's not, or for someone to undergo a colonoscopy from an in-network gastroenterologist but receive anesthesia from an out-of-network doctor.
Out of network: Costlier in multiple ways
The complexities of health insurance networks mean that it's crucial for policyholders to understand exactly what facilities and which doctors are included in their network before seeking services. Venture out of network and the results could be costly, says Joe Mondy, spokesman for Cigna HealthCare in Bloomfield, Conn.
If your insurance company covers out-of-network care at all, those services or procedures will probably cost more since they won't be eligible for your provider's negotiated rates. And not only will the overall charges be bigger, but policyholders will also be responsible for a larger portion, says Mondy.
"If you go out of network, in most cases, the health plan will continue to cover you but there will be a difference in terms of the deductible," he explains. "It will be a separate deductible and perhaps a higher deductible."
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Stepping outside your health insurance company's preferred providers list could take a toll on your bank account.
Though there are certain circumstances where an insurance company will pay all or a portion of out-of-network costs, policyholders need to tread carefully.
If your insurance company covers out-of-network care at all, those services or procedures will probably cost more since they won't be eligible for your health care provider's negotiated rates.
For example, many insurance policies cover about 90 percent of all in-network costs beyond a policyholder's deductible, but may only cover 50 percent of those costs when you go out of network.
Thanks to the Affordable Care Act, policyholders with health insurance plans created after March 23, 2010, are protected from receiving higher out-of-pocket costs when they go outside the network in an emergency.
And, once policyholders have satisfied the out-of-network deductible, their plan most likely will cover a smaller percentage of medical costs above the deductible mark. While many insurance policies cover 90 percent of all in-network costs beyond a policyholder's deductible, a plan might pick up just 50 percent of those costs when you seek treatment out of network, Mondy adds.
Out-of-network pricing exceptions
"Sometimes, certain types of out-of-network costs such as emergency care are covered" even by plans that generally don't pay for out-of-network care, says Powell.
Certain health plans include built-in coverage for out-of-network emergency services. Also, patients who go to an emergency room outside their network are given some protection by the Affordable Care Act, the health care reform law signed by President Barack Obama. It bars insurers from hitting policyholders with higher out-of-pocket costs when they go outside the network in an emergency. This provision currently applies only to health insurance plans created or issued after March 23, 2010.
However, an out-of-network hospital or other provider might bill the patient directly for additional charges, in a practice called "balance billing."
Another time when health insurance may cover out-of-network services is when you need to see a specialist and an in-network doctor isn't available in your area, Mondy says. Once again, the Affordable Care Act can come into play because it requires that newer health plans cover a long list of preventive care screenings, including colonoscopies and mammograms, and some of these may be administered by specialists.
If an in-network specialist isn't available in your area, "you should contact your health care plan," Mondy says. "Oftentimes, if there's an opportunity to, the health plan will reach out to local doctors who may be out of network to get an agreement with them to put them in network."
You can dicker -- or dispute
If you feel there's no way of avoiding charges for out-of-network care, doctors and health care providers outside your plan may be open to negotiating their fees on specific procedures if you do so in advance, says Gelburd. Make sure to get it all in writing.
The best way to avoid unexpected out-of-network costs is to know your policy. That includes understanding what's included in your plan's network, how out-of-network costs are calculated, which procedures require prior approval, and what costs count toward your deductible, Gelburd adds.
When you do find yourself with surprise out-of-network or other expenses that you thought would be covered, dispute the charges with your health insurer. If your appeal is rejected and you're in a plan created after March 23, 2010, health care reform gives you the right to submit your dispute to an independent review organization, which has the power to overrule the health insurance company.