In-Network vs. Out-of-Network: What It Means for Your Health Insurance

One of the most important factors in how much you pay for health care is whether your doctor or hospital is in-network or out-of-network. Staying in-network can save you hundreds or even thousands of dollars. Going out of network can lead to much higher costs and, in some cases, surprise bills. This guide explains how provider networks work, what happens when you go out of network, and how to protect yourself from unexpected costs.

What Is a Provider Network?

A provider network is a group of doctors, hospitals, labs, pharmacies, and other health care providers that have contracted with an insurance company to provide services at pre-negotiated rates. These contracted providers are called in-network providers. Any provider who does not have a contract with your insurance plan is considered out-of-network.

Insurance companies build networks by negotiating discounted rates with providers. In exchange for sending patients their way, providers agree to accept lower fees. This arrangement benefits everyone: the insurance company pays less, you pay less in cost-sharing, and the provider gets a steady flow of patients.

Every health insurance plan has its own network. Two plans from the same insurance company may have different networks. This means a doctor who is in-network for one plan may be out-of-network for another plan from the same insurer. Always check the specific network for your plan, not just the insurance company.

In-Network Benefits

When you see an in-network provider, you get the full benefit of your health insurance plan. Here is what that means in practice.

• Negotiated rates. In-network providers have agreed to accept the insurance company's allowed amount for each service. This negotiated rate is almost always lower than what the provider would charge an uninsured patient.
• Lower cost-sharing. Your copays, coinsurance, and deductible are set at the in-network level, which is the lower amount described in your plan's summary of benefits.
• No balance billing. In-network providers agree to accept the negotiated rate as payment in full. They cannot bill you for any amount above that rate.
• Costs count toward your out-of-pocket maximum. All in-network copays, coinsurance, and deductible payments count toward your annual out-of-pocket maximum. Once you reach that maximum, your plan pays 100 percent of in-network costs.

Staying in-network is the single most effective way to control your health care costs. The negotiated rates and protection from balance billing can save you significant money on every visit, test, and procedure.

Out-of-Network Costs

When you see an out-of-network provider, the financial picture changes dramatically. Here is what typically happens.

• Higher or separate deductible. Many plans have a separate out-of-network deductible that is two to three times higher than the in-network deductible. You must meet this deductible before the plan pays anything for out-of-network care.
• Higher coinsurance. After the deductible, you may pay 40 to 50 percent coinsurance for out-of-network care versus 20 percent for in-network care.
• Balance billing. Out-of-network providers can charge whatever they want. If they charge $1,000 for a service but your plan only allows $600, you owe the $400 difference on top of your coinsurance. This is called balance billing.
• No out-of-pocket maximum protection. Out-of-network costs often do not count toward your in-network out-of-pocket maximum. Some plans have a separate out-of-network out-of-pocket maximum that is much higher, and some have no cap on out-of-network costs at all.

The combination of higher deductibles, higher coinsurance, and balance billing means that a single out-of-network hospital stay or surgery can cost thousands of dollars more than the same care at an in-network facility.

How Networks Work by Plan Type

Different health insurance plan types handle provider networks in different ways. Understanding your plan type is essential for knowing what happens when you go out of network.

HMO (Health Maintenance Organization)

HMO plans have the most restrictive networks. You must choose a primary care physician from the network and get referrals for specialist care. Out-of-network care is not covered at all except in emergencies. If you see a provider outside the network without a referral, you pay the entire bill yourself. HMOs have lower premiums because of this restriction.

PPO (Preferred Provider Organization)

PPO plans offer the most flexibility. You can see any doctor without a referral, including out-of-network providers. In-network care costs less, but the plan will still pay a portion of out-of-network costs. PPOs typically have separate in-network and out-of-network deductibles and coinsurance rates. PPO premiums are higher because of this flexibility.

EPO (Exclusive Provider Organization)

EPO plans work like HMOs in that they do not cover out-of-network care except in emergencies. However, unlike HMOs, EPOs usually do not require you to choose a primary care physician or get referrals for specialists. You can see any specialist in the network directly. EPOs offer a middle ground between HMO restrictions and PPO flexibility, with premiums between the two.

POS (Point of Service)

POS plans combine features of HMOs and PPOs. Like an HMO, you choose a primary care physician and need referrals. But like a PPO, you can go out of network for a higher cost. POS plans cover out-of-network care at a reduced rate, giving you some flexibility if you need to see a specialist outside the network.

How to Check If Your Doctor Is In-Network

Checking your provider's network status before every appointment or procedure is one of the most important things you can do to avoid unexpected costs. Here are the steps to take.

• Search the plan's provider directory. Every insurance plan has an online provider directory, usually accessible on the insurer's website. Search by doctor name, specialty, or facility to see if they participate in your plan's network.
• Call the doctor's office. Give them your insurance card information and ask if they accept your specific plan. Provider directories can be outdated, so confirming directly with the office is a smart backup step.
• Call your insurance company. The customer service number on your insurance card can confirm whether a specific provider is in-network. Ask for confirmation in writing if you are scheduling an expensive procedure.
• Check all providers involved in a procedure. If you are having surgery, the hospital may be in-network but the anesthesiologist, radiologist, or pathologist may not be. Ask the facility to confirm that all providers involved will be in-network.

Checking network status may seem like extra work, but it can save you thousands of dollars. Make it a habit before any non-emergency appointment or procedure.

Emergency Care Rules and the No Surprises Act

Emergency room visits are a special case when it comes to network rules. Under the ACA, all health plans must cover emergency services regardless of whether the emergency room is in-network or out-of-network. Your plan must cover the emergency visit at in-network cost-sharing rates, and the hospital cannot require prior authorization.

The No Surprises Act, which took effect January 1, 2022, added important protections on top of existing rules. It addresses the problem of surprise medical bills that patients receive when they unknowingly receive care from out-of-network providers.

Under the No Surprises Act, you are protected in the following situations:

• Emergency care. You cannot be balance billed for emergency services at any hospital, whether in-network or out-of-network. You only owe your in-network cost-sharing amount.
• Out-of-network providers at in-network facilities. If you go to an in-network hospital but are treated by an out-of-network doctor you did not choose, such as an anesthesiologist or radiologist, you cannot be balance billed.
• Air ambulance services. Out-of-network air ambulance providers cannot balance bill you. You only pay the in-network rate.

Ground ambulance services are not covered by the No Surprises Act. This remains a gap in protection. If a ground ambulance company is out of network, you may still receive a surprise bill.

When Out-of-Network Care Happens Unexpectedly

Even when you try to stay in-network, out-of-network charges can happen in ways you do not expect. Here are the most common situations.

• Ancillary providers at in-network facilities. You go to an in-network hospital for surgery, but the anesthesiologist, pathologist, or assistant surgeon is out of network. The No Surprises Act now protects you in this situation.
• Lab work sent to an out-of-network lab. Your doctor's office draws blood and sends it to a lab for testing. If the lab is out of network, you may receive a separate out-of-network bill. Always ask your doctor to send lab work to an in-network laboratory.
• Provider leaves the network mid-year. A doctor you have been seeing drops out of your plan's network. You may not find out until your next visit. Some states have continuity-of-care laws that require plans to cover ongoing treatment with a provider who leaves the network.
• Traveling outside your plan's service area. If you travel or move to an area where your plan has no network, all care becomes out-of-network. HMO and EPO plans are especially limited in this situation.

Tips for Avoiding Surprise Bills

While the No Surprises Act provides significant protection, you can take additional steps to minimize the risk of unexpected out-of-network charges.

• Verify every provider before any procedure. Do not assume everyone involved in your care is in-network. Ask the facility to confirm the network status of all doctors, including the surgeon, anesthesiologist, radiologist, and any consulting specialists.
• Request in-network labs. Ask your doctor to send all lab work and diagnostic tests to in-network facilities. You have the right to ask where your samples will be sent.
• Get prior authorization when required. Some plans require prior authorization for certain procedures. If you skip this step, the plan may deny the claim even if the provider is in-network.
• Know your rights under the No Surprises Act. If you receive a surprise bill from an out-of-network provider at an in-network facility or for emergency care, you have the right to dispute it. Contact your insurance company and file a complaint if needed.
• Review your explanation of benefits. After every medical visit, review the explanation of benefits from your insurance company. It shows what was billed, what the plan paid, and what you owe. If something looks wrong, contact your insurer promptly.

The Narrowing Networks Trend

A growing trend in health insurance is the use of narrow networks, particularly on the ACA marketplace. Narrow network plans include fewer doctors and hospitals than traditional broad-network plans. Insurance companies use narrow networks to negotiate lower rates, which translates to lower premiums for consumers.

Narrow networks can save you money on premiums, but they come with trade-offs. Your choice of doctors and hospitals is more limited. You may need to travel farther for care. And if you need a specialist, there may be fewer options. Some narrow network plans exclude major hospital systems in an area, which can be a problem if you need specialized care.

Before choosing a narrow network plan, check whether your current doctors, preferred hospital, and any specialists you regularly see are included. A lower premium does not save you money if you have to go out of network for the care you need.

When Going Out of Network May Make Sense

While staying in-network is usually the financially smart choice, there are situations where going out of network may be worth the extra cost.

• You need a specialist who is not available in-network, such as a rare condition expert or a top surgeon for a complex procedure.
• You have a PPO plan and the out-of-network provider offers a significantly better outcome or experience for your situation.
• You are willing to pay the extra cost for a provider you trust and have a relationship with.

In these cases, ask the out-of-network provider for an estimate of their charges. Compare that with what your plan will reimburse. Understanding the total cost before you proceed helps you make an informed decision.

The Bottom Line

Understanding the difference between in-network and out-of-network care is one of the most important things you can do to manage your health care costs. In-network providers offer negotiated rates, lower cost-sharing, no balance billing, and protection from your out-of-pocket maximum. Out-of-network providers can cost you significantly more through higher deductibles, higher coinsurance, and balance billing.

The No Surprises Act provides meaningful protection against surprise out-of-network bills in emergency and involuntary situations. But the best protection is still proactive: check the network status of every provider before every visit, confirm that labs and specialists are in-network, and choose a plan type that matches your need for provider flexibility. Staying informed and staying in-network is the most reliable way to keep your health care costs under control.