When it comes to health insurance, understanding the difference between in-network and out-of-network providers can save you a lot of money and stress. In-network providers work with your insurance company to offer discounted rates, while out-of-network providers often charge higher prices. Knowing when and how to choose each can help you manage costs and get the care you need.

What Are In-Network Providers?

In-network providers are health care providers across multiple specialties who have a contract with your health insurance company. They have agreed to provide their services at contracted rates. These predetermined, discounted rates are referred to as the ‘allowed amount’, or the maximum your plan will pay for a covered health service.

What Are Out-of-Network Providers?

Out-of-network providers are healthcare providers who do not have a contract with your health insurance company. They can set their own rates for services provided. These rates are often full-price and significantly higher than contracted in-network rates.

Why the Provider Networks Matter

Health provider networks benefit both patients and healthcare providers.

Benefits for patients include:

Access to a well-established network of healthcare professionals, including doctors, specialists, and hospitals, ensuring timely medical care.
Cost savings because staying in-network means lower out-of-pocket costs.
Consistent standards of care from credentialed in-network providers who meet insurer quality requirements.
Improved coordination of care with information sharing between different in-network healthcare providers.
Shorter wait times for appointments and procedures.
Ability to easily find and access healthcare providers within the network.

Benefits for healthcare providers include:

Streamlined billing and payment with faster and more accurate reimbursements.
Increased patient volume due to recommendations from insurance companies compared to an out-of-network doctor.
Access to resources and technology from the insurance company, leading to improved quality of care and efficiency of operations.
Collaboration and knowledge sharing among healthcare providers lead to better patient outcomes and innovation.
Improved communication and information sharing among different healthcare providers, leading to a more coordinated approach to patient care.
Easier compliance due to networks helping providers in meeting regulatory requirements.

In-Network vs Out-of-Network Providers

Cost Implications

In most health plans, you are responsible for paying a portion of your medical bills. This can be a fixed fee (copay) or a percentage of the bill (coinsurance). Copays and coinsurance are typically lower for health care services obtained in-network compared to out-of-network. For example, your health plan may specify a copay of $20 for an in-network provider vs $75 for an out-of-network provider. Your coinsurance could also be 20% for in-network compared to 60% for out-of-network covered services.

Coverage and Out-of-Pocket Costs

To better understand the out-of-pocket cost implications of in-network vs out-of-network, here are two examples:

Example 1:

Your health plan has a copay of $20 for in-network specialists and $100 for out-of-network benefits.

If you see an in-network specialist and they have a contracted rate of $100 with your health plan, you will pay $20 out of pocket in the doctor’s office, and the insurance company will pay the balance of $80.
If you see an out-of-network specialist, they can charge their full fees, which are typically higher, say, $250. You will pay $100 out of pocket, and your health plan may cover up to $150, depending on your plan’s allowed amount for the service.

Example 2:

Your insurance covers 80% of hospitalization expenses at an in-network facility and 40% of hospitalization costs at an out-of-network facility.

You are hospitalized for 3 days at an in-network facility for emergency services. The total bill is $10,000 (discounted in-network rate). You will pay $2,000 out of pocket, and your health plan will cover the balance of $8,000.
You are hospitalized for emergency care at a facility that is not in your plan’s network. The total bill is $20,000 (out-of-network rates). You will pay $8,000 out of pocket, and your health plan may cover up to the remaining balance of $12,000, depending on the allowed amount.

In both examples, if the allowed amount does not cover the remainder of the bill, the doctor may bear the responsibility of the balance. The doctor may choose to bill the remainder of the balance to the patient.

Impact on Health Plan and Coverage

Choosing in-network vs out-of-network providers and services impacts your health plan’s affordability and flexibility. Here are a couple of examples:

HMO (Health Maintenance Organization)

With an HMO (Health Maintenance Organization) plan, there is less flexibility in choosing providers. You typically need a referral from your primary care doctor before seeing a specialist, and the specialists must be part of your plan's network, which offers lower costs. You pay a lower premium (the monthly or yearly fee you pay to keep your health insurance coverage active), but if you see a doctor outside the network (an out-of-network provider), your plan usually won't cover the cost unless it qualifies as an emergency under federal or state laws.

PPO (Preferred Provider Organization)

A PPO (preferred provider organization) plan lets you see any doctor, even if they’re out of your plan’s network, without needing a referral from your primary care physician. However, you may have to pay more for out-of-network care, and some services might not be covered at all. You pay a higher premium for this flexibility, but it gives you more choices for specialists and providers.

Balancing Cost and Care Needs

To understand the cost vs care needs, answer the following questions:

What is more important to you: lower costs or greater flexibility?
What are the monthly premiums, deductibles, copays, and coinsurance in each plan?
How often do you need to see a doctor?
What medical services do you think you’ll need in the next year?
Do you have existing medical conditions that require frequent specialist care?
Do you travel frequently and require the flexibility to see out-of-network providers?

Advantages of Staying In-Network

Lower Costs and Reduced Financial Burden

As mentioned above, one of the key advantages of seeking in-network versus out-of-network care is lower costs. You pay less out of pocket for in-network benefits compared to out-of-network benefits.

Avoiding Balance Billing and Unexpected Expenses

If you seek care out of network, you could end up with balance bills and unexpected medical expenses. This is because even if your health plan offers out-of-network coverage, you may have to:

Pay full price for health care services because your health insurer doesn’t have a contracted relationship with out-of-network doctors and facilities and can't control what they charge for their services. As a result, out-of-network rates can be significantly higher than the discounted rate you get in-network.
Pay the difference between your doctor's bill and what your plan will pay. Many health plans list the maximum amount they will pay for a certain service. If you receive care out-of-network and are billed a higher amount, you are responsible for paying the difference in addition to the deductible, copay, and coinsurance. In contrast, in-network doctors and facilities cannot bill you more than the maximum amount your plan has listed for a particular service.
Pay a higher share of the cost. Out-of-network copays and coinsurance are typically higher than in-network shares.

Maximizing Health Insurance Benefits with In-Network Coverage

As you can see from the above information, out-of-network costs are higher than in-network costs but offer more flexibility. You can maximize the benefits of your health insurance plan by seeking care from in-network providers and healthcare facilities whenever possible and using out-of-network care for emergency services only.

Frequently Asked Questions

What Happens if I Visit an Out-of-Network Provider?

If you visit an out-of-network provider, they can charge you the full price for their services because they have no pre-negotiated rates with your health insurance company. You may also have to pay a higher share of the medical bill (copay or coinsurance) and any difference if the doctor charges more than the maximum amount allowed by your health plan for that particular service.

Is Out-of-Network the Same as Not Taking Insurance?

No, out-of-network is not the same thing as not taking insurance. It just means that while you are insured, your out-of-pocket costs will be higher compared to in-network services.

Is Out-of-Network The Same As Out-of-Pocket?

No, out-of-network is not the same as out-of-pocket. Out-of-network means seeking services from a doctor or facility that has not contracted with your insurance provider. Out-of-pocket means your share of a medical bill.

How Do Out-of-Network Insurance Claims Work?

The maximum amount your insurance company will pay for out-of-network benefits is often less than the amount billed by an out-of-network provider. Your insurance company will pay their share of the out-of-network cost, and the doctor’s office will bill you for the difference.

Does "In Network" Mean "Fully Covered"?

No, in-network does not mean fully covered. Even if you seek care from an in-network provider, you may still have to pay all or part of the medical bill out of pocket, depending on the deductible, copay, and coinsurance in your health plan.

What Is The Difference Between a Deductible and Out-Of-Network Care?

A deductible is the amount of money you pay from your pocket towards covered expenses in a plan year before your insurance provider starts paying. Out-of-network is a provider who is not contracted with your insurance provider.

Tips for Navigating Health Provider Networks

How to Find In-Network Providers

You can find in-network providers on your insurance provider’s website or mobile app (look for tools such as “Find a Doctor”). You can also contact your preferred healthcare provider, call your insurance company, or check your plan information.

Tools for Understanding Your Health Plan

Here is some further information from HealthCare.gov for choosing and understanding your health insurance plan.

Planning for Future Health Care Needs

Health care needs change throughout our lives due to aging, chronic conditions, and medical emergencies. It’s important to plan for future healthcare. Here are some tips:

Assess your current health. For example, do you have a chronic condition, such as diabetes or asthma? Are there any hereditary conditions in your family? Do you plan to become pregnant?
Keep health records up to date. This will help healthcare providers offer you the best possible care and lead to better coordination of care between various providers.
Communicate your wishes. Your family members should know what healthcare and medical interventions you desire if you become incapacitated, as well as end-of-life care. Advance directives—such as a living will and power of attorney for healthcare—are legal documents that outline these medical preferences.
Plan for future health care. Get health insurance, long-term care insurance, and build an emergency fund. Understand plan types and make sure the plan you choose covers the services you need or may need in the future.
Keep up with preventative care. Routine screenings can help to identify and treat health conditions before they cause serious complications or become more difficult and expensive to manage.