Networks in managed care plans
In-Network vs. Out-of-Network
Networks are central to almost all health benefit plans because they are thought to control costs by managing care. Networks limit providers who are approved by the insurer to provide you with medical care and require the providers to accept the insurer’s price for service. This is the essence of what insurers call managed care plans.
The network is comprised of those doctors, hospitals, surgical centers, therapists, and other providers of health care (Providers) who have contracted with your health insurer to provide you (the Member) with health services at a designated charge. The network Provider agrees to accept the amount paid by the insurer, plus your co-pay, as the full payment for the medical service they will provide to you, such as an office visit or a procedure.
In-network providers help control costs because they must accept the amount the insurer has negotiated to pay for the service, even if it is less than they would charge a patient who is not in-network. In-network providers cannot balance bill you for any amount above their negotiated rate, so your cost is limited to your co-pay and or any co-insurance amount you are required to pay under your insurance plan for that specific service.
Out-of-network providers are all of the doctors, surgical centers, therapists, hospitals, and other providers of health care who have not contracted with your insurer to provide in-network services for your plan. Many health plans will not reimburse you for using out-of-network providers, so you have to be sure your plan allows you to go out of network.
If your plan covers out-of-network services, they will be much more costly for you because the goal is to create economic incentives for you to get your health care inside the network. To start, the doctor or hospital is not limited in what they can charge, so you should find out up-front what the costs are for the visit, procedure, or service you are receiving out of network.
When you get care out of network, you will pay the provider first and then you will have to get a reimbursed by the insurer. Almost all plans require that you to pay a deductible amount for out-of-network care, which can be well in excess of $1,000 before the plan will even reimburse you for a percentage of the cost of the services. Furthermore, the percentage that you are to be reimbursed is not based on what you are being charged; it is based on what is considered to be the “reasonable and customary” charges for the service in the specific area. This means that if your out-of-network doctor charges $200, when the reasonable and customary charge is $150 for your visit, your reimbursement will be at the plan’s percentage of the $150, and you have to pay your percentage plus the $50 difference between what you were charged and what the insurer says is reasonable and customary.
This can add up, so if your doctors or other providers are not in the network, you may have to consider switching providers. This is also why a change in health insurers can be so difficult--because each insurance company has a different network. While many doctors accept a number of different insurance plans, you need to see if your doctors, surgical centers you have used, hospitals, and other providers are in the network when any change in health insurance is proposed. The review of networks and providers in which your current insurer is compared with a new insurer is called a “disruption analysis” for a good reason --changes like this can be disruptive.
It is important to know that changing insurers, and thus changing networks, is different than changing benefits, like co-pays, deductibles, or covered services. Thus, in most negotiated health plans, unless the new network being offered is substantially worse (eg, it has a reduced number of doctors or a smaller geographic coverage area), the employer will generally be allowed to change the insurance company it deals with to provide benefits, which changes the network.
Some things to look for in a network are:
- The number of primary care doctors and specialists in each given geographic area.
- The hospitals that are covered in the network and whether the network is national in scope or regional.
If the new insurer does not have key hospitals, or if the old network had doctors in all 50 states and the new one only covers New Jersey, New York, and Pennsylvania, those are issues that can be significant. When such a change is suggested, you will have to compare the networks and evaluate the change, because each situation is different. Thus, if this type of network change is proposed, you should consult with a professional because each situation is different and fact sensitive.