There are lots of good reasons you might go outside of your health insurance provider network to get care. However, getting care out-of-network can increase your financial risk as well as your risk of having quality-of-care issues. While you can’t entirely eliminate your increased risk, by doing your homework in advance, you can decrease or plan for it.
Before you go out-of-network for your care, get
a clear understanding of the risks involved and what you can do to manage them. Start by understanding why getting health care out-of-network carries more risk.
Why Getting Care Out-Of-Network Is Financially Risky
You lose the health plan discount.
When your health insurance company accepts a physician, clinic, hospital, or other type of provider into its provider network, it negotiates discounted rates for that provider’s services. When you go out-of-network, you’re not protected by your health plan’s discount. The only negotiated discount you’re going to get is the discount you negotiate for yourself. Since you don’t have high-powered negotiators on staff making sure you get a good deal, you have an increased risk of getting charged too much for your care.
Your share-of-cost is higher
Your share-of-cost is the deductible, copay, or coinsurance you have to pay for any given service. When you go out-of-network, your share-of-cost is higher. How much higher it is depends on what type of health
insurance you have.
If your health plan is an HMO or EPO, it may not cover out-of-network care at all. This means you’ll be responsible for paying 100% of the cost of your out-of-network care.
If your health plan is a PPO or POS plan, it may contribute some toward the cost of out-of-network care. However, it won’t pay as large a percentage of the bill as it would have paid had you stayed in network. For example, you may have a 20% coinsurance for in-network care and a 50% coinsurance for out-of-network care.
Even your deductible may be affected. If your health plan contributes toward the cost of out-of-network care, you may discover that you have one deductible for in-network care and another, higher, deductible for out-of-network care. Learn more about how this works in “Health Insurance Deductible—What It Is and How It Works.”
You can be balance-billed.
When you use an in-network provider for covered health plan services, that provider has agreed not to bill you for anything other than the deductible, copay, and coinsurance that your health plan has previously negotiated.
When you use an out-of-network provider, not only can that provider charge you whatever he wants, he can also bill you for whatever is left over after your health insurance company pays its part. Called balance billing, this can potentially cost you thousands of dollars.
Here’s how it works. You decide to use an out-of-network provider for your heart catheterization. Your PPO has a 50% coinsurance for out-of-network care, so you assume that your health plan will pay half of the cost of your out-of-network care, and you’ll pay the other half. The heart catheterization comes with a bill of $15,000, so you think you’ll owe $7,500, right? Wrong!
Your PPO will look at that $15,000 bill and say something to the effect of “That’s too much. A more reasonable charge for that care is $6,000, so we’re only allowing a $6,000 charge. We’ll pay our half of that.” The PPO then pays $3,000.
The out-of-network provider credits your PPO’s $3,000 payment toward the $15,000 bill and sends you a bill for the balance (that’s why this is called balance billing). You now owe $12,000 rather than the $7,500 you thought you’d owe. Learn more about this in “Balance Billing—What It Is & How It Works.”
You limit the protection of your out-of-pocket maximum.
Your health insurance policy’s out-of-pocket maximum is designed to protect you from limitless medical costs. It places a cap, or maximum, on the total amount you’ll have to pay each year in deductibles, copays, and coinsurance. For example, if your health plan’s out-of-pocket maximum is $6,250, once you’ve paid a total of $6,250 in deductibles, copays, and coinsurance that year, you can stop paying those cost-sharing charges. Your health plan picks up 100% of the tab for your covered health care costs for the rest of the year.
However, many health plans don’t credit care you get out-of-network toward your out-of-pocket maximum. Since the out-of-pocket maximum may be the only thing standing between you and absolute financial ruin if you develop a costly health condition, choosing to get care outside of the protection of that out-of-pocket maximum will increase your financial risk. Learn more about the protection and limitations of your out-of-pocket maximum in “Out-of-Pocket Maximum—How It Works & Why to Beware.”
Quality of Care Issues With Out-Of-Network Care
Many people seek care out-of-network because they feel they can get higher quality of care than their health plan’s in-network providers will provide. While this may or may not be true, you should be aware that you may lose some quality protections when you go out-of-network.
You may have problems with coordination of your care.
Especially in health plans that won’t pay anything for out-of-network care, there aren’t good systems for the smooth coordination of the care given by an out-of-network provider with the care given by your in-network providers.
Ultimately, the onus is on you to make sure that your in-network doctors know what your out-of-network doctor is doing, and vice versa. You’ll be both the patient and the information conduit between your regular in-network providers and your out-of-network provider.
Before blithely accepting that the buck stops with you…realize that the buck will never actually stop. You won’t have to step in just once to fill this communication gap. You’ll have to do it each and every time you have an appointment, get a test, have a change in your health, or a change in your treatment plan.
You’re not just bridging the communication gap between your doctors, either; you’ll be doing it between your out-of-network provider and your health plan, also. For example, if your out-of-network cardiologist wants to order a test or treatment that requires pre-authorization from your insurance company, you’ll be the one responsible for making sure you get that pre-authorization. If you don’t get the pre-authorization, even if it’s because you didn’t know you needed pre-authorization, your health plan can refuse to pay for its portion of the out-of-network care.
You’ll lose health plan screening of providers.
Before allowing a health care provider to participate in its provider network, your health plan does quality screening. This may be as simple as checking that providers’ licenses are in good standing and that facilities are accredited by recognized health care accrediting organizations like JCAHCO. However, it’s likely to be much more complex and detailed than that, providing a service that would be difficult for you to duplicate yourself. Additionally, many health plans have ongoing programs monitoring the quality of care provided to their members by their in-network providers. Providers not measuring up to quality standards risk getting dropped from the network.
When you go out-of-network, you lose the safety net of your health plan’s quality screening and monitoring programs.
How To Manage the Increased Risks Associated With Out-Of-Network Care
Since you’ll have an important role in making sure you get quality care from your out-of-network provider, study up. These links may help you:
How to Research a Doctor’s Credentials.
How to Find a Doctor’s Medical Malpractice Record.
How to Choose the Best Hospital.
If you’re a medical professional, coordinating your own care might not be that difficult. However, most people will need to get their own medical records. Make sure your out-of-network providers have the records from your in-network providers, and that your in-network providers have the records from your out-of-network providers. How to Request Your Medical Records.
Since you’ll be paying for a larger portion of your care when you get that care out-of-network, you need to know what the cost will be before you get the care. Plan on negotiating a discounted rate with your out-of-network provider; you don’t want to pay the “rack rate.” If your health plan contributes toward paying for out-of-network care, ask it what its reasonable and customary rate is for the care you’ll require.