If you have an HMO or PPO, you know that going to your plan’s network providers will save you money. But for those cases where you really want (or need) to see a specific doctor, and they’re not in the network, it might be worth the extra cost. After all, if co-insurance is 80% in-network and 50% out-of-network, how big will the difference really be?
The answer is not so straightforward. Or in other words, it could cost a lot more than expected, even if you obtain prior approval from your plan. Here’s a behind-the-scenes of going out-of-network.
So why the network in the first place?
In-network providers have made a deal with your health plan to accept a certain rate of payment for each service they provide. But there’s no such deal with out-of-network doctors, so most of the time, they are going to bill the plan more than that agreed-upon rate. It’s a way for health plans to control their costs and for providers to ensure they get some guaranteed patient flow.
Why you might pay more than expected
Health plans have a strange way of calculating how much they will pay an out-of-network provider, and now, many plans have begun to change that method in order to control their costs.
Let’s say your surgery cost $10,000 and your PPO plan says it covers 50% out-of-network. You would think they would pay $5,000, right? But instead of looking at what the procedure really cost, health plans typically use the UCR or “Usual Customary Rate,” a kind of industry average, and calculates 50% of this. So if the hospital you went to is not wildly expensive, the UCR would be just about right.
Many plans are now switching from UCRs to Medicare rates—which tend to be a lot lower. So if Medicare’s rate for the surgery is $4,000, the plan will pay $2,000. You can imagine what the hospital might do after providing a $10,000 surgery and then getting paid $2,000. Yes, you might expect a bill for the remaining $8,000. These numbers are a bit simplistic, because there is usually a multiplier to bring the Medicare amount up since it’s normally pretty low, but you get the idea.
This practice is known as balance billing. It’s illegal for in-network claims and emergency care in most states, and for people with Medicare, but otherwise allowed if you went out-of-network. So what to do? It’s best to know before you go: Read your plan’s policy to see how it calculates these reimbursement rates and find out whether balance billing is allowed in your state. If you do end up with a balance bill, try negotiating with the provider. Many will lower the cost or figure out a payment plan with you.
Beware even if you have prior approval
If you still plan to go out-of-network, you may be able to get prior approval from your plan if for example, the service can not be adequately provided in-network. If you do this, make sure you know exactly who and what is covered: while a specific surgeon may be approved, other physicians involved with the procedure, such as an anesthesiologist, may still be considered out-of-network, even if they work at a hospital that is in-network.
The same goes for follow-up care, even if it is with the same physician. The bottom line? Don’t assume everything is approved just because one thing is.
Of course, the best bet for keeping your costs down is staying in-network. But if that’s not possible, first try for prior approval and make sure you know exactly what is approved. If you can’t get approval, make sure you understand how out-of-network rates are calculated before making your appointment. After that, watch your bills and Explanation of Benefits for multiple charges for the same thing.