What is a health insurance network?
A Closer Look at Health Insurance Networks
A health insurance network, also known as a provider network, are health care providers contracted with health insurance plans to provide health-related services. The providers under contract with health insurance companies are known as “network providers”.
Health insurance companies negotiate a discount with health care providers to use their services. The end result is that insured individuals usually pay less for health care services when they use one of their health insurance plan’s network of providers. A health insurance plans list of approved health-care providers is also known as in-network providers.
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Why Health Plans Use a Network of Providers
The number one reason why health insurance companies use provider networks is to keep costs low. Brokers for the health insurance companies negotiate with health care providers to provide specific services at a set rate. In return, the health care providers agree not to charge you more for services beyond the agreed upon rate with the health insurance companies.
The agreed upon rate is known as a contracted rate. When you use the health care providers in your health insurance plan’s network of providers, you usually pay less in monthly insurance premiums and other charges.
Provider Networks: How They Work
When you are comparison shopping for a health insurance plan, you may find an insurance company that offers several different plans.
The health insurance plan you choose determines which health care providers you can use for health-related services and how much you can expect to pay out-of-pocket.
If you want to keep your health care costs low, you can choose a managed plan such as an HMO, PPO or POS (Point of Service). If you choose a managed plan, your health-related costs will only be covered if you use a provider in the plan’s network.
Understanding HMOs and PPOs
Health Maintenance Organizations, known as HMOs, are managed health-care plans. An HMO requires you to use their network of health care providers. HMOs have more restrictions than other plans and limit whether or not you can use an out-of-network provider.
For example, if you are comparison shopping and decide to use an HMO to reduce your health care costs, you may need to choose a new primary care doctor if your current doctor is not in the HMO’s provider network.
HMOs will only cover your costs if you use the providers in their network. If you decide to use a provider outside the HMO’s network, the HMO will require you to pay for that care.
Preferred-Provider Organizations are managed healthcare plans that have their own network of providers. However, these plans allow a little more flexibility if you use an out-of-network provider. If you choose to use the plans in-network providers, you will pay less in out-of-pocket expenses than you would when you use a provider that is not in the plan’s network.
PPOs require you to pay a small deductible/coinsurance for prescription refills and doctors’ visits, and the monthly premiums on PPOs are slightly higher than HMOs.
Choosing to Use Out-of-Network Care
If you decide on a health insurance plan and choose to use a healthcare provider outside of the plan’s network, you will likely pay more for your care. This may not make sense at first, just choose a doctor in the plan’s network so you save money, so why choose a provider outside the network?
Well, many people remain dedicated to their primary care doctors and other healthcare providers and are willing to pay more in premiums and deductibles to keep their current providers. That is why it is so important to look at the details of the plan and how much the plan charges when you decide to use providers that are outside of the plan’s network.
If you have concerns about which doctors and providers are part of a health insurance plan’s network, make sure to review the plan’s provider directory. Every health insurance plan has a directory of every provider that is part of their network.
You can ask your current primary care doctor if he or she is part of the health insurance plan’s network, and also ask them if there were any recent changes to the contract with that health insurance plan.
Once you choose a health insurance plan and choose to seek care in-network or out-of-network, contact the healthcare provider and make sure they are accepting new patients.
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