How in-network and out-of-network differ
In-network providers have signed contracts with your insurer agreeing to specific rates for specific services. They accept those rates as payment in full. You pay your deductible, copay, or coinsurance based on those negotiated rates.
Out-of-network providers have no such agreement. They bill at their own rates, often at or near chargemaster prices. Your insurer may pay nothing (if your plan has no out-of-network benefits) or may pay based on an "allowed amount" that is far below what the provider charged, leaving you responsible for the balance.
How your plan handles out-of-network claims
HMO plans (Health Maintenance Organizations) generally do not cover out-of-network care except in emergencies. PPO plans (Preferred Provider Organizations) cover out-of-network care but at a higher cost-sharing rate. EPO plans (Exclusive Provider Organizations) typically do not cover out-of-network care at all.
Your Summary of Benefits and Coverage document explains how your specific plan handles out-of-network care. Key numbers to find: your out-of-network deductible (often higher than the in-network deductible), your out-of-network coinsurance percentage, and your out-of-network out-of-pocket maximum (some plans have no out-of-network maximum).
The "allowed amount" problem
When your insurer processes an out-of-network claim, it calculates an "allowed amount," the maximum it will reimburse for that service. This amount is based on internal benchmarks, historical data, or a percentage of Medicare rates. It has no relation to what the provider actually charged.
If a provider charges $5,000 and your insurer's allowed amount is $1,200, your insurer pays its share of $1,200 (say, 60%, or $720). You owe your share of $1,200 (40%, or $480) plus the $3,800 balance that exceeds the allowed amount. That balance is the balance bill.
When the No Surprises Act limits out-of-network billing
As of January 1, 2022, the No Surprises Act prohibits out-of-network billing for emergency services at any facility and for certain services at in-network facilities where you did not choose an out-of-network provider. In these situations, you pay only your in-network cost-sharing amount.
The law does not cover all out-of-network situations. If you knowingly and voluntarily choose an out-of-network provider for a scheduled procedure, you can still be billed at out-of-network rates, provided the provider gave you adequate advance notice.
How to avoid out-of-network charges
Before any scheduled procedure, verify that every provider involved is in-network. This includes the facility, the surgeon, the anesthesiologist, the assistant surgeon, and the facility's pathology and radiology groups. Hospitals frequently use employed or contracted specialists who are not on your insurer's panel.
Call your insurer directly to verify network status. Do not rely solely on the hospital's claim that a provider is in-network. Get confirmation in writing or note the date, time, and representative name from your call.
Frequently asked questions
What does "usual, customary, and reasonable" (UCR) mean on my EOB?
UCR is the amount your insurer considers reasonable for a given service in your geographic area. It is often used to calculate the allowed amount for out-of-network claims. UCR rates are set by insurers and are not regulated. They are often far below actual market rates.
Can I ask a provider to waive the out-of-network balance?
Yes, and many will. Especially if the provider is at an in-network facility, they may agree to accept in-network rates as a courtesy or to avoid a patient complaint. Get any waiver agreement in writing.
Does going out-of-network reset my deductible?
Most plans have a separate, higher out-of-network deductible. Amounts paid toward your in-network deductible typically do not count toward the out-of-network deductible, and vice versa. Check your plan documents.
Can an out-of-network provider send me to collections while I dispute the balance?
Yes, unless the bill is protected by the No Surprises Act. If the bill falls under No Surprises Act protections, you should not be paying the balance at all. File a complaint with CMS and your insurer immediately.