Out-of-network services: a nasty surprise ($150 vs $1,200)
A study from the Kaiser Family Foundation of Americans who had trouble paying their medical bills found that 32% received care from an out-of-network provider that insurance wouldn’t fully cover and 21% of respondents did not know that their provider was out of network.
Why is it important to choose an in-network provider?
Out-of-network = higher co-pay, higher deductible, higher bill.
In-network providers have contracted with your insurance company to provide you services at a negotiated or discounted rate. This is why your insurance company will typically cover more of the cost of seeing these providers. Out-of-network providers have not agreed to the discounted rates. You may also have a higher deductible for out-of-network services (usually twice your in-network deductible), meaning you’ll have to pay more out of pocket before insurance begins to pay. In some cases, the out-of-network provider can provide you service and accept the discounted rate from your insurance company and then bill you the difference.
For example, you have a 50/50 sleep study (this is the typical first sleep study) with a sleep center that’s in-network and the total charge is $3,000. Because the sleep center is contracted with your insurance, a discount is applied to that amount for the negotiated rate between the sleep center and your insurance company. The negotiated rate is $750. The discount is $2,250. Your insurance pays 80% or $600 and you’ll pay the remainder, $150.
| Charge amount for 50/50 sleep study: | $3,000 |
| Contracted rate between sleep center and your insurance company | $750 |
| Discount | $2,250 |
| Amount due for 50/50 sleep study | $750 |
| Your insurance pays 80% to the sleep center for in-network services | $600 |
| Remainder (amount due to sleep center minus the amount your insurance company will pay) | $150 |
| You pay: | $150 |
If you go to a sleep center that’s out-of-network, no discount is applied to the total charge because the provider is not contracted with your insurance. Your insurance company may agree to a usual and customary rate for similar services in your geographic area, probably about $1,200. But you’re responsible for the remainder, $1,800. In fact, your insurance company may pay even less than $1,200 because your out-of-network coverage is 50% (not 80% like for in-network) and they only pay $600. But wait! You have a higher deductible for out-of-network providers. Deductibles for out-of-network providers are usually double your in-network deductible. Let’s say your in-network deductible for this year is $2,500, so your out-of-network deductible is $5,000. This means that your insurance company pays $0 to the sleep center and the sleep center will bill you $1,200.
| Charge amount for 50/50 sleep study: | $3,000 |
| Contracted rate between sleep center and your insurance company | $0 |
| Discount | $0 |
| Usual and customary rate determined by your insurance company for sleep studies in your area: | $1,200 |
| Amount due for 50/50 sleep study | $1200 |
| Your insurance allows 50% for out-of-network services | $600 |
| You have a $5,000 yearly deductible for out-of-network services that you haven’t met. | – |
| Amount your insurance company pays to the sleep center for out-of-network services because you haven’t met your deductible: | $0 |
| You pay: | $1,200 |
In-network vs. Out-of-network: $150 vs. $1,200
Fact: Accepting your insurance and being in-network are not necessarily the same thing.
Fact: You probably have two deductibles; one for in-network providers and one for in-network providers. You have to meet each deductible, separately, before services are paid for by your insurance company. You pay 100% out-of-pocket until you have met your deductibles
Fact: Some out-of-network providers will offer to bill you only the in-network rate, even though they’re not in-network, but you’ll still have to meet your deductible for future services. You still have to pay the “in-network rate” of $750, and the full $1,200 won’t apply to your deductible, so if you plan on having any other services this year, in-network or out-of-network, you’re still at square-one with your deductibles. Do you plan on having any other medical services this year? What about in network services, what about when you need a Dispositivo PAP y suministros de repuesto later in the year?
Fact: Many insurance plans don’t even include coverage for out-of-network providers anymore. If that is the case, you will either need to find an in-network provider or expect to pay full price or cash rate for your service.
If you’re a patient:
Learn about your insurance coverage. Make sure you know whether your provider is in-network (not just contracted) with your insurance. What’s the most they will bill you? It could be the difference between paying $150 for a sleep study and paying $1,200.
If you’re a healthcare provider:
Make sure your patients understand that there are major differences in coverage with in-network vs. out-of-network providers. Whenever possible, refer your patients to an in-network provider. Patients are more likely to obtain the services that you recommend if they understand their financial responsibility and are prepared for the expense. No one likes a $1,200 surprise medical bill.
Download our guide to understanding your health insurance and see our top insurance FAQs (including codes for sleep studies, PAP devices and supplies).
Guide to Understanding Your Health Insurance
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