You’ve heard about or read patient horror stories involving huge medical bills for out-of-network care. A patient goes to a physician or hospital thinking that their insurance will pay for their treatment and instead ends up owing thousands of dollars because the doctor wasn't in their insurer's coverage network.
One patient was slapped with a $1,039.50 bill after getting five stitches at an urgent care clinic and another had surgery at an out-of-network hospital and wound up with bills totaling about $150,000.
But what, exactly, is a provider network and what does it mean for providers and patients?
Healthcare industry terminology can be confusing. Learn the basics about provider networks to keep up to date on how payer coverage for provider services works. We've assembled this provider network refresher, complete with a rundown of what you need to know about the forthcoming No Surprises Act, which aims to make out-of-network balance billing a thing of the past.
What are medical provider networks?
Every payer has a list of healthcare providers that it contracts with. These might be individual providers, like physicians and advanced practice professionals, or organizations, like hospitals and health systems. These lists of contracted providers make up medical provider networks. Providers that are included in a payer's network are considered "in network," while ones that aren't are considered "out-of-network." Insurers often have different provider networks for different health plans.
Provider networks exist for several reasons. First, health insurance companies use their networks to ensure quality standards for their members (i.e., patients or enrollees). For instance, doctors who want to join UnitedHealthcare's network must first submit a request for participation before going through the payer's credentialing process, in addition to completing other steps. By credentialing its providers, payers verify their qualifications and background to ensure that patients receive care from qualified, competent clinicians.
In addition to ensuring quality standards, provider networks allow payers to negotiate payments with their contracted providers to keep their costs in check. By negotiating agreed-upon rates with these providers ahead of time, providers in the payer's network agree not to bill patients for amounts any higher than the rate they've established with the payer.
What networks should include
Although payers have standards and requirements for which providers they choose to contract with, they also have rules about the parameters of the networks they offer, which are called network adequacy standards. Networks that are too narrow might prevent patients from getting the care they need when they need it, placing the payer’s coverage guarantees in jeopardy.
That's why network adequacy standards aim to ensure that payers provide enrollees "with timely access to a sufficient number of in-network providers, including primary care and specialty physicians, as well as other health care services included in the benefit contract," according to Community Catalyst.
These standards vary. For instance, health insurance plans in Washington state must include certain types of providers, have enough of each type of clinician, and provide 24-hour emergency care. In California, those specific requirements for health insurance companies include things like having at least one full-time physician for every 1,200 covered people and having primary care network providers "within 30 minutes or 15 miles of each covered person's residence or workplace."
Within those adequacy standards, though, payers have the right to set and adjust the number of providers allowed into their networks, and providers might get rejected from a network for any number of reasons, from failing to meet the payer's enrollment criteria to over-saturation of a provider type in a given service area.
In addition, health insurance companies are increasingly offering narrow network plans, which offer a smaller pool of providers but lower costs.
Risks of using an out-of-network provider
Although insurers vet the providers in their networks, there are many reasons a provider may not contract with a specific payer that have nothing to do with quality. Instead, for consumers, the risks of using an out-of-network provider come primarily down to cost.
Because health insurers and their in-network providers negotiate discounted prices for services, consumers who choose to get their care from out-of-network providers won't be able to take advantage of these health plan discounts.
In addition, patients' out-of-pocket costs might be higher for out-of-network care. For instance, instead of paying an already agreed-upon cost, such as a copay, or having their out-of-pocket costs count against their annual insurance deductible, out-of-network care might have a higher copay, get applied to a separate deductible, or not be covered at all, depending on the kind of health plan.
Another issue with getting out-of-network care is so-called "balance billing." When patients get in-network care, their annual out-of-pocket costs cannot exceed whatever their plan's cost sharing amount is. Plus, the provider agrees that whatever rate they've negotiated is what they'll bill for. With out-of-network care, those negotiated rates don't apply, and providers are free to bill patients for whatever amount their insurance plan didn't cover. Such a practice is called "balance billing" and often results in those high surprise bills we mentioned above.
But there can also be risks for healthcare facilities that work with physicians who aren't in one of their payers' provider networks. That risk, too, stems from balance billing. For instance, let's say a patient needs a knee replacement. She does her due diligence and makes sure that the hospital and surgeon are in-network with her insurance plan. However, she discovers later—when a big bill arrives—that the anesthesiologist (who the patient has no control over) was out of network.
Not only is balance billing often a public relations nightmare for healthcare providers, but it will also become a regulatory problem when the No Surprises Act goes into effect next year, which we'll explain below.
Understanding the No Surprises Act
Medicare and Medicaid already don't allow balance billing, but the No Surprises Act will extend similar protections to consumers who have employer-sponsored and commercial health plans.
According to the Centers for Medicare & Medicaid Services, as of January 1, 2022, the No Surprises Act will ban:
- Surprise billing for emergency services. That means emergency services, regardless of where they are provided, must be treated on an in-network basis without requirements for prior authorization. If a patient wakes up in an out-of-network hospital after a car accident, for instance, they won't get balance billed later.
- High out-of-network cost-sharing for emergency and non-emergency services. Co-insurances, deductibles, and other cost sharing can't be higher than if those services were provided by an in-network doctor. In addition, any coinsurance or deductible must be based on in-network provider rates.
- Out-of-network charges for ancillary care (like an anesthesiologist or assistant surgeon) at an in-network facility in all circumstances. This provision makes the knee replacement scenario we described above a thing of the past.
- Other out-of-network charges without advance notice. Healthcare providers and facilities must tell patients that the care they're about to receive is out-of-network. To do that, they must provide patients with a plain-language consumer notice explaining that patient consent is required to receive care on an out-of-network basis before that provider can bill at the higher out-of-network rate.
The rules, terminology, and specifics of healthcare provider networks are complex and often confusing, varying from payer to payer and even from plan to plan within the same payer's offerings. That's why it's so important for healthcare stakeholders to have a solid baseline knowledge of provider networks and how they work before they attempt to navigate specific plans and networks. Such knowledge can go a long way in helping stakeholders understand the complicated world of healthcare provider networks.
No matter how your organization interacts with providers and payers, symplr can help.