Follow this guide to insurance networks to help you decide which option is right for you.

1. What is an insurance network?
2. What does “in network” mean?
3. What kind of insurance networks are there?
4. What is out-of-network insurance?
5. What is balance billing?
6. What’s a primary care provider (PCP)?
7. What happens if I go out of network for emergency care?
8. What is a health maintenance organization (HMO) network?
9. What is a preferred provider organization (PPO) network?
10. What is an exclusive provider organization (EPO) network?
11. What is a point of service (POS) network?
12. What kind of network is right for me?

When you’re shopping for health insurance and trying to compare plans, it can get confusing quickly. You may have to translate an alphabet soup of acronyms describing health care network options before you can even consider which one might be right for your individual situation.

To help you figure out what type of network might be right for you, take a look at this comprehensive guide to insurance networks.

What is an insurance network?

An insurance network — which you might also see called a provider network — is a group of doctors, providers and hospitals that have contracted with a health insurance company. That means they’ve agreed to accept a prenegotiated rate for medical services or supplies they provide.

This reimbursement is typically discounted from what a patient who’s not in the network would pay. It’s like when you stay in a hotel room and pay less than the standard rate because you belong to an auto club.

Being in a network brings more patients to providers, and that increase in patients can help offset the lower reimbursement rate. Paying providers at a discounted rate lowers insurance companies’ expenses.

When insurance companies save money, they can pass that savings on to consumers, for example, by charging lower premiums. (A premium is a monthly insurance bill.)

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What does “in network” mean?

Being “in network” means that a doctor, provider or hospital belongs to an insurance company’s network. In other words, the provider has agreed to accept a set reimbursement rate for their services.

When you go to an in-network provider, you typically save money on out-of-pocket costs, such as copayments and coinsurance.

• A copayment, or copay, is a set amount you pay for a covered health service — such as $20 for a doctor’s office visit. It doesn’t matter how much the provider bills for the visit and what the insurance company pays the provider, you are responsible for your copay.
• Coinsurance is a percentage of the total cost of a covered health service, such as 20% of emergency room charges. If you stay in network, you’ll pay less because the total amount of the bill will be based on the discounted network rate.

What kind of insurance networks are there?

Common types of health insurance networks include:

• Health maintenance organization (HMO)
• Preferred provider organization (PPO)
• Exclusive provider organization (EPO)
• Point of service (POS)

We’ll discuss each type in more detail below. The costs for each can vary widely when you see in-network doctors and providers or visit in-network hospitals versus when you use providers who are not in the network.

What is out-of-network insurance?

Let’s say your health insurance company has a network. If you go to a doctor, provider or hospital that’s not a member of the network, that is what’s called an out-of-network provider. Your insurance may pay less for that provider’s services or may not pay anything at all.

It all depends on the type of insurance you have. If you have out-of-network insurance coverage, how much your insurance company pays also depends on your plan’s benefits. However, you will most likely have higher out-of-pocket costs than if you had stayed in network.

For example, you may pay a $25 copay for an in-network office visit. That’s a set amount for a covered service. It doesn’t matter how much the total bill is. However, if you go out of network, you may have to pay 20% coinsurance for the billed amount. That could be a lot more.

Additionally, if you see an out-of-network provider, they may use a facility, such as an outpatient surgery center or a lab, that’s also out of network. These costs can add up.

An insurance company also may not credit out-of-network costs toward your out-of-pocket maximum. That’s the amount you’ll pay out of pocket during the plan’s period (usually one calendar year) before the insurance begins to pay 100% of the allowed amount. The plan will spell out which costs apply to the limit. For example, you won’t get credit if you pay for a medical service that the plan doesn’t cover.

What is balance billing?

Balance billing happens when a provider bills you for the difference between what they charge and what your insurance company’s total allowed amount is. An insurance company determines its allowed amount based on what it would pay an in-network provider.

That might be based on usual, customary and reasonable (UCR) rates. UCR rates are the amount that providers typically charge for a medical service in a geographic service area.

As a result, if an out-of-network provider charges you more than the allowed amount, the provider may bill you for the difference. So, if an out-of-network provider charges you $500 for an office visit, but your insurance company’s allowed amount is $400, you are responsible for that extra $100 — in addition to any copay or coinsurance you might owe.

What’s a primary care provider (PCP)?

Some types of health insurance networks require you to have a primary care provider (PCP). If you’re an adult, a PCP is typically an internist or a family medicine doctor — but it could be a nurse practitioner or physician assistant too.

If you have a child, their PCP is typically a pediatrician or a family medicine doctor. Your PCP coordinates your care. In fact, some types of networks may require you to get a referral from your PCP before seeing a specialist.

Some types of networks may allow you to see another provider without a referral from your PCP.

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What happens if I go out of network for emergency care?

Your plan will define what it considers emergency care. You may receive emergency care as defined by your plan from an out-of-network provider. For example, you may be transported by ambulance to the nearest facility. If this happens, you may pay out-of-pocket expenses at an in-network rate. Any in-network deductible requirements may also apply. You may not have to pay extra out-of-network charges.

What is a health maintenance organization (HMO) network?

An HMO, or health maintenance organization, is a closed type of health insurance network. It typically limits you to seeing only in-network providers. You may need to live or work in a certain area to join an HMO.

A PCP will coordinate your care, and you will need a referral from your PCP to see a specialist. An HMO may also require prior approval for certain services. With rare exceptions, all your providers will need to be in the HMO’s network for them to be covered.

If you go out of network, you may be responsible for the whole cost. In addition to emergency care, an exception may apply if the network doesn’t have a provider for a medically necessary need.

HMOs were originally created to focus on preventive medicine, wellness and continuity of care. Continuity of care means that you don’t keep starting over with different doctors. You see one provider, your PCP, consistently. In turn, your PCP gets to know you and your medical history and health needs better.

HMOs encourage members to get preventive services, such as physicals and recommended screenings. That lowers costs and improves patients’ health. For example, it’s less expensive and better for a patient to be diagnosed with cancer in its early stages. So, if that were a breast cancer diagnosis, it might be done through a mammogram, or even via a doctor’s exam before symptoms appear.

HMOs typically have lower monthly bills compared to other types of health insurance. They may also have a low or no deductible. That’s the amount of money that you pay out of pocket for covered health services before your insurance company starts paying the rest.

An HMO may work well for you or your family if all your providers are in network. If you’re healthy and rarely need health care services, an HMO might also appeal to you due to the lower costs.

If you or a family member is managing a chronic condition (for example, if your child has asthma), an HMO’s continuity of care and lower out-of-pocket costs may make it a good choice.

What is a preferred provider organization (PPO) network?

A preferred provider organization (PPO) covers both in-network and out-of-network services. You usually pay less if you stay in network.

But you have the flexibility to go out of network if you choose. Unlike an HMO, you don’t need a referral from a PCP to see specialists. But a PPO may require you to get prior approval for certain services.

A PPO typically costs more than an HMO. Premiums are higher and out-of-pocket costs, especially if you go out of network, may be higher. If you regularly use out-of-network providers, a PPO may work well for you.

You’ll save money when you stay in network, but you’ll gain the flexibility to go out of network. If you travel frequently, a PPO may be a better option than an HMO if the HMO’s network is geographically limited.

What is an exclusive provider organization (EPO) network?

An exclusive provider organization (EPO) is a type of network that covers services only in network, except in an emergency. Unlike an HMO, you don’t need to get a referral from a PCP to see a specialist. You generally can see any provider that’s in the network.

But you may need to get prior approval for certain medical services. Like an HMO, an EPO generally doesn’t cover out-of-network services.

An EPO typically costs more than an HMO but less than a PPO. An EPO may work for you if all your providers are in network, and you want the flexibility to see a specialist without having to get a referral. Maybe that’s a specialist you’re already seeing.

What is a point of service (POS) network?

A point of service (POS) network is a hybrid of an HMO and a PPO. Like an HMO, you’re required to have an in-network PCP, and you’ll need a referral to see a specialist. You pay less if you use in-network providers, but you can go out of network for an additional cost.

Plans that use a POS generally cost more than HMOs but less than PPOs. If you already have a PCP that’s in network, the lower cost and flexibility to go out of network may be factors in favor of selecting a POS.

What kind of network is right for me?

What kind of network that’s right for you will depend on your individual situation. Above all, when you’re shopping for health insurance, always read the plan description carefully. Cost and flexibility are important factors to consider.

In addition to the monthly insurance bill, look at potential out-of-pocket costs, including the:

• Copays and coinsurance
• Deductible
• Maximum out-of-pocket limit

It’s worth noting that there are typically different individual and family deductibles and maximum out-of-pocket limits.

Check if your current providers are in network. If all your providers are in network, an HMO or EPO may be a good option for you. It will also cost less than a PPO or POS.

But keep in mind that if you need to go out of network, which could happen unexpectedly, you will most likely need to pay the entire cost on your own, unless it’s an emergency.

A PPO or POS typically costs more than an HMO or EPO. But a PPO or POS gives you the flexibility to go out of network. If you already have a mix of providers who are in and out of network, you may want that flexibility.

Even if your providers are all in network, your health needs may change, and you may want to know that you have the option of going out of network should the need arise.

Looking for access to a national network of doctors, providers and hospitals? Explore your short-term plan options now or call 1-844-211-7730 for more information.

Sources:

Healthcare.gov. “UCR (usual, customary, and reasonable).” Retrieved from https://www.healthcare.gov/glossary/ucr-usual-customary-and-reasonable/ Accessed July 14, 2024

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51742-X-1124