Health Insurance Provider Networks

Today most health insurance companies use provider networks for their policies.  You should know the advantages and disadvantages of plans that use provider networks.

Advantages of Health Insurance Provider Networks

The advantages of a policy with a network of doctors, hospitals and other providers are the lower cost for medical care and the lower premiums for the policy.

When you use a doctor or other provider that participates in your health insurance carrier’s provider network the provider charges less than they would if you didn’t have insurance.  The lower rate is called the “negotiated rate.” The insurance company or you will pay a rate that the carrier has negotiated with the provider.  This rate can be half of the standard price for a given service.

This means that your costs are lowered in two different ways.  First, the insurance premiums you pay for your policy will be lower than they would be for a similar policy that does not use a network.  Second, if you have to pay for the service out of your pocket because you haven’t met your deductible, you will pay the lower negotiated rate.

Disadvantage of Health Insurance Provider Networks

The disadvantage is that you will pay more for care if you choose to seek treatment from an out–of-network provider.  In some cases, you will have to pay the entire cost of care received from a doctor, hospital or other provider.  In other cases you will pay a higher percentage.

Emergency care is often an exception to this.  Your share of the bill may the same as it would be if you used a network provider if you use a non participating doctor or hospital during a medical emergency.

It is important to know how your policy covers you when you are out-of-network.  HMO plans will typically cover nothing but emergency care if you are out of network.  PPO and POS plans will typically cover some costs when you use a non-participating provider.  However, you will often have a higher deductible and/or a higher coinsurance percentage.

Special Health Insurance Network Issues

It is important to be able to have access to in-network care at all times if possible.  If you are a college student, ideally you want an insurance policy with a strong network near your parents’ home as well as near your school.  “Snow birds” and other people who have secondary residences that they spend substantial amounts of time in will have similar concerns.

Tags: health insurance, health insurance provider, medical insurance