Avoid Surprise Medical Bills by Understanding Provider Network

Health Insurance

It’s the kind of surprise nobody wants: staying on top of your medical expenses only to find you’ve accidentally used an out-of-network doctor and now face a huge bill.

The situation is common enough to have a name: surprise medical billing. It happens most often when patients go to a hospital in their provider network where a non-network doctor happens to practice. Health insurance covers the charges as outlined in the policy, except for fees from out-of-network doctors who treat you, which can be thousands of dollars depending on the length of the hospital stay and complexity of the treatment.

Worse, any over-billed amount you owe doesn’t count toward your health insurance deductible or out-of-pocket maximum.

Since it’s unreasonable to expect consumers to research every physician at a hospital before they seek emergency care, many states protect against surprise billing. Several states have enacted laws to address balance billing, especially when it results from an emergency. Here’s a report on balance billing from the Robert Wood Johnson Foundation and the Center on Health Insurance Reforms.

Still, a majority of states don’t protect consumers from out-of-network charges, so you should know how a provider network works and how to stay within yours — and what to do if you get a surprise bill.

What is a provider network?

A provider network is a group of doctors and other health care providers, including hospitals and clinics, that has a contract with your health insurance company. A doctor’s contract with an insurer may not include all of the company’s policies, perhaps just a few out of hundreds. Only facilities and doctors are included in the network; other health care costs like tests and exams are covered differently, as outlined by your policy.

Payment rates are the main part of such a contract, says Dr. Jonathan Weiss, founder of HealthEngine, a website that helps consumers shop for medical services covered by their insurance. “Similar rate agreements don’t exist with out-of-network providers, so the insurance company has no ability to influence what the provider will charge,” he says.

Some insurance plans will pay a portion of a provider’s fee when you go out of network, but others will pay none, except in some emergencies. Many people choose the first type of plan so they can see an out-of-network doctor they know and trust and still have some of the charges covered. Typically, PPO or POS insurance plans are the most generous in their out-of-network coverage, paying a percentage of a non-network doctor’s fee, usually less than half, while you pay the remainder.

In network vs. out of network

Here’s an example: Say you get an X-ray at an in-network hospital, but the radiologist who interprets your scan is not in your network. The charges involved in an imaging procedure typically include a cost for the scan, the facility fee and the radiologist’s fee. Let’s say that in this case, those charges are:

  • Cost of the scan: $300.
  • Facility fee: $100.
  • Radiologist: $150.

Let’s say your insurance policy covers imaging scans at 70%. In that case, it would pay 70% of the scan and the facility fee, or $280 total. You’d be responsible for the remaining 30% — your coinsurance — which is $120. But you’d also be responsible for the entire out-of-network radiologist fee, adding $150 to your total and leaving you with a $270 bill.

Had that radiologist been in your provider network, your insurance would have paid $105 more — 70% of the radiologist fee — and your bill would have been just $165 for the entire visit.

Your out-of-pocket costs

Procedure and billed cost With radiologist in network With radiologist out of network
Total out of pocket $165 $270
Scan ($300) $90 $90
Facility fee ($100) $30 $30
Radiologist ($150) $45 $150

Making sure your provider is in-network

The best way to avoid surprise charges? Do your best to make sure any doctor or clinic involved in your care participates in your insurer’s provider network. You should do this before you see a new doctor or use a new facility for a test, such as an X-ray or bloodwork, and every time you change insurance plans.

To get started, you’ll need your insurance plan information, including your plan type and number. This should be on your health insurance card or on the top of each page of your policy summary. When you have that, follow these steps:

  • Go online to your insurer’s physician locator or directory tool, enter your plan information and search for your physician. This should tell you if the doctor you want to see not only accepts your insurance but is part of your plan’s network.
  • Verify your findings with the insurance company by phone, ensuring that the physician’s name and location match the details your insurer has. In some cases, providers work out of multiple locations that aren’t covered in the same network or two physicians have similar names.
  • When scheduling your appointment, confirm that the office participates in your plan and doesn’t merely “accept” your insurance. Be sure to ask them specifically: “Does every provider I might see at your facility participate in this insurance plan?”

That seems like a lot of work just to go to the doctor or have a test done, but providers can join and leave plan contracts at any time. Out-of-date provider directories or misinformed office staff aren’t as rare as you might expect, so skipping steps could result in your claim being denied.

What to do if you’re balance billed

In the complicated world of health care billing, even the most diligent consumers sometimes find themselves with out-of-network charges. If this happens to you, there’s a chance you won’t have to pay them all, but you’ll have to work with your insurer or the provider first.

  • Contact the clinic or hospital billing staff to make sure there were no mistakes. “Sometimes the error is a matter of a typo in a billing code,” Weiss says.
  • Check your state’s balance billing or surprise medical billing laws online. If you have problems, call your state’s insurance commission service line and ask how you’re protected. If your state restricts balance billing, call your provider and insurer to let them know your rights and ask to have the problem resolved.
  • If you’re not protected, find out what was out of network: the doctor, the facility or another care provider, such as a registered dietitian. Then, call and ask the provider to waive or lower the charge.

» MORE: How to read your medical bill

If you have no luck, Weiss suggests you involve your doctor, who may be able to work out a solution. “As members of clinical teams with privileges at various facilities, and as the source of referrals for many other medical providers, doctors have local influence that insurers simply do not,” he says.

Remember, you’re much more likely to avoid these hassles — and save money — if you did the work ahead of time to try to stay in network. You’re also more likely to see results if you know your rights and how your state may protect you.

Finally, don’t approach these phone calls with hostility or anger, even though that might be your first reaction. Billing and insurance personnel don’t have to reduce your charges unless your state protects you from them. Speaking calmly, asking earnest questions, and expressing a desire to have the charges resolved may just be enough to change the tide in your favor.