What's Out-of-Network Liability and Balance Billing?

This is important information! 

If you visit an out-of-network provider, you will likely pay a lot more. Out-of-network (OON) providers do not have a contract with your insurance to limit what you'll be charged for services. These OON providers can include doctors, therapists, hospitals, clinics, pharmacies, labs, and other providers.

Also, some health plans do not cover any out-of-network providers/services, except: 

  • In the event of a medical emergency, as defined by your plan
  • When medically necessary services aren’t available from an in-network provider (which will likely require precertification from your health plan)

Refer to your insurer's plan documents for important benefit information.

Out-of-Network Liability

As the insurance policy holder, it's your responsibility to make sure you only use in-network providers and facilities. So you should always verify and ask specifically, "Is this in my network?"

While many doctors and hospitals will accept your insurance, it doesn't mean they are in your network. And going out-of-network is expensive.

When you go out of network, you pay a larger part of the cost share for those services than you would for the same services provided by an in-network provider. This may include the deductible, coinsurance and other out-of-pocket amounts.

Financial consequences of using out-of-network providers include:

  • Much higher out-of-pocket (OOP) costs for you
  • Costs may not apply to your plan deductible
  • Costs may not apply to your out-of-pocket limit or the OOP limit may be higher 

Read more about how plan deductibles and out-of-pocket limits work.

Balance Billing

Assuming your plan allows for out-of-network providers/services, you may have to pay the difference between what the plan allows and the amount billed by the provider. Balance Billing is the difference between the out-of-network provider's charge and your plan's allowed amount for the service(s). 

An in-network provider will not bill you for the difference between their charge and the plan's negotiated rate.

While the Affordable Care Act limits out-of-pocket costs for in-network services, you do not have this same financial protection when you use out-of-network providers or services.

Example 1

Balance billing can get complicated, so let's start with a simple example. Say you visited an out-of-network doctor and the charge is $100, but the plan's allowed amount is $70. The provider may bill you for the remaining $30.

This example may seem manageable, but your out-of-pocket costs can quickly skyrocket. 

Example 2

Here's an example where costs can quickly escalate. Say your plan covers 100% of allowed charges for in-network care, but only 50% of out-of-network (OON) care. You had an imaging scan performed at an OON facility. The provider bills you $3000, but your plan only allows $600.

Since you went out-of-network (OON):

  • Your insurance only pays 50% of the $600 (plan's allowed amount)
    • Your insurance pays $300
  • The provider still expects to be paid the full $3,000
    • You pay $2,700

"But, I don't want to change my doctor..."

You may be faced with a really difficult choice: move to an in-network provider or pay a lot more for services. 

That said, there's no downside to negotiating directly with your provider. Ask for discount or if they'd be willing to write-off (waive) balance billing fees.

Continuity of Care

If your current doctor or provider is no longer in-network, very specific situations may qualify for transition of care. 

  • If your request is approved, you can continue to see your doctor for a transitional period only (not forever)
  • The most common example is for pregnancy (other examples include chemo, post-surgical care/surgeries performed in stages, organ transplant, substance abuse treatment, mental illness treatment)
  • Your new health plan would treat these medical bills as if you received in-network care

Related reading:

The Importance of Staying In-Network
How does a Deductible Work?
Precertification for Medical Services
Prior Authorization for Prescription Drugs
How to Choose a New Doctor
What's an Employee Assistance Program (EAP)?

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