Why can going out of network cost so much?

Health insurance companies establish an allowed amount for each covered medical service. When you use an in-network provider, that provider has agreed to accept the plan’s negotiated amount as payment in full.

An out-of-network provider has not agreed to those rates. You may face a higher deductible, higher coinsurance, and charges above the amount recognized by your plan. That last amount is often called balance billing.

Consider a simplified example involving knee surgery. With an in-network provider, the negotiated cost is $18,000 and 10% coinsurance after the deductible would leave the patient paying about $1,800.

At an out-of-network provider charging $28,000, the plan may recognize only $18,000 and pay 60% of that amount. The patient could owe $7,200 in coinsurance plus the $10,000 difference between the provider’s bill and the recognized amount—a total of $17,200.

Out-of-network providers are not bound by the health plan’s negotiated rates and may establish substantially higher charges.

At the same time, many health plans have increased out-of-network deductibles and coinsurance, restricted covered services, or excluded nonemergency out-of-network care entirely. The result is a much larger difference between what people expect to pay and what they may actually owe.

There are circumstances in which someone may reasonably consider an out-of-network provider, such as highly specialized treatment that is not available locally, continuing care with a trusted physician, or care received when there is no practical opportunity to choose a provider.

Before proceeding, it is important to understand both the medical reason for going outside the network and the financial responsibility you may be accepting.

Confirm the network before receiving care. Check with both the insurance company and the provider. A medical group, facility, and individual physician may not all have the same network status.

Ask for a written cost estimate. Request the provider’s estimated charge and the billing codes expected to be used.

Contact the health plan. Ask what amount the plan will recognize, what deductible and coinsurance will apply, and whether the provider may bill you for additional charges.

Review everyone involved in planned care. Ask about the facility, surgeon, assistant surgeon, anesthesiologist, laboratory, and other professionals who may submit separate bills.

Ask for help before making the decision. A brief review of the plan and provider information can reveal risks that may not be apparent when the appointment is scheduled.