In network vs out of network
Last reviewed · Educational use only
A network is the set of providers who signed a contract with the plan. The contract fixes the price and bars the provider from billing the patient beyond the plan's cost-sharing. Out of network, neither protection exists unless a law steps in.
In network (participating)
- Price set by contract: the allowed amount.
- Provider writes off billed minus allowed.
- Patient owes only copay, deductible and coinsurance.
- Counts toward the in-network out-of-pocket maximum.
- Provider files the claim and handles prior authorization.
Out of network (non-participating)
- No contract; the plan decides what it allows.
- Provider may balance-bill charge minus allowed.
- Separate, higher deductible and coinsurance, or no coverage at all on HMO/EPO plans.
- Separate out-of-network limit, or none.
- Plan may pay the patient instead of the provider.
The same service, both ways
An MRI billed at $2,400. The PPO's contracted rate is $900; its out-of-network allowance is $700. The patient has met neither deductible. In network: $1,500 deductible, 20% coinsurance. Out of network: $3,000 deductible, 40% coinsurance.
| In network | Out of network | |
|---|---|---|
| Billed charge | $2,400.00 | $2,400.00 |
| Allowed amount | $900.00 | $700.00 |
| Applied to deductible | $900.00 | $700.00 |
| Plan pays | $0.00 | $0.00 |
| Provider writes off | $1,500.00 | $0.00 |
| Balance bill | $0.00 | $1,700.00 |
| Patient pays | $900.00 | $2,400.00 |
Out of network, the patient pays the whole bill even though the plan "covered" it: the allowance went to the out-of-network deductible, and the rest is a balance bill. Try your own numbers in the calculator.
How plans set an out-of-network allowance
- Percentage of Medicare. For example 125% to 200% of the Medicare fee schedule for the same code and locality. Common in self-funded plans.
- Usual, customary and reasonable (UCR). A percentile of charges in the area, often from a commercial database such as FAIR Health.
- Reference-based pricing. A fixed multiple of a benchmark (usually Medicare) applied to every claim, sometimes with no network at all.
- Repricing networks / wrap networks. A third party negotiates a discount on the claim after the fact. The provider may have signed a rental network agreement without knowing which plans use it.
The No Surprises Act
Since January 1, 2022, federal law protects people with employer, Marketplace and individual coverage from surprise out-of-network bills in three situations. In each, the patient pays only in-network cost-sharing, it counts toward the in-network deductible and out-of-pocket limit, and the provider may not balance-bill.
Emergency care
Emergency services at any hospital emergency department or freestanding emergency center, in or out of network, without prior authorization, through stabilization. Some post-stabilization care is also protected unless the patient gives written consent.
Non-emergency care at in-network facilities
Out-of-network clinicians at an in-network hospital, hospital outpatient department or ambulatory surgery center. Ancillary services (emergency medicine, anesthesiology, pathology, radiology, neonatology, assistant surgeons, hospitalists, intensivists, and diagnostic services including radiology and lab) can never use notice and consent to waive this.
Air ambulance
Out-of-network air ambulance services. Ground ambulance is not covered by the federal law, though many states protect it.
- Notice and consent. For non-ancillary, non-emergency services, an out-of-network provider at an in-network facility can ask the patient to sign the federal standard notice and consent form, which waives the protections. It must be given at least 72 hours before the service. If the appointment is made less than 72 hours ahead, it must be given on the day it is scheduled and at least 3 hours before the service. Patients do not have to sign.
- Recognized amount and QPA. The patient's cost-sharing is based on a recognized amount, usually the qualifying payment amount (the plan's median contracted rate) or a state-law amount.
- Payment disputes stay between plan and provider. A 30-business-day open negotiation, then federal independent dispute resolution (IDR) if they cannot agree. The patient is out of it.
- Uninsured and self-pay patients must receive a Good Faith Estimate for scheduled care. If the bill is $400 or more above the estimate, they can use the patient-provider dispute resolution process.
- Directories and continuity of care. Plans must keep provider directories accurate; a patient who relied on a wrong directory listing pays in-network cost-sharing. A patient in active treatment when a provider leaves the network can get up to 90 days of continued in-network care.
The No Surprises Act does not apply to Medicare, Medicaid, TRICARE or VA coverage; those programs already restrict balance billing in their own ways. It also does not protect planned out-of-network office visits the patient chose.
Getting in-network benefits from an out-of-network provider
Network gap exception (network adequacy exception)
A request asking the plan to pay an out-of-network provider at the in-network benefit level because no in-network provider of that specialty is available within a reasonable distance or time, or none can provide the service. Usually filed before care, with the CPT/HCPCS codes, diagnosis, dates and the reason in-network options don't work. Approval sets the patient's cost-sharing; it does not always stop balance billing unless the plan also agrees a rate.
Single case agreement (SCA)
A one-time contract between the plan and an out-of-network provider for a specific patient and episode of care, fixing a rate and usually barring balance billing. Common for specialty care, transplants and continuity of care. Get it in writing with the codes, units, dates and rate.
Continuity of care
When a provider leaves the network or a patient changes plans in the middle of treatment (pregnancy, serious illness, scheduled surgery), the plan may continue in-network coverage for a transition period. Federal law requires up to 90 days for plan-provider terminations in many cases.
When you are out of network:
- Decide whether you will file the claim for the patient as a courtesy, accept assignment, or have the patient file. Many plans send out-of-network payments to the member.
- Check whether the service falls under the No Surprises Act before you set patient responsibility. If it does, you bill only in-network cost-sharing and dispute payment with the plan through open negotiation and IDR.
- Give self-pay patients a Good Faith Estimate for scheduled services.
- Do not routinely waive deductibles or coinsurance to look in-network. For Medicare and other federal programs this can violate the Anti-Kickback Statute and civil monetary penalty rules; for commercial plans it can breach plan terms and state law. Document real financial-hardship waivers case by case.
- Medicaid patients cannot be balance-billed for covered services, and you generally must be enrolled with the state Medicaid program to be paid.