Health Insurance: What Is a Health Insurance Provider Network?

A Contracted Group of Health Care Providers

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A health insurance provider network is a group of health care providers that have contracted with an HMO or PPO to provide care at a discount.

A health plan’s network includes health care providers like primary care physicians, specialty physicians, labs, X-Ray facilities, home healthcare companies, hospice, medical equipment providers, infusion centers, chiropractors, podiatrists, and same-day surgery centers.

Health insurance companies want you to use the providers in their network for two main reasons:

  • These providers have met the health plan’s quality standards.
  • They give the health plan a discount.

Why Your Health Plan’s Network Matters

You will pay lower co-pays and co-insurance when you get your care from an in-network provider, as compared to when you get your care from an out-of-network provider. In fact, many HMOs won’t even pay for care you received from an out-of-network provider except under extenuating circumstances. Even less restrictive PPOs commonly charge 20 or 30 percent co-insurance for in-network providers and 50 or 60 percent co-insurance for out-of-network providers.

An in-network provider bills your health plan directly, collecting only the copay or coinsurance amount from you. However, an out-of-network provider might not file an insurance claim for you. In fact, many require that you pay the entire bill yourself and then submit a claim with your insurance company so that the insurance company can pay you back.

That's a lot of money up front from you, and if there is a problem with the claim, you are  the one who's lost the money.

An in-network provider is not allowed to balance-bill you. They must accept the contracted rate, including your copay or coinsurance, as payment in full or they’ll be in violation of their contract with your health insurance company.

In some states, an out-of-network provider may charge you whatever they choose to, no matter what your health insurance company says is a reasonable and customary fee for that service.

Since your insurance company will only pay a percentage of the reasonable and customary fee, you will be on the hook for the entire rest of the bill with an out-of-network provider. Thus, an in-network provider is usually the best option.

Examples:

My health plan has an extensive network of providers. If I don't like one cardiologist, I can choose a different one.

I didn't choose that health plan because its network isn't very well developed in my area. I would have had to drive 50 miles to find an in-network lab to get my blood tests done.

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