Why Using an In-Network Provider Isn't Always the Best Deal

One of these in-network surgeons will cost you less than the others. Learn how to tell which one.. Image © Ghislain & Marie David de Lossy/Getty Images

Most people think that if they choose an in-network doctor, lab or pharmacy, they’re making the most economical choice. While this is sometimes true, it’s not always true.

Staying in-network is usually cheaper than going out-of-network, but that doesn't mean you're getting the lowest price just because you chose an in-network provider.  Here are two exceptions to the rule that could save you money.

In-Network Providers Are Not All Created Equal

When you owe a copay, as long as you choose an in-network provider, your out-of-pocket expenses are the same no matter which in-network doctor, pharmacy or lab you use. Since copays are a fixed dollar amount, your costs are the same regardless of how much your health care provider bills your health insurance company.

When it comes to coinsurance, however, you have to do some homework to make sure you get the best deal. With coinsurance, you pay a percentage of the bill rather than a fixed amount. Since you’re paying a percentage, the larger the doctor’s bill, the more you pay. You need to shop around among the in-network providers, making sure you choose the one who charges your insurance company the least for the services you’ll be using.

Coinsurance vs Copay—What’s the Difference?

Your health plan has negotiated discount rates with all of its in-network providers.

Your coinsurance is a percentage of the discounted rate, not the original rate. You’re comparing discounted rates because not all discounts are created equal; you’ll pay more if you go to an in-network provider that doesn’t give your health insurance company a very good discount.

A Real-Life Example

I have series of blood tests every 3 months.

I normally go to the closest in-network lab. My 20 percent coinsurance for these tests usually amounts to about $9.

A couple of years ago, I was working at our local hospital. I thought it would be convenient if I had my lab tests done at the hospital’s outpatient department while I was on my lunch break. I called my insurer to see if the hospital’s outpatient lab was an in-network provider.

“No problem,” the insurance lady said. “The hospital’s outpatient lab is in-network. You’ll be responsible for 20 percent of our negotiated discount rate if you get your lab work done there.”

A few weeks later, I was surprised by a bill that was ten times larger than my usual bill for the exact same blood tests. Why? My insurer hadn’t negotiated as good a discount with the hospital as they had with the nationwide chain of labs.

Here’s how it worked:

  Regular Rate Discounted Rate My 20% Coinsurance
 Nationwide Chain Lab $400 $45 $9
 Hospital Outpatient Lab $600 $490 $98

Even though I had the exact same blood tests and I used in-network labs, I paid ten times more using one in-network provider than I paid using another.

Don’t assume that just because you’re using an in-network provider, you’re paying the lowest possible price; shop around.

Sometimes No Insurance Is Better Than Using Insurance

Most of the time, using your health insurance with an in-network provider is a lot less expensive than going to an out-of-network provider or not using your insurance at all. But, this isn’t always true.

Here’s an example. Let’s say your copay to fill a prescription for a generic drug is $20. Several big-box stores and even some grocery stores fill prescriptions for older, generic antibiotics for $4. Some even fill prescriptions for older, generic cholesterol-lowering medications and diabetes medications for $4.

If you just hand over your prescription and insurance card, you’ll pay the $20 copay. If you know about the $4 deal, you can get those medications more cheaply without using your health insurance than you can with it.

How To Get the Best Deal

There’s no simple answer; you have to do your homework. Know what your copays are. Know what your coinsurance rates are. Know which services require a copay and which services require coinsurance.

For services that require you to pay coinsurance, ask what the provider is charging your health insurance company. Next, comparison-shop with a few other in-network providers. If you don’t have the time or energy to do this every time, focus on high-cost items or procedures that require coinsurance, and on lower-cost services that you use frequently.

For services that require you to pay a copay, ask what the provider charges people without health insurance for this same service. If the self-pay charge is lower than your copay, consider paying for the service without using your health insurance.

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