Insurance 101: What is the Difference Between "In-Network" and "Out-of-Network" Insurances?
What does it mean for a provider to be "in-network" with your insurance?
It means:
The insurance company and the provider have a contracted relationship.
The contract lays out:
What the insurance company will pay for.
What the insurance company absolutely will not pay for.
How much the insurance company will pay the provider for a given treatment.
What may not be obvious about insurance contracts is:
It is not common knowledge how much an insurance company will pay for a given treatment. It's not easy (and in some cases, impossible) for either the insurance company or the healthcare provider to tell you what your full costs will be before treatment. This minimizes your ability to budget appropriately or "shop around" to compare value before receiving treatment.
Different insurance companies pay different amounts for treatment. The exact same treatment billed to two different insurance companies can be reimbursed in two different amounts.
Insurance companies make more money the less they pay out in reimbursement. They're financially incentivized not to pay for your care.
Insurance companies pay people to do healthcare audits to determine if something is medically necessary. Those people are not usually medical providers, and even in the case that they are, I know that I couldn't tell you if a medicine for a heart condition were medically necessary. You think that a random doctor off the street could tell you if pelvic floor physical therapy were necessary?
Also, this all happens AFTER treatment is delivered. If something is determined NOT to be medically necessary, your insurance company just doesn't pay for it, leaving it to you and your provider to have awkward conversations about what you'll pay out of pocket.
What does it mean for a provider to be "out-of-network" with your insurance?
It means:
The provider has no relationship with your insurance company, and doesn't rely on the rules or auditing practices of your insurance company to know what will be covered when they treat you.
So how does payment work?
You pay the provider what their prices are, allowing you to know exactly what you'll be expected to pay up front.
Some insurance plans have "out-of-network" benefits that will reimburse you for some of the costs of your care. It completely depends on the insurance plan.
You can still use an HSA or flex spending account if your insurance company doesn't have a relationship with your provider.
It is not a bad thing to have insurance, and it's not a bad thing to want to be able to use it with the providers you see. It is, however, a bad thing to get straddled with bills you didn't know you were going to be responsible for due to having medical coverage denied by someone who has never even met you.