What Are The Situations Where One Would Need An Out-Of-Network Physician?

Cindy J. Holtzman, Director of Operations at Medical Billing Advocates of America (MBAA) answers, "O.O.N. is an abbreviation of these words. Sometimes, consumers will "choose" to go out of network, because of the specialty service offered by a provider that is not in their network, and sometimes out of state. Many times providers that are in a P.P.O and H.M.O. network cancel their contract and do not notify the patient. Members should continuously always ask if their [health care] provider is in network. Group, employer insurance plans, may change to a different insurance company when it comes time to renew the policy and the previous provider may not be in the new insurance network. Always ask!"

Ms. Holtzman further explains, "R.A.P.E. PROVIDERS: Although a hospital & surgeon may be in your network, some insurance companies will not pay in network benefits for all the providers used. Certain services, which consist of the specialists listed below, may not be in your network. A patient really has no idea who will look at any x-rays, initiate anesthesia, biopsy a specimen, or be the emergency room physician on call that day. Many instances the, what we call them R.A.P.E. physicians are not in any network at all. These providers could also be called "Phantom Providers." You never meet them or know them, until you get their bill.

Radiologist
Anesthesiologist
Pathologist
Emergency Room Physician
(Lab work may be billed as an out-of-network when you have outpatient lab services preformed).

Always ask if the provider is your network, especially for Labs, Anesthesiologists, Radiologist, Pathologist and the Emergency Room Physician. If you do receive a bill from these providers, try to negotiate a discount from them."


Ms. Cindy J. Holtzman provides the following information.
Example of Claim Paid In-Network versus Out-Of-Network (O.O.N.) & Deductible already met:

Policy type is: Insurance pays 80% & the Member pays 20% (familiar as 80/20) with the Co-Insurance Maximum of $5,000 (fixed amount), the members "Stop Loss", only if the services are all in network. Too often, when the member is out-of-network, there is NOT a fixed amount of O.O.P. costs, this policy pays 60% for those benefits.

In-Network Provider

Billed Charge
$8,633.00

Less PPO Discount
$3,795.00

Balance
$4,838.00

Insurance pays 80% 0f Balance (80% of $4,838.00)
$3,870.40

Member pays 20%
$967.60

Total Member Out of Pocket
$967.60


Out-of-Network Provider

Billed Charge
$8,633.00

Maximum Allowable Fee for this Service
$6,707.18

Difference not Covered by Insurance
$1,925.82 (over U.C.R. allowable)

Insurance Pays 60% of Allowable Fee
$4,024.30

Member pays 40% of Allowable Fee
$2,682.87

Total Billed Charges
$8,633.00

Total Paid by Insurance
$4,024.30

$4,608.70 still due from the member


Member owes in 40% coinsurance
$2,682.87

Members Over Allowable Fee Responsibility
$1,925.83

Total Member Out of Pocket
$4,608.70


Ms. Holtzman elaborates, "You can see, by using in-network providers, the member and insurance company both spend a lot less money. Also you get an idea on how much an In-Network provider will accept per their PPO/HMO contract. (Yet they charge an uninsured consumer the "List Price"). The remaining balance & or discount is a provider write-off and CANNOT BE BILLED TO THE PATIENT. If the member is being billed for the discounted amount, it is illegal, and called "Balance Billing". The above example is based on a small bill, remember, the larger the bill, the less reimbursement a member will receive if they are using out-of-network providers."

"In the above example: 80/20 co-insurance was paid for the In-Network Providers and the Out-Of-Network reimbursement was reduced to 60/40. This is very common to have a lower percentage paid by insurance if you are not in the network," Ms. Holtzman clarifies.



Ms. Holtzman explains billing procedures of seeing an out-of-network physician.
"Most of the time (but not always), when this happens, the patient is aware that the benefits paid by the insurance company may be reduced. If the provider is not in the network, the insurance will generally (depending on the specifics of the plan), pay the claim in a format called "Usual & Customary" - (U&C), "Usual, Customary & Reasonable" (U.C.R), or "Reasonable & Customary" (R&C). Sometimes there could be an "Additional out of Network Deductible" the member may be responsible for."

"Definition of U & C: The reimbursement method, used by insurance companies, is judged by knowing what the charges being billed in a particular region or city or even zip code, and the insurance will pay a percentage of that rate (which is usually determined by the insurance company and is listed in the policy specifications). The resulting dollar amount or payment made will differ from each insurance company, but the end result, the member will have much more out of pocket expenses then they may previously thought, prior to the services being performed."

Ms. Holtzman advises, "It always makes sense for the member to try to negotiate a discount (preferably a "Managed Care" discount if possible) with any providers that may have a balance due higher than what they would have been responsible for if an "In-Network Provider" was used. Members should also ask the insurance company to explain how their reimbursement figures were calculated. If it is a large bill, ask the insurance company (and/or hospital) to do an internal audit of the bill for errors. Since the member will have a much larger out of pocket expense going out of network, removing any billing errors can reduce that amount. Some insurance companies have a set "Maximum Allowance" fee schedule for any out of network procedures."