In-Network vs. Out-of-Network Claims

Patients frequently hear the terms “In-Network” and “Out-of-Network” with respect to their healthcare providers and treatment options, but what do these terms actually mean, and what are the key differences between the two?

Generally speaking, healthcare providers – including primary care physicians, specialists, and hospitals – are free to charge whatever amount they deem appropriate for their services.  Health plans, meanwhile, are only obligated to reimburse healthcare claims pursuant to the limits outlined in their respective policy or plan document, subject to state and federal minimum essential coverage requirements.  The total amount covered under an insurance policy or plan on a given claim is referred to as the Allowed Amount, and is frequently subject to copays, coinsurance, and/or deductibles owed by the patient.  More often than not, there exists a gap between what a provider charges for its services and a plan’s Allowed Amount, leaving the patient liable for the remainder.  When a patient is charged for the difference between the billed charges on a claim and the plan’s Allowed Amount, this is called a Balance Bill.

In an effort to avoid the myriad problems which can arise from Balance Billing, many plans and providers choose to access health care networks, which provide pre-negotiated reimbursement rates for healthcare services.  Plans benefit from these arrangements by paying discounted rates off of billed charges; providers benefit by seeing more steerage from participants of these plans; and patients benefit by avoiding burdensome Balance Bills.  When a plan and provider participate in the same network, resulting claims are considered In-Network, and patients will only be responsible for applicable copays, coinsurance, and/or deductibles.  When a plan and provider do not participate in the same network – or if either party is not a part of any network – then resulting claims are considered Out-of-Network, and patients will be responsible for paying the portion of the provider’s charges that exceed the plan’s Allowed Amount.

Patients should be aware that there are many different types of health plans, and coverage options are unique.  Some plans may offer robust Out-of-Network coverage, some may offer more limited coverage, and others may not cover Out-Of-Network services at all.  In addition, some plans may have limited direct contracts with specific providers, or they may eschew contracts at all.  Thus, it is important that patients review and fully understand their plan’s coverage terms and search for available In-Network providers before seeking elective treatment.


Surprise Bills

A Surprise Bill is a Balance Bill that arises out of services in which a patient had no choice in provider, and thus was not afforded the ability to stay In-Network.  For example, suppose an individual was involved in a car accident and sustained injuries requiring emergency treatment.  The emergency medical technicians responding to the scene are not going to waste precious time attempting to verify the person’s health coverage and identify an In-Network facility; rather, they will take this person to the nearest emergency room capable of treating the particular injuries.  If the patient subsequently receives a bill for the difference between the ER facility’s charges and the plan’s Allowed Amount, this is considered a Surprise Bill because the patient had no choice in where to present for treatment.




The No Surprises Act 

Recognizing the massive economic burden that Surprise Billing was placing on millions of American citizens, the federal government passed the No Surprises Act (NSA) as part of the 2021 Omnibus Appropriations Bill.  Officially enacted in 2022, the NSA prohibits providers from balance-billing patients in most scenarios for the following types of services:

  • Out-of-Network emergency services.

  • Ancillary Out-of-Network services provided at in In-Network facility.

  • Air ambulance services.

The NSA implemented a detailed procedure by which plans and providers must resolve billing disputes arising from the above-referenced scenarios, all while protecting patients from bills exceeding standard copays, coinsurance, and/or deductibles.  It also ensures that providers and plans alike remain transparent about the cost of services and the extent of coverage.


Contact the Phia Group for Out-of-Network Consulting and Support


The Phia Group, LLC strives to provide cost containment techniques and solutions to third-party administrators and health plans seeking to control their current and future employee health care benefit costs. Our services include consulting, plan drafting and defense, claim negotiation, and subrogation and overpayment recovery, amongst others.  We can help your company control its health care costs while protecting your plan's assets in the future.

The Phia Group's consulting and cost-savings services include our innovative and forward-thinking technologies and methodologies to create modern solutions to your problems.  We want to put control of your costs and assets back into your hands.  Contact The Phia Group today to speak to a representative or call us at 888-986-0080.