Having access to an extensive network of hospitals, facilities, providers and suppliers is very important when considering a health insurance plan. In an effort to manage your out-of-pocket costs, it's also important to make sure the doctor, hospital or specialist you choose is in your provider network prior to seeking care.
Understanding what a provider network is and how it works when shopping for health insurance coverage is one of the first steps to narrow down your plan options.
A provider network comprises of the hospitals, facilities and providers a health insurance company contracts with to provide healthcare services to its members. These providers are often referred to as “preferred providers” or “in-network providers.”
Provider networks are important because they help save you money in a few different ways. For example, health insurers negotiate directly with the hospitals, facilities and providers for better prices, which results in lower insurance premiums for members.
Another way provider networks save you money is by reducing your out-of-pocket costs when seeking care. Visiting an in-network provider usually means lower copays, deductibles and other costs for you.
Finally, when you seek care from an in-network provider, your out-of-pocket costs will be minimal, as in-network providers bill your insurance company directly. This means that you can seek care and won’t be expected to pay a large bill up front; instead the care provider will bill your insurance company first, making any rate adjustments, and then bill you for what you owe after your claim has been processed.
Make note of the network of providers a health insurance company features to ensure your doctors and hospitals are in-network, as networks can vary significantly from plan-to-plan and insurer-to-insurer.
Understanding the difference between CDHP, EPO, HDHP, HMO, HMO-POS, POS and PPO plans will help you understand how the plan defines and determines how and where you should access care to minimize your out-of-pocket costs.
A CDHP usually pairs a high-deductible health plan with a spending account, such as a Health Savings Account (HSA) or a Health Reimbursement Arrangement (HRA), allowing the member more control over his or her health care spending.
An EPO plan requires you to use in-network healthcare providers, and does not provide out-of-network benefits, except in an emergency.
An HMO plan typically only covers in-network benefits. To receive in-network benefits, you must seek care exclusively from providers in your network. With an HMO plan, you will be responsible for paying the cost of all care that is provided by non-network/out-of-network providers unless the care you receive from the non-network/out-of-network providers is pre-authorized or is for emergency or urgent care services.
An HMO-POS is similar to an HMO plan but allows you the flexibility to seek care from any Medicare-approved provider, though your out-of-pocket costs may be higher if you see providers outside of your network.
An HDHP typically features a traditional insurance plan with low premiums and a high deductible and is combined with a Health Savings Account (HSA) or a Health Reimbursement Arrangement (HRA).
A POS plan features aspects of both an HMO and a PPO plan. Like an HMO plan, a POS plan requires you to choose a PCP and get referrals for specialists, but it also offers out-of-network benefits like a PPO plan.
A PPO plan is designed to allow you maximum flexibility in choosing your healthcare providers by offering both in-network and out-of-network benefits. If you choose to receive care from an in-network/preferred provider, your out-of-pocket expenses for medical services will be kept to a minimum, but you still have the option to seek medical treatment from out-of-network/non-preferred healthcare providers.