From PPOs and EPOs to HMOs and everything in between, the health plan industry often looks like a bowl of alphabet soup. Have you ever wondered what “provider network” actually means?
No worries — you’re not alone. Plenty of health plan sponsors and members are in the same boat. That’s why we’re here to help you understand the ins and outs of your plan.
From in-network vs. out-of-network coverage to the plan types you can choose, we’ll make sure you have everything you and your employees need to access high-quality medical care.
What is a provider network?
According to the federal government, a provider network consists of all the doctors, hospitals and other healthcare providers that a health plan contracts with to provide medical care to its members. Think of it as a list of organizations that accept your coverage.
There are many benefits to using a provider network. First is “network adequacy,” which is a requirement of the Affordable Care Act (ACA). Adequacy standards ensure that enrollees have timely access to a sufficient number of practitioners. If a network is too narrow, patients might not be able to get the medical care they need when they need it.
Second, networks help the payer save money by contracting with healthcare providers that agree to a discounted rate for covered services. In exchange, they become part of the network. Any doctor or organization on the list is a “network provider.” Practitioners that aren’t on the list are called “out-of-network healthcare providers.”
The cost of in-network vs. out-of-network care
Healthcare services are billed differently based on whether the enrollee visits a network provider. Network participants have agreed to discounted prices, so members pay more when they see an out-of-network physician.
Let’s look at a hypothetical example:
- In-network coverage: If a member visits a doctor inside the network, they may be charged $5,000. The health plan covers a contracted rate of $4,000, but because the doctor is in-network, they can’t bill you the difference. That’s good!
- Out-of-network coverage: If a member visits a physician outside the network, they may be charged the same $5,000. But because they went out-of-network, the provider is allowed to bill the difference even though the member is covered up to $4,000. In other words, they get stuck with a $1,000 tab. Not good!
Types of health plans
Coverage also depends on what type of health plan you have, which is where all those acronyms come into play. Let’s break them down one by one:
- Preferred Provider Organization (PPO): A PPO plan includes a list of preferred providers that enrollees are encouraged to visit. Patients still have some flexibility, however: If you don’t go to a preferred provider, the insurer may still cover some portion of the medical care received.
- Health Maintenance Organization (HMO): An HMO plan generally offers less freedom to go out of network, and members may have to choose a primary care physician (PCP) for all referrals. You may get lower premiums than with a PPO plan, though.
- Point-of-Service (POS): A POS plan means your members pay less if they use providers that belong to the plan’s network, but they’re required to obtain referrals from their PCP to see specialists.
- Exclusive Provider Organization (EPO): EPOs only cover medical care rendered by entities within your network — never outside (unless it’s an emergency).
Build the network you need with MagnaCare
Healthcare doesn’t have to be a mystery — and with MagnaCare, it never is. As a third-party administrator, we’ve spent decades helping clients navigate the complexities of self-funded health plan and network management.
More than just an administrative service provider, we’re a network liaison. We contract with regional and national healthcare systems so your members can access the coverage they need no matter their location. With a variety of flexible plans, deep discounts and more, we’re here to help you take the next step in your health plan journey.