Clinic Network Fees: Insurance Or Extra?

A clinic network fee is not considered insurance. Instead, it is a payment model where healthcare providers and physicians are reimbursed based on the number of services they provide or procedures they carry out. In this model, insurance companies or government agencies are billed for every test, procedure, and treatment whenever a patient visits the doctor, has a consultation, or is hospitalised. This model rewards physicians for the volume and quantity of services provided, regardless of the outcome.

Out-of-network costs

• Higher expenses: Out-of-network doctors and facilities have not agreed to a discounted rate with the patient's insurance plan, so they can charge the full price for their services. This can lead to significantly higher costs for the patient compared to using in-network providers.
• Lack of coverage: In some cases, insurance plans may not cover any services received from out-of-network providers, leaving the patient responsible for the full cost. Even if the plan provides partial coverage, the out-of-pocket expenses are typically higher.
• Cost-sharing: When using out-of-network providers, patients may have to pay a higher deductible, copay, and/or coinsurance. The coinsurance, which is a percentage of the covered charges, is usually higher for out-of-network services.
• Surprise billing: In certain situations, patients may unintentionally receive care from out-of-network providers, such as during an emergency or when referred by their primary care physician. This can result in unexpected bills, known as "surprise billing," where the patient is charged more than expected.
• Impact on treatment choices: The higher costs associated with out-of-network providers may influence a patient's treatment decisions. For example, they may opt for a less expensive in-network provider or seek alternative treatment options.
• Emergency services: It's important to note that emergency services are typically covered by insurance plans, even if the patient receives care from an out-of-network provider. However, patients should still be cautious to avoid surprise billing in these situations.

Understanding the difference between in-network and out-of-network providers is crucial for managing healthcare expenses. By staying in-network, patients can often save money and avoid unexpected bills. However, in certain cases, using out-of-network providers may be necessary or preferred, and patients should be aware of the potential financial implications.

In-network vs out-of-network

In-network providers have a contract with your insurance company and have agreed to accept a discounted rate for their services. This means that your insurance company will pay part of the bill, and you will pay the rest.

Out-of-network providers, on the other hand, have no contract with your insurance company and can charge you the full price for their services. This means that you will likely have to pay the difference between what your insurance company covers and what the provider charges.

• Cost: Out-of-network costs can quickly add up, even for routine care. In the case of a serious illness or injury, this can mean paying thousands of dollars more. It's important to understand the cost differences when choosing a plan to meet your specific needs.
• Network Size: Some provider networks may be larger than others or may include different choices of providers in your local area. When choosing a plan, make sure your preferred providers are part of the network associated with that plan.
• Emergency Services: All plans are required to cover emergency services received out-of-network and apply in-network cost-sharing. It is illegal for out-of-network providers to bill you more than the in-network cost-sharing amount for emergency services.
• Surprise Bills: All plans must cover out-of-network "surprise bills" for non-emergency services received at an in-network facility. These can arise when an out-of-network provider, such as an anesthesiologist, takes part in your care without your knowledge. Out-of-network providers must submit claims directly to your insurance company and are prohibited from billing you more than the in-network cost-sharing amount.
• Specialist Referrals: If your primary care physician refers you to a specialist, they may be out-of-network. Ask your provider to refer you to in-network specialists whenever possible.
• Geographic Accessibility: In rural or remote areas, there may be limited options for in-network providers. You may need to use an out-of-network provider to receive timely and convenient care.
• Continuity of Care: You may want to continue seeing a healthcare provider with whom you have an established relationship, even if they are no longer in your network. This can be beneficial if you're managing a long-term medical condition.

Reimbursement models

The traditional reimbursement model for healthcare is the fee-for-service (FFS) model, where healthcare providers and physicians are reimbursed based on the number of services they provide. This model incentivises doctors to order unnecessary tests and procedures to generate more income and rewards physicians for the volume and quantity of services provided, regardless of the outcome. The FFS model has been criticised for causing uneven care, excessive services, and healthcare inflation.

Healthcare providers are transitioning to value-based reimbursement models, where providers are reimbursed based on the value of the services they provide, rather than the volume. This shift is driven by the COVID-19 pandemic, rising inflation, and staffing shortages, which have put unprecedented strain on hospitals and health systems. Value-based reimbursement models require extensive data analytics capabilities, population health management programs, and the ability to successfully use electronic health records (EHRs) for documentation and reporting.

There are several types of value-based reimbursement models:

• Pay-for-performance models: Providers are reimbursed using a fee-for-service structure but can also qualify for value-based incentive payments or penalties based on quality and cost performance. An example is Medicare's Hospital Value-Based Purchasing program, where providers receive positive or negative payment adjustments based on the quality of care they deliver.
• Shared savings arrangements: Providers are reimbursed under a fee-for-service model, but if they can reduce healthcare spending below an established benchmark, they can retain a portion of the savings. An example is bundled payments, where providers are paid a fixed amount for all the services involved in a patient's episode of care.
• Shared risk models: Also known as downside risk models, payers and providers agree upon a set budget and quality performance thresholds. Providers must cover part or all of the healthcare costs if they cannot keep costs lower than the set benchmarks. An example is Medicare's Shared Savings Program (MSSP), which saved Medicare $1.8 billion in 2022.
• Capitation payments: Providers take on full financial risk for care quality and healthcare spending. They are paid a fixed amount per patient, per unit of time, whether or not the individual seeks care. If providers generate healthcare savings, they retain all of the payment. But if they cannot reduce costs below the payment amount, they are responsible for the loss in revenue.

Out-of-Network Reimbursement

Out-of-network costs can add up quickly and are usually much higher than in-network costs. If a doctor or facility has no contract with your health plan, they are considered out-of-network and can charge you full price. Most health plans provide access to a network of doctors and facilities that have agreed to accept a discounted rate for covered services.

In some cases, health plans may cover out-of-network care at in-network rates. This may occur in emergency situations, if there are no in-network providers available, or if your provider changes status in the middle of complex treatment.

Insurance plan types

There are several types of insurance plans available, each with its own unique features, benefits, and limitations. Here are some of the most common types of insurance plans:

Health Maintenance Organization (HMO)

HMOs provide a comprehensive set of health services through a network of healthcare providers and facilities in specific geographic or service areas. They often require you to choose a primary care physician (PCP) who coordinates your care and refers you to specialists within the network. HMOs typically have lower out-of-pocket costs and charge a copay for primary physician and specialist visits. They generally do not have deductibles or coinsurance for in-hospital care but may require you to live or work in their service area for coverage eligibility.

Preferred Provider Organization (PPO)

PPOs offer flexibility in choosing healthcare providers, both in-network and out-of-network, without needing referrals. However, using out-of-network providers will result in higher out-of-pocket costs. PPOs usually have higher premiums than other plans, and you may need to file claims for reimbursement if you use out-of-network providers.

Exclusive Provider Organization (EPO)

EPOs provide a moderate amount of freedom in choosing healthcare providers without the need for referrals. However, they do not cover out-of-network providers, except in emergencies. EPOs typically have lower premiums than PPOs offered by the same insurer.

Point-of-Service (POS) Plan

POS plans combine features of both HMOs and PPOs. They offer more freedom in choosing healthcare providers than HMOs, and you can use out-of-network providers for an additional cost. POS plans usually require referrals from your primary care doctor to see specialists.

High-Deductible Health Plan (HDHP)

HDHPs have higher out-of-pocket costs than many other types of plans, but they may be linked to a Health Savings Account (HSA) to help pay for these costs. Money deposited into an HSA is not taxed, and you can use it tax-free for eligible medical expenses. HDHPs often have lower premiums compared to other plans.

Fee-For-Service (FFS) Plans

FFS plans are a traditional type of insurance where the insurance company pays the medical provider directly or reimburses you after filing a claim for each covered medical expense. FFS plans offer complete independence in choosing physicians and hospitals but typically result in higher out-of-pocket expenses.

Cost-sharing

A deductible is the amount you must pay every year before your health plan will pay for most of your medical bills, supplies, or other services covered by your plan. Some services, like preventative care, do not require you to meet your deductible. For example, if your deductible is $500, your health plan won't pay anything until you've paid $500 yourself. Some plans have more than one deductible, such as separate deductibles for in-network and out-of-network care.

A copayment, or copay, is a fixed amount you must pay for a service covered by your plan. For example, your health plan may require you to pay $25 to see your primary care physician or $40 to see a specialist. Plans usually don't count copays toward your deductible.

Coinsurance is the percentage of the medical cost you pay after you have met your deductible. For example, your health plan may require you to pay 40% of the cost and it will pay the other 60% of covered services until you meet your out-of-pocket maximum.

In the context of clinic network fees, it is important to understand the difference between in-network and out-of-network providers. In-network providers have a contract with your health plan and have agreed to accept a discounted rate for covered services. Out-of-network providers have no such contract and can charge you full price, which is usually much higher than the in-network discounted rate.

While plans are generally not required to cover care received from out-of-network providers, there are exceptions. All plans are required to cover emergency services received out-of-network and apply in-network cost-sharing. Additionally, it is now illegal for out-of-network providers to bill you more than the in-network cost-sharing amount for emergency services.

Frequently asked questions