What is an in-network or out-of-network provider?
In a standard healthcare plan, insurance companies will contract with a huge network of physicians, specialists, pharmacies, hospitals and other points of contact for medical professionals. These individuals and groups have agreed to a contracted rate to cover the full cost of their services, while the account holder will pay his/her share, which typically takes the form of a co-payment, deductible or co-insurance. Any medical professional or group who have agreed to these terms with the account holder's insurance company will fall into this individual's network, and will be considered an "in-network provider" (eHealthInsurance).
When account holders seek a medical professional or particular service with a provider who falls outside of their insurance plan, these individuals or groups would be considered "out-of-network providers." These providers have not contracted a negotiated rate for reimbursement for their services, thus meaning that patients will be forced to pay full price for consultations and procedures conducted by this out-of-network provider (Verywell Health).
In some cases, these out-of-network providers may charge more for their services than those offering the same procedures inside the account holder's network. Additionally, some insurance companies may cover out-of-network providers, but may add a penalty in the form of higher co-payments, deductibles or co-insurance payments for using them. In other cases, some insurance plans may not cover the cost of out-of-network care, the full cost of which would have to be paid for in full by the account holder.
While the account holder's insurance plan may or may not cover these out-of-network services in full, these services are eligible for reimbursement with the most popular consumer spending accounts, including FSAs, HSAs and HRAs. Insurance plan holders must weigh the risks of seeking out-of-network services in accordance to their network limits to avoid exorbitant charges.