Going ‘out of network’ isn’t always a horrible wallet-eating trap

“Out-of-network” means “bad idea.” Right?

Between alarming stories about balance billing and out-of-network doctors in the in-network emergency room, more Americans with new health insurance under the Affordable Care Act are rushing to tuck themselves into in-network medical relationships. There, at least, the financial damage in the form of out-of-pocket cost is limited and predictable.

Certainly, inpatient care can prove very costly, and the push to require on-call doctors at hospitals to provide those services in-network is probably a good idea. Patients usually see on-call doctors in an emergency or trauma situation, and if the patient has gone to the trouble of stanching his own bleeding long enough to check whether hospital X is in-network before he lets his wife take him there, it’s a bit unfair to put him in a “gotcha” situation with a premium-priced emergency physicians’ medical group.

Hospitals have a sense of responsibility to stabilize an uninsured patient in an emergency. That sense was knocked into them by a law, as the Emergency Medical Treatment and Active Labor Act forbids bouncing a very sick or hurt patient out the door due to lack of insurance. But their sense of responsibility to keep patients’ bills predictable with in-network doctors hasn't been as impressive. (A caveat: In some cases, the hospital may have made a futile attempt to find an in-network cardiac surgeon or ER doctor to cover shifts.)  

Yet many patients do willingly choose out-of-network doctors for planned medical care, whether for a complex surgery or for the management of their diabetes. They have chosen these doctors because they believe in the doctor’s reputation or beliefs. To the patients, the extra money is a worthwhile investment, or even a discretionary expense that might otherwise have been spent on home improvements, clothing, or private school for their kids.

Some out-of-network doctors have chosen to eliminate insurance billing due to the personnel costs. Many clinics have to hire a full-time biller in order to keep up with insurance companies. Eliminating the biller means that there is more money to buy supplies and hire medical assistants. Often, the out-of-network doctor is not actually making more money per patient than the in-network doctor down the street. The in-network doctor might receive a $10 co-pay and $90 from the insurance company; the other doctor may receive $100 directly from the patient for the same service. If the patient has a PPO plan, she might receive a reimbursement of up to 50 percent of her costs when she notifies her insurance company.

Other doctors and nurse practitioners have recognized that their skills and talents are valued enough that cash patients will choose to spend their money at their practice, and that they no longer have to be in-network with the lowest-paying insurance companies in order to have a full work schedule. Just as the top hairdressers see fewer clients and make more money per client, these in-demand doctors have chosen not to see 30 patients a day, but a manageable 10.

Going out-of-network is not for everyone, but it can have benefits for patients who are seeking out particular doctors and making a fully informed choice.

[Photo by Com Salud via Flickr.] 

Related Webinar: Out of Pocket: Surprise Costs After Health Reform