The Difference Between In-Network and Out-of-Network Insurance Providers

23 Mar, 2020
In-Network VS Out-of-Network Providers

What’s the difference between In-Network and Out-Of-Network?

This is a topic that most of the public has little-to-no understanding of and that’s completely reasonable. Insurance is a complicated business that often requires professionals in the space to help navigate you through the nuances. I hope to provide an informative article that may be easily interpreted by members and clinical professionals alike. I have laid out the article so that you can skip to whatever part is relevant for your visit here. Part One will break down key differences between these two types of providers and their interaction with different insurance plans followed by Part Two which will explain Sober Life’s motivation to pursue In-Network statuses.

In-Network providers vs Out-of-Network providers

The key difference between these two types of providers is a contract.

The contract is between the provider(i.e. Sober Life) and the insurance company. A contract is negotiated between the two parties to set discounted rates.  Motivating factors for treatment centers to go In-network are predictable reimbursements, better communication and authorization periods from the insurance company, and access to all HMO and EPO plans. Out-of-Network providers can only work with PPO plans excluding rare exceptions. Another motivating factor for providers is the low cost to the member which will increase the chances the member will pursue treatment. Insurance companies benefit from in-network contracting by agreeing to discounted rates from the provider and having a more transparent relationship. Most insurance companies have a “Credentialing” process which, as implied, verifies the legitimacy and quality of care that the provider offers.

In-Network providers also offer reduced cost to PPO plans.

Members with PPO plans have “In-Network” benefits as well as their “Out-of-Network” benefits. HMO/EPO plans ONLY have “In-Network” benefits which restrict the list of providers they can utilize. PPO plans, while unrestricted in their network, are rewarded with using the insurance company’s established network by also having an “In-Network” benefit account. For example, PPO plans may have a $2,000 deductible and $5,000 maximum out-of-pocket cost for the year for PPO OON(out-of-network) benefits and simultaneously have a $1,000 deductible and $2,000 maximum out-of-pocket for In-Network services.

That’s a lot to consume. Let’s look at a visual:

In-Network Provider

Plan covers 80%

Out-of-Network Provider

Plan covers 60%

Actual charge from provider $22,000 $22,000
Amount recognized by insurance plan: $14,000
(the discounted rate for health plan)
$14,000 Plan does not recognize the $8,000 difference
Insurance plan pays: 80% of discounted rate:
$14,000 x 80% = $11,200
$14,000 x 60% = $8,400
Member pays: 20% of the discounted rate:
$14,000 x 20% = $2,800
40% of charges ($14,000) plus 100% of the amount the plan does not recognize ($8,000):
$5,600 + $8,000 = $13,600

So to summarize this first section, it’s important to understand that both types of providers have the ability to offer top-tier services. In many cases, the OON provider will receive more money for their services which can translate into high-quality care. It’s quite common for the reimbursement rates to fluctuate OON however which results in some uncertainty in the relationship between the two parties and can end in a lawsuit if one of the parties is unsatisfied.  OON care typically requires a larger contribution from the member financially.

Why did Sober Life pursue INN (In-Network) contracts?

Cost to the member

Being an INN provider increases access to our services for a much larger percentage of our local community. We can accept PPO, HMO, and EPO plans. There are a lot of HMO/PPO plans that cover 100% of the cost associated with our treatment. This allows people to seek treatment for their issues without overburdening them with the cost. Lower cost and fewer barriers mean we can increase easy access to our program. Part of Sober Life’s mission statement says “…easily accessible to everyone.”. We are working diligently to broaden the road to admission.


INN network status helps us get better authorization for treatment. Most insurance plans require some form of authorization before you can start to provide services. This can be problematic if you need help now, not next week. It’s commonplace for insurers to only authorize a week of treatment at a time and simultaneously make you jump through hoops to get the initial thumbs up. INN providers generally get better authorizing periods with a better working relationship between the two parties.

Predictable revenue cycles

This point is good for everyone to understand, however, it’s more applicable to treatment centers and providers. Having set negotiated rates with insurance companies prior to their members admitting, we can accurately predict total reimbursement rates over the course of someone’s treatment. In simplest terms, this allows us to maximize our potential while not overshooting the mark. We have a better idea of our limitations so that we can expand, hire appropriately, and provide the best quality of services we can afford.

I hope you got something out that. If you have any feedback on this article please feel free to email me!

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