What Does it Mean When a Doctor Is Contracted by Your Insurance Company?

Whether you're enrolled in an employment-based, government-based or even direct-purchase health insurance policy, chances are you'll hear the terms "in-network" and "out-of-network." An in-network doctor contracts with your health insurance company, which then refers you to one of their contracted physicians when you need medical services.

Contracting with Insurance

• Doctors enter into contractual agreements with health insurance companies to provide medical services to patients covered by certain plans. Insurance companies usually negotiate discounted fees with physicians in return for referrals. The insurance company and doctor mutually agree upon fees for specific services like office visits. The doctor agrees to accept the discounted fees, even if the fees are less than what the doctor would regularly charge a self-pay patient. In contracting with the insurance company, the doctor agrees not to charge the patient any additional fees over what the insurer will allow.

Copayments

• When you visit a doctor that is contracted by your health insurance company, you'll often make a small copayment at the time of service. This copayment is the difference between the fee the doctor agrees to accept and the amount of the fee that your health insurance policy pays for you. For example, a doctor's office visit may cost $100, but the health insurance policy may pay only $75 of that fee. Your copayment to the doctor would be $25. The copay usually varies depending on the service, with a specialist visit requiring a higher copay than a primary care physician. The insurer will provide you with a schedule of copays for different services.

Out-of-Network

• Doctors who do not contract with your insurance company are termed "out-of-network." While some health insurance plans do not cover out-of-network doctors, some do offer to pay a portion of your doctor bill. Since the doctor has not agreed with your insurance company to accept a reduced fee, though, he does not have to bill at the discounted rate. The amount you pay out-of-pocket for an out-of-network doctor's visit is usually substantially greater than if you visited one in your insurance company's network.

Locating Doctors

• To find in-network doctors, you can contact your health insurance company directly. Most health insurance companies maintain a member directory of in-network doctors and health service providers to assist patients with their doctor search. You typically receive a hard copy directory when you sign up for the insurance policy and may be sent one on an annual basis thereafter. Many insurance companies also offer online provider lookups. In addition, it's always a good idea to call a physician directly to determine if the practice is in-network.