Key takeaways:
A healthcare network is a group of doctors and hospitals that provides services to insured members at a lower cost than providers outside the network.
When shopping for a health plan, explore the network of the plan you are considering. Make sure it includes the healthcare providers you want and need.
Remember that upfront cost isn’t the only factor. Consider the location of the available healthcare providers, including any specialists you might need to see.
If you have a healthcare provider you know and like, it’s a good idea to consider the affordability of their services when you choose a new health plan. No matter who's on your care team, it's important that they're in your health insurer's network, or you'll likely face higher costs.
Using providers in your insurer's network often rewards you with lower out-of-pocket costs when you need services. And the opposite is true when you go out of network. For health maintenance organization (HMO) plans, you're typically only allowed to visit in-network providers for routine care.
How do you judge whether a network is wide enough for your needs? Below, we detail how to judge the tradeoffs, use online tools to explore your insurer's network, and balance the size of the network against the cost of the plan.
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How do healthcare networks work?
A healthcare provider network is a group of doctors, other clinicians, and hospitals that insurance companies contract with to deliver services at a negotiated rate.
When choosing a health plan, pick one that allows you to see the healthcare providers you prefer at the lowest cost to you. It’s also important to consider which hospitals are available to you and fit your needs. Having access to the right caregivers can be a more important consideration than the premium.
One way health insurers control costs is by convincing you to use less healthcare. Private health insurers and Medicare Advantage plans use healthcare provider networks. Hospitals, doctors, and other caregivers who are in your insurer’s provider network cost you less to see than those who aren’t. Sometimes, policies don’t pay anything if you visit an out-of-network provider.
Why do health insurance companies use provider networks?
Insurers limit the healthcare providers their members can use to those that agree to accept lower payments for their services. In exchange, providers get to see more patients.
If you choose a plan with a “narrow” network, as insurers call them, you’ll pay less. Estimates vary, but savings range from 5% to 20% less for your insurance than if you picked a plan with more choices.
With a narrow network, you’ll often have fewer options for specialists and maybe even primary care providers and pediatricians. You are also still at risk of higher healthcare costs.
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Additionally, if you or your children need a specialist, your out-of-pocket costs may increase, as there is a possibility that you may need care from someone who isn’t in your network.
There may be other negatives:
Travel time to doctors — especially specialists — may be long.
You may need to wait a while before you are able to get an appointment.
The number of primary care physicians may be small, and the ones available may be very busy.
How do network restrictions affect costs?
Narrow networks save insurers money, and that increases their profits. Some networks are so restrictive that you may have trouble getting the care you need.
The Affordable Care Act (ACA) has rules to ensure that enrollees have enough choice of in-network primary care providers and specialists without unreasonable delay. But gaps remain among insurers with narrow networks that provide no, or inconvenient, coverage. For instance:
Obstetricians and gynecologists can be scarce. Many networks have inadequate OB/GYN care, according to a survey by the Guttmacher Institute.
Cancer doctors who work at National Cancer Institute (NCI)-Designated Cancer Centers and take complex cases are unlikely to be in narrow networks, researchers found.
Networks may be particularly inadequate in communities of color.
Mental health providers are frequently out of network. A study found that patients with private insurance were more likely to rate their mental health provider network as inadequate compared with their medical provider network.
How does emergency care factor into healthcare provider coverage?
Many people have received surprise bills after getting emergency medical care such as anesthesiology, lab work, or radiology from an out-of-network provider, even if they were at an in-network hospital. A patchwork of state-level protections has left many holes.
But national, comprehensive financial protections are on the way. The No Surprises Act takes effect on January 1, 2022, to shield Americans from the unpredictability of certain out-of-network and related balance-billing charges. Starting on January 1, private insurers must cover emergency services at in-network rates, and balance billing will be banned. Coverage of ground ambulances isn’t included in the new law.
How do you find the right balance between network availability and insurance costs?
A narrow network — and the resulting cheaper premiums — might work fine for you if you don’t use much healthcare. It may work if the caregivers you usually see and the hospitals where they work are in the network.
But don’t make your decision based strictly on cost and your current healthcare usage. What would you do if you can’t get the care you need and you are forced to go out of network? How much will you pay for that care? Some insurers pay part of out-of-network costs, but about 30% don’t pay anything, according to the Robert Wood Johnson Foundation.
How can you tell if a network is accessible enough for your needs?
Don’t make snap decisions. Spend time and energy researching your options.
Below are some ways to do that depending on your situation.
How can you find insurance providers in your network?
Your insurer offers a list of in-network healthcare providers. This list is sometimes called a panel or directory. In the last few years, insurers have come under scrutiny for failing to keep their lists of network providers up to date. Some states have laws to ensure accuracy, with more protections coming in 2022. Even so, you can start with the online list, but you’ll want to call the providers you usually use and confirm that they are in the network.
Check out the in-network hospitals. Make sure you are comfortable with their quality ratings.
If you are new to the area and will have to find new providers, ask for recommendations. Then, call the caregivers who appeal to you and see what insurance they take and whether they are taking new patients.
Get a map or use a device with GPS and figure out how far you’ll have to go to see the caregivers you use the most.
Online tools for exploring your insurer’s network
If you have commercial insurance
Healthcare.gov provides an excellent list of guidelines for judging healthcare providers in your plan. It also explains how to appeal an insurer’s decision when it won’t pay for a healthcare visit.
U.S. News and World Report provides an annual rating and ranking of hospitals.
If you have employer insurance
Understand how your employer limits its costs, especially during open enrollment when you must pick a plan. Large employers may offer a portfolio of plans, with some costing less and some more. The lower-cost plans are likely to offer narrower networks than the premium plans. Your employer might also select a “Center of Excellence” to provide some high-cost services, giving you no choice if you aren’t happy with the Center of Excellence providers. Or, it might contract directly with a low-cost provider to handle certain routine care like annual physicals or immunizations.
You probably can’t do much about your employer’s strategies. But you may be able to find the best options for you by looking at your current plan’s online provider directory, comparing online reviews, and talking to other employees about their choices.
If you have Medicare Advantage
Medicare Advantage is private Medicare that must follow most, but not all, of Medicare’s rules and procedures.
One of the big differences between original Medicare and Medicare Advantage plans is the choice of providers. In original Medicare, you can choose any provider that accepts Medicare. Medicare Advantage plans limit you to physicians and other caregivers in their networks. Kaiser Family Foundation research suggests about a third of these networks are narrow.
A narrow network will probably restrict you from getting routine care when you travel. It can also keep you from using caregivers at academic hospitals. This may not matter to you unless you get a serious illness requiring the care of different specialists.
If you have Medicaid
Medicaid networks may be the narrowest of all in some areas. Depending on where you live, you may be able to shop around in search of a plan that will allow you to see your preferred providers.
How to weigh network availability when picking an insurance plan — network size vs. plan costs.
Consider how the insurers you’re considering handle out-of-network caregivers. There is a big difference between refusing to pay at all and being willing to pay a percentage. Do the math to make a smart comparison.
Look ahead. Your healthcare needs in the future could be affected by lots of things in your life. If you are pregnant or planning to be, make sure there are enough obstetricians and pediatricians available to meet your needs.
Don’t get so discouraged by costs that you walk away from insurance. See if you qualify for Affordable Care Act insurance subsidies or Medicaid.
The bottom line
Choosing an insurer with a narrow network may work fine if you are healthy and mostly need preventive care. But if you have a chronic or rare condition, make sure that the network you choose is broad enough to allow you to see the providers you need. Use insurers’ directories to compare health plans’ networks to find the one with the best fit for your medical and financial needs. Consider distance to providers and wait times, as well. Then, call and confirm that your desired providers are in fact in the network.
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References
Avalere. (2021). Medicaid networks more than 60% narrower than commercial in some areas.
Busch, S.H. et al. (2021). Assessment of perceptions of mental health vs. medical health plan networks among US adults with private insurance. JAMA Network Open.
California Association of Marriage and Family Therapists. Jasper, S. (2017). What providers need to know about the provider directory law.
Centers for Medicare & Medicaid Services. (n.d.). What are the new protections?
Centers for Medicare & Medicaid Services. (2021). Hospital compare.
Centers for Medicare & Medicaid Services. Healthcare.gov. (n.d.) How to appeal an insurance company decision.
Families USA. (2016.) McAndrew, C. 10 tactics for improving health insurance provider networks for communities of color.
Health Affairs Blog. Burman, A. et al. (2021.) Without a dedicated enforcement mechanism, new federal protections are unlikely to improve provider directory accuracy.
Kaiser Family Foundation. Jacobson, G. et al. (2017). Medicare Advantage: How robust are plans’ physician networks?
Merck Manual Consumer Version. Schreck, R.I. (2020). Controlling health care costs.
Milliman Report. O’Connor, J. et al. (2014). High-value healthcare provider networks.
National Association of Insurance Commissioners. (2021). Network adequacy.
Peterson-KFF Health System Tracker. Claxton, G. et al. (2019). Employer strategies to reduce health costs and improve quality.
Polsky, D. et al. (2021). Provider networks and health plan premium variation. Health Services Research.
Robert Wood Johnson Foundation. Hempstead, K. (2018). Marketplace pulse: Percent of plans with out-of-network benefits.
Van den Broek-Altenburg, E. M. et al. (2020). Patient preferences for provider choice: A discrete choice experiment. The American Journal of Managed Care.
