Anyone who has ever had insurance has heard the jargon: “In network provider,” “preferred provider network,” yada yada yada. What exactly does that mean, and how does it benefit little ol’ you?
Basically, insurance companies and health plans negotiate with doctors, hospitals and other medical professionals and services to get better rates. The reason the providers are able to get these lower rates is because they’re basically providing the opportunity for the medical professional or center to get a bunch of clients, equaling larger volume. Larger volume means the doctors or hospitals can charge lower prices. It’s like going to Costco and buying things in bulk: because you buy more, you pay less per pound or whatever it is you’re purchasing. Consider it bulk patient servicing.
Imagine it this way: say you’re someone who just walks into a hospital and needs emergency care. The hospital can’t ethically turn you away if it’s a legitimate emergency, except under certain extenuating circumstances (like, it’s the middle of a nuclear holocaust and they have no capacity). They take you in, even if you have insurance. They have no idea if you can or will ever pay for the services rendered, so they automatically charge you a higher rate for everything. If you pay, great. If you pay only a part, great too. If you don’t pay…well, they’ll bill you until you declare bankruptcy.
On the other hand, if you are on an insurance plan, and the hospital or doctor is in the network, they know there is some kind of financial backing for their services. They have agreed to accept that plan or company’s patients at a certain, set fee schedule, because the company or plan funnels more patients to them. They can bill the insurer, and know they’ll get some kind of recourse.
Ironically, being in a network can result in too much work for doctors, and they have to sometimes turn people down because they have too many patients in their service. Doctors and other medical professionals are ethically bound to provide a minimum level of care to every patient, and although sometimes it seems like that is not what you’re getting when you have to wait for hours or even days for an appointment or test results, it would be far worse if they didn’t restrict their practices somewhat.
If you’re in an insurance program or health plan network, it also means you have the backing of the company and its money pool behind you. The health care provider knows they will get paid. It’s almost like a form of insurance for them, in the fact that they have someone to bill at the end of the day…but, if the insurer denies payment, they will turn around and bill you, be assured.
So being in a network for a doctor or hospital is something like being part of a bulk buying club or discount network for anything else: quantity equals discount. Unfortunately, people aren’t bags of rice or flats of instant soup…we have complex needs, and doctors know that. They do the best they can to provide good service at the agreed- upon rate, to help everyone, all around.