In-network vs. Out-of-network Medical Claim Billing

Many new and growing practices seek out in-network insurance carrier affiliations to help build their patient base, while mature practices might choose in-network participation for security and continuity. On the other hand, providers might choose an out-of-network position to eliminate the hassles of dealing with insurance carriers all together. Regardless of which position you choose, there will be pros and cons. Here, we address key considerations of in- and out-of-network with respect to stability, profitability and patient satisfaction.


Many practices choose to become in-network providers because of the stability it offers to medical claim billing and the increased potential patient base. In this type of arrangement all medical billing claims tend to be honored more consistently, and reimbursement rates are clearly defined before services are rendered- eliminating much of the medical claim billing guess work. Becoming an in-network provider also allows practices to tap into the existing carrier patient base and take advantage of indirect advertising through online provider directories and the like. The principle downside with becoming an in-network provider is that the credentialing process can be time consuming.
With respect to profitability, in-network agreements typically require pricing concessions for medical claim billing of normal services- reducing the reimbursement rate a practice can expect for services. One of the main arguments in favor of such concessions suggests that, because carriers put a large customer base at your finger tips, practices should be able to offset lower rates with higher volume. While there may be some glimmer of truth to this argument, reduced reimbursements require practices work much harder to reach the same level of profitability- often easier said than done.
Overall patient satisfaction may be higher for in-network medical claim billing, depending on your market area and the limitations of plan offerings to enrollees. Generally though, patients are familiar enough with co-pays, deductibles and other responsibilities to the point where they know what to expect. There are typically fewer medical billing surprises for patients when visiting and in-network provider- yielding a higher overall sense of satisfaction. This also eliminates much of the guess work for the patient as most of the work falls on the practice’s medical claim billing service and the carrier.
The out-of-network option can be less stable, particularly for new and growing practices, as there they do not have a definable patient base available through a carrier affiliation. Receiving out-of-network services can also increase the cost of care to patients who might already be paying several hundred dollars per month for insurance premiums and have only limited coverage for a out of network services. Thus, unless your practice is in a high patient volume area, or renders a niche service that’s not typically covered by insurance, out-of-network medical claim billing can be a negative determining factor for prospective patients. In more competitive markets, the out-of-network is an option usually only available to more mature practices with a dedicated patient base and excellent reputation, or can support more in-depth advertising.
With respect to profitability, choosing out-of-network medical claim billing is a double edged sword for many providers. On the one hand, there are no concessions necessary in fee schedules so rates can be set as the practice sees fit. On the other hand, carriers will typically reimburse the “usual and customary” rate (at best) with the balance left to the patient. And, carriers are not bound to honor medical billing claims the same way as an in-network provider, thus, consistency can be intermittent. Nonetheless, if you have a conscientious patient base and a high success rate on patient collections, out-of-network medical claim billing can be very profitable.
Patient Satisfaction can be harder to attain when practicing out-of-network – as mentioned above – since patients may be required to assume greater cost responsibility. If the practice can tactfully control the associated problems associated with patient collections– delinquent payments, non-payments, etc. – then this may not be an issue. In these instances, shortcomings in patient satisfaction can be mitigated by keeping them fully informed on cost and coverage levels from the outset.
Of course practices do have the freedom to choose which position they take, in- or out-of-network medical claim billing. Depending on location, type and service area, the choice can even make or break your business. Also remember that choosing one position or the other is not a total commitment, as some practices might blend their options and elect to become in-network with some insurances, while remaining out of network for others. It really depends on the preferences of the practice manager and owner, and past performance of overall medical claim billing. So, when considering your options, weigh the pros and cons and find the right mix to balance a stable patient base with profitability and high patient satisfaction.