When it comes to health insurance, policyholders need to understand the difference between network hospitals and out-of-network hospitals. Network hospitals work with insurance companies to provide cashless care to insured customers (policyholders). This means the insurance company pays directly to the hospital, reducing the financial burden on the patient. Typically, insurance companies offer a preferred list of network hospitals, ensuring efficient medical care with minimal paperwork.

In contrast, out-of-network hospitals do not have such agreements with insurance companies. Although patients can continue to receive all treatments, they must first pay for all medical expenses themselves. The insured can then request reimbursement by submitting medical bills and other documents to the insurer.

“Choosing the right type of hospital can have a huge impact on both medical experience and cost, so policyholders should thoroughly review their insurance plan’s hospital network before choosing a health insurance policy,” said Rakesh Goyal, Director, Probus.

Differences

When purchasing health insurance, the distinction between network hospitals and out-of-network hospitals has a significant impact on how medical bills are handled. Understanding the contrast between the two can enable policyholders to make more educated healthcare decisions.

Goyal said, “Network hospitals are hospitals that have signed partnerships with health insurance companies to provide cashless care to insured patients. This means that a health insurance policyholder does not have to pay hospital fees upfront when seeking care at a network hospital. Instead, the insurance company pays the amount directly to the hospital. For example, if a person is admitted to a network hospital for surgery, the insurance company will cover the allowable expenses, allowing the patient to focus on recovery rather than money. In this case, it is sufficient for the insured to obtain a pre-authorization from the insurer in order to receive cashless treatment.” Out-of-network hospitals

out-of-network hospitals

Out-of-network hospitals, on the other hand, do not have a formal agreement with the insurance provider. If the insured person receives hospital treatment, he must pay the full amount (out-of-pocket payments) after discharge. Individuals can then submit a request for reimbursement to their insurance company. This process involves sending all medical bills and other necessary documents to the insurance company. “For example, if a person gets treatment at an out-of-network hospital, he can pay Rs 1 lakh and then claim the refund amount. However, depending on the policy terms, some expenses may not be covered,” Goyal added.

It is important to note that even if the insured uses the cashless facility, he/she still has to reimburse the expenses if he/she is admitted to an out-of-network hospital. The insurer may approve all or part of the claims, depending on the hospital’s expenses.

Solution

Understanding the distinction between network hospitals and out-of-network hospitals is critical for anyone with health insurance, as it affects both the treatment process and prices. “Network hospitals provide the significant benefit of cashless care by allowing patients to focus on their health rather than immediate personal expenses. The convenience of the insurance company paying the bill directly with the hospital, along with minimal paperwork, provides peace of mind during periods of critical medical need,” said Goyal.

Out-of-network hospitals, on the other hand, require patients to pay upfront for care, which can be costly, especially in emergencies. While reimbursement is possible, it requires documentation and a waiting period and may not cover all expenses due to policy terms and conditions.

Finally, choosing a network hospital whenever possible leads to a more efficient and cost-effective treatment experience. While out-of-network hospitals offer more options in terms of location and service, they also incur up-front costs and delayed reimbursements. As a result, policyholders need to have knowledge of their insurance company’s hospital network so they can make informed healthcare decisions when necessary.