There are two “statuses” with insurance, participating and non-participating also known as par and non-par. Being a participating provider indicates that the physician has agreed, by signed contract, to be a part of the insurance network. This process of applying to be a participating provider is called credentialing. The participation agreement states that the doctor will abide by the insurance’s rules and accept the insurances payment amounts as payment in full for services rendered. The dollar figure that the insurance allows is called their fee schedule or payment schedule. In return for being part of the insurance network and agreeing to their terms, the doctor can see their patients and get paid directly. Participation also gives the provider free advertising in provider directories. Patients seeking a doctor look through a provider directory for a one that meets their needs.
Insurance companies identify providers by a nationally recognized provider identification number called an NPI. A practice may have multiple NPI numbers as each doctor is assigned his or her own identification number and there is one shared group number. Think of it this way, in a family each member has their own first name (each individual doctor is assigned an individual NPI number) and the entire family shares a last name (the whole group of doctors is assigned a group NPI number to link them together). It is also important to understand that doctors alone in practice (sole practitioners) can have group NPI numbers. This is a matter of how the doctor is credentialed; the doctor or credentialing specialist may decide to create a group with the insurance company just in case they decide to expand in the future.
In addition to the NPI some insurance companies will assign provider numbers to identify the providers. Other insurance companies do use the tax id number, social security number, or the doctor’s medical license number.
Non-participating providers are not in contract with the insurance and therefore do not have to abide by the insurance rules. In many cases the doctor can charge higher rates, so long as the rates are reasonable and customary. Sounds good hu? Not so much. There are several drawbacks to this. First, some insurances will not pay for a non-par doctor to treat the patient unless it is a true medical emergency and usually the doctor will only get paid for treatment in the hospital. Next, insurances are not obligated to pay the doctor directly. Instead, so some insurances will send the payment to the patient. Finally, many payments that are made are at tremendous reductions and the balance of the charge is the patient’s responsibility. Most patients would choose an in-network or participating doctor to avoid having to pay out of pocket.
Insurances are obligated to pay for emergency services by law. If a patient presents to the emergency room for a sudden illness, payment cannot be denied, but getting claims paid can be challenging.
Some insurance will pay emergency services at 100% of the provider’s charge amount, but they are not obligated to make that payment to the doctor, instead they may send it to the patient. Whenever a payment is sent to the patient it is harder to collect because many patients do not question it then spend it rather than sending it to the doctor.
Some patients have a benefit added in to their policy called an out of network benefit, this means that the insurance will pay a portion of the services to a non-participating doctor, but the payment is reduced and the patient usually is responsible for a large portion of the bill. Many out of network benefits are subject to “out of network” deductibles (sometimes up to several thousand dollars) and then payment is made by percentage of the provider’s charge or the insurance determined usual and customary rate. For example, the insurance may pay 60% and the patient will be responsible for 40% of the physician’s bill.
For some doctors non-participation is the best option to make a profit. Ultimately, the provider has to recognize that most patients will not want to pay if they don’t have to so they will choose a doctor that the insurance will pay, a participating provider. If the non-participating doctor is an unusual specialty or has little competition participating in the insurance, this is a great option. Many plastic (cosmetic) surgeons opt out of participation since many of their services are not covered anyway. If the doctor is a common specialty or has a lot of competition (other participating doctors in the same area) participation is usually the best option.