What is the Difference Between Participating and Preferred Providers in Health Insurance
One of the most important decisions you can make as a health insurance consumer is selecting the right provider. With many different types of plans to choose from, this can be challenging. If your plan limits your providers or certain hospitals you're interested in visiting, read on for what to consider when comparing participating vs. preferred providers.
What Is a Participating Provider?
A participating provider is a doctor or health care provider that has agreed to accept the health insurance plan’s reimbursement rate. The plan pays the provider directly, and you must pay your part of the cost at the time of service.
Participating providers agree to accept lower reimbursement rates than their regular fee schedule because they receive payments from multiple health insurance plans, which helps them get more business and make more money overall.
What Are Preferred Providers?
Preferred providers are doctors who have contracted with your health insurance company. They don't have to meet the same requirements as participating providers, which means that the cost can be cheaper. Make sure you read your plan details (and ask an agent if you're not sure) before choosing a recommended doctor or hospital. A doctor may be a preferred provider even if they don't participate with your insurance company; they may still be covered by your plan's network but will usually charge more than in-network providers do.
Differences Between Participating and Preferred Providers
Preferred providers are in a network that receives higher reimbursement rates than participating providers. This is because preferred providers are required to meet quality standards while participating providers are not. Preferred providers also usually have more stringent requirements for membership and maybe more selective with the types of treatments they offer than participating providers.
Preferring means having a pre-existing relationship between insurance companies and doctors or hospitals before an illness occurs. You will pay extra out-of-pocket costs if you go see a doctor outside of your network.
Participating means doctors/hospitals will accept any health plan you offer them, but they are not required to be within your network or work directly with your insurance company (and thus don't receive higher reimbursement rates). These doctors/hospitals may charge less out-of-pocket expenses than those in preferred provider networks because they aren't compensated by insurance companies at all; instead, they charge patients themselves directly through fees called co-pays or co-insurance fees depending on what type of plan they have signed up for.
Major Reasons Why Doctors Become Participating Providers or Preferred Providers
The first thing to understand is that a doctor becoming a participating provider is not a guarantee that they are also a preferred provider.
Many insurance companies have separate networks for preferred providers and others who sign contracts with them to manage claims and reimbursements. That's why you'll need to check with your insurer if you want to know what kind of network you're in and which doctors will accept your plan.
When comparing plans, be aware that not all preferred providers are participating providers in any given health insurance company's network. To determine whether or not your doctor accepts your plan, contact them directly or check online listings of participating doctors by state.
Why Does It Matter If a Doctor Is a Participating Provider or Preferred Provider?
Speaking of costs, it's important to note that doctors who are in your plan's preferred provider network are generally cheaper to use than doctors not in the network. The reason for this is simple: insurance companies know that if they pay out more money than they take in, they'll go bankrupt and you'll be stuck without any health care at all. So they make sure there are incentives for participating providers to deliver the best care at a reasonable price.
Participating providers are also more likely to accept your insurance plan than non-participating ones (you probably won't find a dentist who doesn't accept Aetna). But even if your doctor isn't a preferred or participating provider, there may still be ways you can get reimbursed by using them as an out-of-network provider—if you follow through with enough paperwork and hassle. And if you have good benefits with low copays, this process can save you money!
Key Takeaways
Knowing the difference between participating and preferred providers can help you choose the right health insurance plan. You should know:
The difference between in-network, out-of-network, and direct care providers
How to find out if a doctor is in your network
The difference between a participating provider and a preferred provider
Schedule an appointment with Jake Triton at Triton Health Plans to learn more or call us at (407) 501-1772.
If you’re looking for affordable health insurance, you can check our tips for finding a health insurance policy.
