Chelsey Tucker graduated with a Bachelor of History degree from Metropolitan State University in 2019. She now writes about insurance with her specialty being life insurance and has been quoted on Help Smart Phone and MEL Magazine.

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Dan Walker graduated with a BS in Administrative Management in 2005 and has been working in his family’s insurance agency, FCI Agency, for 15 years. He is licensed as an agent to write property and casualty insurance, including home, auto, umbrella, and dwelling fire insurance. He’s also been featured on sites like

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Reviewed by Daniel Walker
Licensed Auto Insurance Agent

UPDATED: Mar 19, 2020

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The lowdown...

  • Networks help hold down the price of medical care
  • Providers agree to low prices and get a high volume of patients in return
  • Managers use narrow networks to offer lower premiums to consumers
  • Narrow network can force consumers to use expensive outside services

Managed care networks help hold prices down. Managed care providers negotiate below market service contracts to accept their members in specific geographic areas. Networks can be large or small depending on the design. Some managed care managers reduce the size of the network to reduce the price of the monthly premiums. Comparison shopping is an effective method for finishing the best prices and values in health plans.

Networks can be large or small depending on the design. Some managed care managers reduce the size of the network to reduce the price of the monthly premiums. Comparison shopping is an effective method for finishing the best prices and values in health plans.

Comparison shopping is an effective method for finishing the best prices and values in health plans. Enter your zip code here to start shopping for health insurance online today!

Negotiating Managed Care Discounts


The HMO gets deep discounts from medical care professionals and facilities; it is a proven method for holding down costs and lowering premiums.

It’s one thing to get a high-priced hospital to lower its prices for an insurance cycle; it’s another to keep the prices low for a more extended period.

In many instances, a low network price exists, but insurers cannot sustain them. After a short period, the medical service providers raise their prices and stop the deepest price concessions.

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Indemnity Plans Give Free Choice


Indemnity plans offer consumers freedom to choose the doctor and healthcare providers they wish to use. They often have no copays, coinsurance, or costs sharing. The insurance company pays the bills or reimburses the beneficiary. The indemnity plan does not constrain the customer; it constrains the medical services providers. They must accept the payment limits or terms.

The beneficiary can decide when to get medical care, what kind of care, and the medical care provider. The indemnity plan does not limit the customer to a network or force higher prices with low cost-sharing for outside network resources.

Point-of-Service Networks

A plan or a facility like a hospital may need to send a patient to a specialist not available in their staff or network. This referral to an outside specialist is a point of service. The network to which the outside specialists belongs can be a point-of-service network.

The idea behind point-of-service depends upon a point of view. As a network, POS usually uses the primary care physician to provide care and make referrals to network resources.

Fixed-Fee-for-Service Plans


The fixed-fee-for-service health insurance policy permits a wide range of consumer freedom. It is not as broad as indemnity, but it strikes a balance favorable to the consumer.

Fixed-fee plans control the provider more than the consumer. The consumer can pay more if they wish to use a particular doctor or hospital. They will still benefit from the fixed fee agreement for most or a substantial part of the fee.

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Understanding Networks

Networks determine the price and costs of health insurance coverage. When plans use a narrow network, they can leave the beneficiary to go outside and pay all or a greater part of the costs.

This outside spending does not count towards the maximum for deductibles or out of pocket expenses. The consumer can get deeply in debt using outside services while insured on a narrow network plan.

Managed Care Networks

Managed care uses networks to control the price of services. The agreements with doctors and medical care facilities form the basis for setting low premiums. The following descriptions cover the basic features of the managed care networks.

HMO is the Health Maintenance Organization. This type of managed care uses a network of low-cost providers and promises to send a lot of patients to them.

PPO is the Preferred Provider Organization. This type of network uses outside resources but charges the customer more. The customer pays all or part of the outside fees. They pay much more than when using network resources.

EPO is the Exclusive Provider Network. This network plan does not use outside resources. Member must pay the fees when using outside specialists or doctors.

SNP is the Special Needs Plan; it is a Medicare type of network tuned to the needs of a particular group with a common illness. The plans include specialists in the appropriate fields and drug formularies that match the illness.

Narrow Networks


Networks that utilize fewer than 25 percent of the available doctors and medical service providers are narrow networks. Managed care plans use These types of networks in the Obamacare marketplace. The small size of the resource pool helps to hold down costs.

The demand for services can pressure members to use more services outside of the narrow network than they should. The members can lose the savings from the narrow network by using higher priced services outside of the network.

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Customization of Networks and Plans

Some insurers offer customized plans including different types of networks. They may offer a Preferred Provider Organization plan but with the option of adding a primary care physician.

The consumer may wish to have the advice of a doctor that would know his or her case well. You may wish to have an informed opinion when considering using specialists.

Mixing and matching resources from a menu, consumers can customize a network.

Risks of Narrow Networks

Managed care providers can lower costs by using narrow networks. They can use fewer than 25 percent of the available medical care providers in a covered region. The customer bears a risk of going outside of the network to find the services they need or prefer.

Medicare Networks


Medicare Advantage Plans use networks. Original Medicare uses a fixed-fee-for-service approach. Original Medicare gives a wide range of choice to the beneficiaries. They can decide which medical resources they wish to use.

They can have the free prevention and wellness assets that Obamacare incorporated into Marketplace plans. Medicare Advantage plans are network plans. The Centers for Medicare and Medicaid reviews the network arrangements of these plans.

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Medicare Network Oversight

The CMS reviews the quality of Medicare Advantage plans and the adequacy of their networks. The Advantage plans must equal the coverage that beneficiaries get in Original Medicare.

The CMS pays attention to the details of the plan network. It reviews the adequacy of the plan’s resources to serve the designated population of beneficiaries. From the viewpoint of the health plan provider, this would be a point-of-service network.

  • Build out the network to sufficiency for the service area
  • Commit to buy additional services at the Point of Service

CMS Requires Corrective Action


CMS has proposed changes in rules to be more proactive when reviewing health plans. When it finds the network lacking or that it has not been fully deployed, the CMS requires a formal commitment to buy the needed service for the beneficiaries on the open market or otherwise. For example, if the CMS reviewed an HMO and determined its network was too small.

The insurer would have to build out the network or commit in writing to pay as needed. The insurance company must agree to pay as much as the going rate for comparable Original Medicare services.

The Networks Matter


The type of network that a plan uses to reduce costs can determine the level of service for the beneficiaries. Coverage that is inconvenient, delayed, and difficult to access is not as beneficial as responsive coverage.

Consumers must consider the size and type of plan’s network when selecting a plan. Comparison shopping is the ideal solution. This method can focus on the consumer’s major concerns.

Using comparison shopping, you can focus on the features that match your top priorities.

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