Network Loss

Network loss is when plan members use out-of-network providers when in-network alternatives are available — either because they don't know an in-network option exists, they prefer a specific out-of-network provider, or the referral pathway defaulted to out-of-network without anyone catching it. Every out-of-network claim costs a self-funded plan substantially more than an equivalent in-network claim, and it's often avoidable.

This loss is one of the highest-value cost reduction opportunities for self-funded employers because it's addressable without changing plan design or reducing benefits. Claims analysis consistently shows that 15 to 25 percent of claims spend in a typical employer plan involves providers who have in-network equivalents that weren't used. Common patterns include: lab tests ordered by an in-network physician but sent to an out-of-network reference lab; imaging ordered in-network but performed at an out-of-network hospital-affiliated facility; specialist referrals from a primary care physician who defaulted to a colleague outside the network; and emergency follow-up care at out-of-network facilities after an ER visit. Each of these can be addressed through member communication (which lab is in-network, which imaging centers), physician education (reminding referring PCPs which specialists are in-network), and care navigation support that intercepts referrals before the appointment is made. For self-funded employers, a care navigator or health advocate service that pre-screens referrals for network status can recover the investment quickly — reducing even 10 percent of that loss in a mid-size employer plan can save hundreds of thousands of dollars annually.

The takeaway: pull your claims data and look for out-of-network utilization patterns. If more than 10 to 15 percent of your spend is going to out-of-network providers, a focused effort to cut that loss — starting with the highest-spend out-of-network categories — is likely the highest-ROI benefits intervention available to you this year.