What does "network" refer to in health insurance?

In health insurance, the term "network" specifically refers to a group of health care providers and facilities that have entered into agreements with an insurance company to provide services at negotiated rates. These providers, which can include doctors, hospitals, specialists, and other healthcare professionals, form a network where they agree to deliver care to members of the insurance plan at lower costs compared to those outside the network.

This arrangement benefits both the insurance company and the policyholders; the company can manage costs, and insured individuals often pay lower out-of-pocket expenses when they utilize services from in-network providers. Utilization of these services encourages members to seek care from these providers, which can result in better health outcomes due to established relationships and familiarity with care protocols.

Considerations regarding the other options: A group of insured individuals who share medical costs pertains to risk pooling rather than a network. A list of medications covered under a plan refers to a formulary, not a network. A type of insurance provider could imply different entities within the insurance industry, which does not capture the essence of what a network is in the context of health insurance.