Christopher Cheney | December 16, 2014
Two decades after a consumer backlash drove many health maintenance organizations out of business, narrow provider networks are back in a big way.
Market conditions in the healthcare industry are driving the growth of narrow networks, according to a pair of leaders from large employer organizations.
“This time, narrow networks are here to stay,” William Kramer, executive director of health policy for the San Francisco-based Pacific Business Group on Health, said this week. “With the early HMOs, some managed care plans were put together clumsily and generated a backlash from some providers and many consumers.”
Steve Wojcik, vice president of public policy at the Washington, DC-based National Business Group on Health, says several key healthcare industry stakeholders are embracing narrow networks.
“Employers and health plans in particular have increasingly realized there is a wide variation in healthcare price and quality,” and narrow networks have emerged as a market-based approach to maximizing value in care delivery, he said this week.
“We are able to select winners and losers. It’s easier for us to do it [than the government programs]. We’re looking for the best we can get in terms of price and quality.”
Providers and patients also are embracing narrow networks, he says. “The last time with managed care, narrow networks were formed without the support of physicians and consumers,” and the recent widespread growth of narrow networks has many healthcare providers clamoring to be included for competitive reasons.
“Price-sensitive consumers are choosing narrow networks on the new exchanges. It’s not like someone is forcing them into it… As long as the public sees value in the narrow networks, there won’t be a repeat of the managed care backlash.”
‘Selected for Quality and Efficiency’
Health plans are committed to developing narrow networks, and regulators appear to accept their inevitability in the evolving healthcare industry.
Amy Oldenburg, head of performance networks for Hartford, CT-based Aetna Inc., says narrow networks are generating multiple benefits for health plans, consumers, and the entire healthcare industry. “Narrow networks have become a valuable way to offer consumers a more affordable healthcare product, better control medical service costs, and improve negotiating leverage as providers consolidate into sprawling health systems.”
Oldenburg says a key difference between the early HMO provider networks and the current crop of narrow networks is an emphasis on value rather than cost, which is why many insurance carriers and employers prefer the term “high-performance network.”
“Aetna’s performance networks include a special group of providers who have been evaluated and selected for quality and efficiency,” she says.
Tyler Brannen, a health policy analyst at the New Hampshire Insurance Department, says the steady increase in healthcare costs over the past 20 years has primed the market for narrow network proliferation.
“In general, narrow networks are an effective tool in negotiating prices with providers,” Brannen said this week. Health insurance premiums reached a tipping point for employers and consumers in the years leading up to the passage of the Patient Protection and Affordable Care Act in 2010. “The costs were never as high as they are today,” he says.
New Regulations Under Consideration
Regulators are definitely open to the concept of narrow networks, but new network adequacy rules under consideration in states across the county are a major concern for employers, Kramer says. “The biggest threat to narrow networks is an overly protective regulatory environment.”
Patients should not be required to “drive too far for needed care,” but onerous limits on narrow networks would impede the push for value in the healthcare industry, he says. “The appropriate amount of regulation is helpful, but over regulation could stifle development of these health insurance products, which are delivering value for consumers.”
Last month, the Washington, DC-based National Association of Insurance Commissioners released a report that includes the results of a national survey about narrow networks and proposed changes in the organization’s guidelines for network adequacy rules.
“Although some reasonable trade-offs are necessary to ensure health coverage is affordable, the increasing use of ‘narrow networks’ and tiered networks has focused additional attention on the regulation of health plan provider networks and the potential financial implications for consumers who receive out-of-network services,” the report says.
Insurance officials from 38 states completed the NAIC survey, which found the main tool regulators use to monitor network adequacy is complaint data.
The survey also showed most states are lagging in their efforts to police narrow networks: “Enforcement actions are rarely taken based on violations related to network adequacy. Only four states reported they usually take enforcement actions against more than one health plan a year due to network adequacy violations.”
The NAIC report makes 17 recommended changes to the organization’s network adequacy guidelines, including:
• Expand the scope of existing network adequacy regulations to include all types of network plans, including health maintenance organizations, preferred provider organizations, exclusive provider organizations and point of service plans.
• Establish quantitative standards for meaningful access to care, such as minimum provider-to-enrollee ratios, reasonable wait times for appointments based on urgency of the condition, and distance standards that require access to network providers within a reasonable distance from an enrollee’s home.
• Require health plan provider directories to be updated regularly and available for both enrolled members and individuals shopping for coverage.
In New Hampshire, insurance officials are conducting an extensive review of the state’s network adequacy rules that began last February.
During a meeting of the NHID Network Adequacy Working Group this week, Brannen presented the framework for a new set of rules. The Granite State is seeking to move away from rules that set explicit time and distance access standards for patients to travel to specific classes of providers.
Under the proposed model, the network adequacy rules would specify access to types of services rather than the type of provider who offers those services, he said.
“We’re not going to include 10,000 procedure codes within the rules,” Brannen says. “The goal is to establish networks that have standards but allow carriers the flexibility to create the most value in their networks.” After the working group session, NHID plans to have new network adequacy rules set by early 2016.
In March, federal officials set “reasonable access” as their prime consideration for network adequacy in the PPACA-spawned insurance exchanges. But the Centers for Medicare & Medicaid Services advised health plans that time and distance or other standards are likely in future rulemaking.
Reform Advocate Wary
Harold Miller, president and CEO of the Pittsburgh-based Center for Healthcare Quality and Payment Reform, says narrow networks could undermine efforts to boost coordination of care.
“The dictionary defines a network as a ‘group or system of interconnected people or things.’ But a health plan’s network is typically nothing more than a list of providers,” Miller said this week.
“There may be no connections whatsoever among the providers on the list, and a short list of providers chosen based on price may be even less likely to have connections than a longer list… At a time when there is a strong national focus on improving coordination of care, forcing patients to use providers who don’t have any connections to each other might result in lower prices for individual services but higher overall spending, since the providers in this kind of ‘network’ will be more likely to order duplicate tests, perform unnecessary services, and fail to prevent problems that require expensive treatment.”
Narrow networks have the potential to rattle care coordination, he says. “If the narrow network is the only choice the patients have, it’s even more problematic because, almost by definition, it means that many patients will have to change doctors, which will disrupt continuity of care.”
Source: Health Leaders Media
http://www.healthleadersmedia.com/page-1/HEP-311323/Narrow-Networks-Enjoying-a-Resurgence