qotd: Narrow Provider Networks: Balancing Affordability with Access - a flawed approach

Urban Institute
Georgetown University Center on Health Insurance Reforms
May 2014
Narrow Provider Networks in New Health Plans: Balancing Affordability
with Access to Quality Care
By Sabrina Corlette, JoAnn Volk, Robert Berenson and Judy Feder

New network configurations offer trade-offs for consumers. Many insurers
were able to lower their overall costs by reducing the prices they pay
participating providers, which in turn allowed them to lower their
premiums to attract price-conscious shoppers. However, in many cases,
consumers have been surprised to discover that their new plan offers a
more limited choice of providers. Some others willing to pay more to
purchase a plan with broader access to providers have found that only
limited-network plans are available in their area.

It is not yet clear whether these new, narrower network plans can
effectively deliver on the benefits promised under the plan. If
policyholders opt to seek medically necessary care out-of-network, it
could expose them to significant financial liabilities. If policyholders
delay or forgo care because in-network providers can't meet their needs,
it could put their health at risk.

Consequently, state and federal policy-makers are taking another look at
the Affordable Care Act (ACA) requirement that plans participating on
the new health insurance marketplaces maintain an adequate provider
network. In doing so, they must strike a delicate balance. If they
overly constrain insurers' ability to negotiate with providers,
consumers could face significant premium increases. On the other hand,
consumers must be able to choose among plans with confidence that they
have a sufficient network to deliver the benefits promised and that they
will not be exposed to unanticipated health and financial risks because
of an inadequate network. Insurers also need incentives to take provider
quality into account (in addition to prices).

Conclusion

There is no perfect approach to the oversight of health plan networks.
In the absence of other government policies to constrain provider
prices, insurers' ability to exclude or threaten to exclude providers
from the network is important to their ability to negotiate
reimbursement rates and offer more affordable premiums to consumers. On
the other hand, if insurers narrow their networks too much, consumers
could be harmed if forced to go out-of- network or to a less-preferred
provider tier to meet their needs. Policy-makers therefore need to
strike a balance between consumer protection and insurer flexibility.

Our proposed approach sets minimum quantitative standards, with waivers
for certain providers based on price and quality; improves transparency
and consumer information to give consumers better tools to make informed
choices; gives insurers the flexibility to develop more value-oriented
network designs so long as they maintain a provider network that can
meet people's needs; and — to assure effective consumer protection — calls
for continuous monitoring of consumers' use of out-of-network services,
complaints and appeals, and more active oversight of plan behavior.

Full report (10 pages):
http://www.rwjf.org/content/dam/farm/reports/issue_briefs/2014/rwjf413643

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Comment by Don McCanne

This report provides an excellent discussion of the tradeoffs between
affordability and access to care when insurers use networks of
providers, especially the trendy narrow networks in many of the ACA
exchange plans. Unfortunately, the authors' approach to trying to
achieve an optimal balance misses an opportunity both to totally avoid
the impaired access characteristic of narrow networks, and to make
health care even more affordable.

The flaw is that they assume that private health plans are a given. With
that, they then try to achieve a compromise between avoiding excessively
reduced access to providers and reducing insurance premiums by
restricting patients to providers who agree to lower contracted rates. A
single payer system would have full choice of providers and would be
more affordable because of the efficiencies of a government administered
program, including its power as a monopsony. Compared to single payer,
patients enrolled in narrow network plans have less choice of providers
and pay more. They lose on both counts.

Even broader networks found in the majority of private plans still
compromise between these choices, though not to as great of a degree.
But they still do compromise.

The remedial proposals in this report are designed to support the
superfluous private insurer intermediaries, while compromising access
and cost for patients. Our health care system should be about patients,
not insurers.

It is not as if the authors of the report do not understand this. They
write, "In the absence of other government policies to constrain
provider prices…" If they are going to change policy, why don't they
move to policies that actually benefit patients? Like a single payer
national health program - full access to all health care professionals
and institutions, in an equitably funded system that all of us can afford.