Health insurers’ efforts to keep costs low by using narrow networks are drawing increased scrutiny.
Such oversight may be inevitable given that hospitals and physicians often complain if they are excluded from narrow networks, and sometimes consumers complain as well if their doctors or preferred hospitals are suddenly deemed to be out of network. The problem is that increased scrutiny could lead to increased regulation that limits the ability of insurers to control costs.
Earlier this month, the federal Centers for Medicare & Medicaid Services (CMS) said it would review all networks to ensure that they meet patients’ needs. Writing in The New York Times, Robert Pear reported that insurers will be required to have contracts with at least 30 percent of “essential community providers” in their service areas and that insurers must not discriminate against people with significant health needs.
The CMS action came in a letter to health plans using the federal marketplaces. In its 2015 Letter to Insurers in the Federally-facilitated Marketplaces, CMS said it wants to ensure that networks have adequate participation from hospital systems, mental health providers, oncologists, and primary care physicians.
The National Committee for Quality Assurance, which rates health plans, is also developing criteria to review the adequacy of networks, and asked for public comment on its proposal (PDF), “Health Plan Accreditation 2015 and Additional Accreditation and Certification Product Updates Overview,” as Anthony Brino reported in Healthcare Payer News. “The organization is proposing adding two general accreditation categories for narrow networks: requiring health plans to monitor member experiences with networks and be transparent about coverage for services from out-of-network,” he wrote.
All this examination is welcome and the complaints from providers and consumers may be valid, but the issue to keep in mind when covering narrow networks is that employers and some consumers prefer these networks because the costs are lower than they are in broader networks where insurers have less control over costs.
As Sarah Kliff wrote for The Washington Post (before she departed for Vox Media), narrow networks will make some people furious, but they also will control costs.
In The New Republic, Jonathon Cohn covered the issue well, using examples from California where some consumers have complained that Cedars-Sinai Medical Center in Los Angeles was left out of some networks. “Anthem Blue Cross and Blue Shield of California, two of the state’s largest insurers, wanted bigger discounts than Cedars was willing to give … As a result, patients who want fully covered access to Cedars have only one option left: a health maintenance organization, called Health Net, with a relatively small network of doctors,” he wrote.
For health care journalist Elliott M. Kass, the debate over narrow networks reminded him of Miller Lite’s beer commercials from the late 1970s and early 1980s. Miller’s ads featured famous sports heroes arguing over whether the beer “tastes great” or was “less filling.” Here’s one of those commercials.
A reporter for HIX (which covers health insurance exchanges), Kass was writing about a Kaiser Family Foundation (KFF) health tracking poll that found the public split over broader, more costly networks versus cheaper, narrow networks.
In the report, KFF researchers said of consumers responding to a poll, “About half (51 percent) say they would rather have a plan that costs more money but allows them to see a broader range of doctors and hospitals, while just under four in ten (37 percent) prefer a plan that is less expensive but allows them to visit a more limited range of providers.”
Note that one key factor in consumers’ responses involved who is paying the bill. Employees who have employer-sponsored health insurance prefer networks that offer wide choice, KFF reported. But Americans who pay for insurance themselves, such as those enrolling through the insurance exchanges under the Affordable Care Act, prefer the lower cost narrow networks.
These distinctions are important because an earlier KFF survey, last year’s Kaiser Family Foundation/Health Research & Educational Trust (HRET) 2013 Employer Health Benefits Survey, showed that more employers contracted with narrow networks in 2013 than did so in 2007. Among companies offering health benefits, the percentage of employers whose largest plan included a narrow network (which the survey researchers called a high-performance provider network) grew from 15 percent in 2007 to 23 percent last year. Health plans choose providers for these networks based on quality, cost, or their ability to deliver care efficiently, the researchers said.
As is the case with so many issues related to the ACA, the advantages and disadvantages of narrow networks have become politicized, as Merrill Goozner explained in Modern Healthcare. In his article, Goozner recalled the history of narrow networks from the 1990s when health plans used limited networks and health maintenance organizations to control costs. Then, as now, consumers complained about restricted access to providers. State legislatures responded by passing laws that to allow any provider willing to accept a health plan’s rules for participation into their networks.
After many states passed “any willing provider” laws, health plans had no choice but to offer broader networks and the plans lost some of their ability to control costs. As Goozner explained, similar efforts are underway again.
“The movement has already gained traction in some states,” he wrote. “Regulators in Maine prohibited insurers from excluding some hospitals. Some states are considering ‘any willing provider’ laws, which would essentially ban the creation of narrow networks.”
In Connecticut, the medical association in Fairfield County filed a federal lawsuit in February to stop UnitedHealthcare from dropping 2,250 physicians from its network. UHC also has dropped 2,100 physicians in New York City, and 250 in Florida, including an important cancer treatment center, Kaiser Health News reported.
Also in February, both Democrats and Republicans criticized CMS’ efforts to develop narrow pharmacy networks, forcing CMS withdraw this part of a proposal to revise its Part D prescription drug program.
One of the best commentaries on the issue comes from David Blumenthal, M.D., president of the Commonwealth Fund, who wrote:
“Government may respond to the narrow network controversy by further regulating private insurers’ contracting practices. Whether this will succeed in providing more relief to consumers, while controlling costs, remains to be seen.
“But one thing is clear. Competition in health care sounds like a good idea. But when its effects surface, the public reacts as if health care is a right, not just another one of those gas grills or wide-screen TVs that line those long aisles at your local retailer.”