Narrow network health plans—which tend to cover a limited number of hospitals and doctors—emerged as popular options in the Affordable Care Act's first open enrollment period. About 48% of "silver level" plans sold in the health insurance exchanges during the first open enrollment period could be classified as narrow, according to a McKinsey report.
Done right, narrow networks have advantages for patients
Narrow network plans can be appealing to consumers because they tend to be less expensive than standard plans, but the limited selection has also worried consumer advocates and insurance regulators.
Narrow networks in the exchanges
The Daily Briefing's Clare Rizer and Dan Diamond sat down with Piper Su, the Advisory Board's Vice President of Health Policy, to discuss the state of narrow networks as the second round of open enrollment under the Affordable Care Act (ACA) nears and what providers need to know.
Q. In light of the ACA, there seems to be more interest now in the state of networks and which services plans cover. However, this has been an issue for years—well before the ACA was passed. Is this a burning problem? And why now beyond Obamacare?
Piper Su: The narrow network issue became more prevalent with the rollout of exchanges because it introduced this new dynamic of a federally driven marketplace that emphasized consumer choice, and what we saw was that consumers were very price-sensitive.
So we had a lot of individuals who were purchasing coverage on their own for the first time picking less-expensive, narrow network plans without necessarily understanding, or having all of the information to understand, what that means when it came time to seek out a provider.
As a result, it raises not just questions about the adequacy of networks but also questions around who regulates the networks: the state or federal government?
Determining which entity has control affects how regulators will think about narrow networks and the push for legal requirements on network adequacy issues.
Traditionally, determining network adequacy is part of the annual plan review process so insurers have to meet state-specific network adequacy pieces when they submit their proposals.
But we increasingly see CMS moving into this space- first with MA plans and now potentially with exchange plans. So, there is a discussion around how the state and federal regulators work together in this space, and NAIC is undertaking an effort to modernize its network adequacy guidelines to reflect some of these changes. And some of these change will matter to providers.
Q. As head of the Advisory Board's health policy team, you have a unique window into how lawmakers and influential policy groups see the issues. How is the policy community thinking about narrow networks right now?
Su: The policy community is viewing the issue of narrow networks in a three-step process. They're first asking "How significant is the narrow network phenomenon?"—meaning is the phenomenon actually happening, or is it anecdotes that have been blown out of proportion.
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The second thing they're asking is, "If narrow networks are a real phenomenon, will they actually drive down costs for consumers, and will they hinder consumer access to health care?”
And lastly, if that's the case, they're asking, "How do we address the situation? Do we increase adequacy requirements? Do we make networks more like Medicare and create an any willing provider standard?" People in the policy world are looking more closely on what the options are for addressing network adequacy and trying to determine how much, if any, additional intervention is needed.
Q. Have providers been changing their strategy in relation to lawmakers' potential moves here?
Su: Yes, but I think provider response is linked to market dynamics as much as it is linked to anticipated policy changes. Part of the provider strategy that we are seeing is they are thinking about network appeal—and thinking of themselves as network aggregators having strategic advantage. They want to build a low-cost, high-quality group of providers that is going to appeal to a wide range of payers, expecting that payers may be more selective about who they are choosing as partners in providing care.
During the first year of Obamacare, there was a lot of incomplete information—some providers were still negotiating around which networks to join, and consumers weren't able to make the most informed decisions because of a lack of transparency in the network descriptions. Some of that will improve in the second year but the focus on providing transparent information about a beneficiary’s access to providers and out of network costs is going to remain.
Thousands of doctors get cut from new narrow networks
Q. It sounds like the state of narrow networks is in flux—we're still waiting on the second round of open enrollment, and for federal regulators to determine whether they are going to take additional steps to ensure network are adequately providing access to care.
Su: I think that’s right.
Basically, what it comes down to is how regulators think of narrow networks. Providers say they are not just narrowing their networks to put pressure on rates, but to ensure they are working with higher-quality providers.
There’s this debate about whether "narrow networks" is even the right term to use—many plans and providers will correct you and say this is about high-performing networks. .
At-risk populations need a better quality of care, because low-quality care would end up costing payers more in the long-run. So, they want to make sure that the physicians in their networks are efficient and high-performing. On the flip side, consumer advocates see this as narrowing the amount of available providers so that the insurance companies can get better rates.
How regulators see the issue is what will determine any future changes. And that's what we're waiting on.
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