In the debate over provider networks, broad access has been the goal of many patient advocates, but some are also warning of unintended consequences of over-regulation.
After a range of public complaints and concerns surfaced about limited networks in exchange plans -- incomplete information, inability to find long-time doctors, an absence of prestigious medical centers -- the Centers for Medicare & Medicaid Services responded with a proposal for new adequacy standards in states with the federal exchange and a promise to closely monitor the issue elsewhere.
As part of reasonable access standard similar to Medicare Advantage, CMS regulators are proposing extending the percentage of essential community providers required in a federal exchange health plan service area from 20 percent to 30 percent. They also want insurers to make a "good faith" effort to contract with all available Indian health providers and at least one provider from every category, including federally qualified health centers, oncology treatment centers and HIV/AIDS providers.
Those proposed standards may or may not interfere with insurers' network and premium pricing strategies, but the impulse to regulate networks could lead to some unintended consequences, argues David Howard, an Emory University health policy and management professor, in the New England Journal of Medicine.
The concern over narrow networks may be understandable. Less than half of exchange plans with what McKinsey consultants term ultra-narrow networks -- those with fewer than 30 percent of area hospitals -- include prestigious academic medical centers like M.D. Anderson or Cedars-Sinai. And in the first open enrollment period, information about providers could be confusing for customers, especially amid the many technology problems.
But narrow networks as a market strategy and a way to make comprehensive health plans affordable are also understandable, Howard argues.
With health system consolidation leaving many parts of the country dominated by just a few or even one hospital system, insurers have had to turn to limited networks to secure sound bargaining.
But, Howard argues: "By shifting bargaining power to providers, CMS network-adequacy regulations may lead to higher reimbursements, insurance premiums, and ultimately costs to taxpayers. These regulations could spur further consolidation, as independent physicians and smaller hospitals seek to negotiate under the umbrella of the 'must have' systems."
While the potential for broad provider networks "to influence the risk profile of plan enrollees" might be an economic rationale for regulation, Howard argues that "CMS would be wise to limit its role to ensuring that plans make their provider lists readily accessible to consumers before they choose a plan."
Indeed, the biggest challenge with narrow networks may be consumer information -- making sure prospective members understand, before buying, which providers are in which plans. Fully 25 percent of adults who purchased exchange plans did not know whether their plan had a narrow network, according to a recent Commonwealth Fund survey.
Absent CMS network regulations, some insurers have stepped up to meet consumer demand for broad networks and prestigious medical centers, selling narrow network plans, tiered network plans and broad network plans..
This gives patients with more complex and costly conditions who want or need access to certain providers the choice to secure a plan with them and in return pay a bit more, while also offering narrow network plans for consumers looking for lower premiums. The challenge for insurers is striking the right balance in their products and maintaining relationships with the providers that allow for tiered rate setting.
The startup insurer CoOportunity Health has plied this strategy in Nebraska and Iowa, and its leaders see it as crucial to winning in the game of consumer choice.
"We will never offer a narrow network without a broad network," said CoOportunity Health COO Cliff Gold, a former senior vice president at Wellmark.
CoOportunity sold only tiered network plan in Nebraska, and sold both narrow and tiered network plans in Iowa. But the company's experience suggest but a good deal of consumers in Nebraska may have been interested in the narrow network plans.
In Iowa, of the new individual members who had a choice, 41 percent chose the narrow network plans, 38 percent choose the tiered network plans and 21 percent chose the broad network .
Although 86 percent of employers groups in Iowa choose the company's broad network plans, the results suggest that individual buyers are "clearly willing to sacrifice network and benefit levels for price," Gold said.