With 25 million Americans set to be insured through exchange plans over the next decade, some health systems are finding a competitive advantage in branding their own health networks, improving on the concept that entered the market with the name "narrow networks."
Many of the exchange health plans sold directly to consumers last fall and this past spring included narrow networks, which offer limited selections of hospitals and physicians and are based on low reimbursement schedules at levels somewhere between Medicaid and Medicare. According to Robert Laszewski, a health insurance consultant, in this next open enrolment period and through the next decade, more insurers are going to be selling exchange plans and looking for ways to craft their own strategic tiers of branded networks.
In New Hampshire, for instance, four new insurers are entering the market both on- and off-exchange, meaning most Granite State residents should have the choice of at least two different plans with myriad providers versus the one they have now.
That increased competition gives providers who were featured in only limited exchange plans (or none at all) the ability to strike new or better deals through access to certain hospitals, physician networks or outpatient facilities.
In states like Iowa, individual exchange plan buyers are "clearly willing to sacrifice network and benefit levels for price," said Cliff Gold, the chief operating officer at startup insurer CoOportunity Health, which sells plans on and off the public exchange in Iowa and Nebraska.
In Iowa last year, the company sold a mix of broad, tiered and narrow network plans in Iowa. While 86 percent of employers and their employees opted for broad network plans, Gold said, 41 percent of new individuals members chose narrow network plans, 38 percent choose middle network tier plans and only 21 percent chose broad networks.
Even with subsidies, many consumers may be price sensitive and willing to pay less for fewer provider choices, especially if they're relatively healthy and don't have chronic conditions requiring regular primary care or medication. But the way narrow networks are marketed is likely to shift and providers have an opportunity to draw in new patients through deals with insurers – or even set up their own health plans in the exchanges.
For instance, UPMC Health Plan, the country's second-largest provider-owned plan, moved into the individual market in 2012 and started selling exchange policies last year. To guide plan designs, the organization simulated the exchange experience for focus groups with various benefit designs, said Adam Pittler, UPMC Health Plan senior product manager, at the AHIP Institute in June.
Premium prices are "paramount," Pittler said, "but at some point price is going to converge" with factors like cost-sharing, drug formularies, access to prestigious institutions and non-essential health benefits like gym discounts or telemedicine.
"What we need to think about is not narrow networks necessarily, but high quality networks," he told his audience.
As both insurer competition and the exchange market grows, the narrow networks of the first open enrollment may not necessarily become broader on a large scale. More likely, they'll be co-branded with regional providers and be offered as part of wide array of choices, along with traditional networks that include access to multiple health systems.