Around the country, narrow provider networks are sparking consumer backlashes, prompting regulatory intervention and also raising questions about the value of current insurance designs.
One of the main factors for what were considered to be mostly reasonable premium prices in public exchange plans, narrow networks are now drawing a range of complaints and litigation, with critics decrying an erosion of provider choice and poor communication.
Even some preferred-provider organization plans are being criticized as insufficiently broad. Blue Shield of California is being sued over PPO exchange plans that two new members, now plaintiffs, describe as "very narrow."
Elite hospital systems in Seattle, New York and elsewhere were not included in many of the exchange plans, and in states like New Hampshire, last year's sole exchange insurer, WellPoint's Anthem Blue Cross, excluded 10 of the state's 26 hospitals -- an issue that recently garnered a public hearing.
Along with concerns for patients who may unwittingly lose access to a long-time doctor, there is a fear among some health policy scholars that narrow networks could lead to a "race to the bottom," as researchers at Georgetown and the Urban Institute wrote recently.
"Over time, insurers currently offering broader network plans could be tempted to narrow their offerings in order to compete on price and discourage the enrollment of sicker individuals," Sabrina Corlette and colleagues argue. Policyholders could also be exposed to high financial risk paying out-of-network prices -- and it's not clear how well the Affordable Care Act's risk adjustment programs will work at sharing risk among insurers, they argue.
Industry shifting
The Centers for Medicare & Medicaid Services is using a new "reasonable access" standard for the networks of plans sold in states where the federal government operates exchanges, and has promised to monitor consumer complaints. Lawmakers and regulators in states like Connecticut, Nevada and Washington are trying to address concerns through new rules.
Health systems are also seeing the juncture of the current insurance market -- with high cost-sharing and narrow or tiered networks being the new norm -- as an opportunity to take integration one step further and launch their own health plans, in pursuit of the likes of Kaiser Permanente and the University of Pittsburgh Medical Center.
Catholic Health Initiatives, which operates 89 hospitals in 18 states, is in the process of buying the Arkansas-based HMO and insurer QualChoice, and may use it as a platform to enter other state markets. Ascension Health, the country's largest Catholic and non-profit health system, is also reported to be eying the acquisition of a health plan, with some analysts speculating that publicly-traded managed care companies Centene and WellCare could be potential targets.
Those and also regional health systems are betting that launching health plans with their facilities as the main networks can offer some efficiencies of scale and lower prices to consumers, especially if they have recognized hospital brands in local markets.
Whether or not that will turn out to be case remains to be seen. One study of health system-owned Medicare Advantage plans found them associated with higher consumer ratings, though also with higher premiums and not with more generous benefits.
But it seems that adequate explanation of a plan's networks, before a consumer purchases a plan, is going to be important in public and private exchanges going forward -- along with formularies and, once members are using the plan, adequate information on pricing.
Even with millions of new subsidized insurance customers, there is pressure to increase the value proposition for insurance, to justify more expensive premiums and to go along with calls for better healthcare quality. Younger consumers may be especially apt to see health plans from the point of view of single payer healthcare supporters -- that private insurers offer little more than administrative functions and waste to the greater healthcare system.
To counter those perceptions and compete with health system-based plans and cooperative insurers, health insurers can prioritize the consumer experience in areas like provider access and price inquiries.
If a customer emails a question asking about prices at area providers for common services like hemoglobin A1c tests, insurers should be able to offer at least a range of prices, if not exact costs. Or, as some are trying to do, they can develop online portals for consumers to review prices and providers personalized to their plan and current benefit levels. Otherwise new entrants could start draining incumbents' membership.