Health literacy: A medical conundrum and a health insurance hurdle

Roughly nine out of ten people have low health literacy, which means they have trouble understanding basic health information and making appropriate decisions. It’s a costly issue in terms of personal wellbeing and overall healthcare costs.

The Centers for Disease Control (CDC) reports that more than 90 million adults in the United States have low health literacy, which means they may not access care when they should, they aren’t taking advantage of preventive services, they may not follow doctors’ orders, and they’re more likely to end up in the emergency department.

This health literacy epidemic costs the U.S. economy an estimated $106 billion to $238 billion annually, according to a 2006 Department of Education Study (PDF). That’s between 7 percent and 17 percent of all personal health care expenditures.

Reading ability, vocabulary limits and math skills all contribute to the issue. For example, some people with chronic conditions have trouble calculating their cholesterol and blood sugar levels, measuring medications or understanding nutrition labels. Nearly half of all patients make mistakes with their prescriptions because they misunderstand the dose instructions.

The stress of illness is also a contributing factor, even for those who are well-educated. Research published in the journal Pediatrics linked relapses of children with kidney disease with parents’ ability to understand and follow directions in times of duress.

Keeping it simple

There’s a nationwide move underway to make it easier for everyone to understand and use health information. Plain language guidelines have been adopted at the federal level, and resources like Washington University’s “Plain Language Thesaurus for Health Communications” (PDF) are gaining traction with providers. The thesaurus offers plain language replacements for multi-syllabic technical terms. Recommendations include using “bruise” instead of “contusion;” “stop” instead of “discontinue;” “cut” instead of “incision;” and “blood clot” instead of “embolism.”

Hospitals and physician offices are creating plain-language print and online materials about medical conditions, with helpful illustrations about difficult-to-understand concepts. And they’re inviting patient dialogue by using open-ended questions instead of those with a yes-no response. For instance, many providers now ask, “What questions do you have?” instead of the conversation-ending question, “Do you have any questions?”

Improving health insurance literacy

It’s no secret that health insurance has confused consumers for years. Many people — especially the young and those who are less educated — don’t completely understand basic health insurance terms and concepts, according to a study conducted by The Kaiser Family Foundation. For example:

  • Seven out of ten correctly identified the definition of a deductible or copay, but only half were able to calculate how much they would pay for a four-day hospital stay with a $1000 deductible and a $250-per-day copay.
  • Only 16 percent could calculate the cost of an out-of-network lab test when the insurer pays 60 percent of allowed charges.
  • Only one-third correctly identified the best description of a health insurance formulary.

What does this mean for employers? Many employees need extra support to understand their coverage, especially if they have a high deductible health plan.

Knowledge is power. In addition to outlining health plan details during open enrollment, look for opportunities to provide education throughout the year. Employees who understand the advantages of no-cost preventive care, in-network providers and transparency tools can stay healthier and help employers keep the lid on costs. And those who can properly calculate expenses will be better equipped to make good use of medical spending accounts.

Price Confirmed as Secretary of HHS

Congressman Tom Price (R-GA) was confirmed as Secretary of Health and Human Services in a party-line vote in the Senate early Friday morning.

Price, a retired orthopedic surgeon and former chairman of the House Budget Committee, is expected to lead the implementation of a repeal and replacement of the Affordable Care Act if and when Congress passes substantive legislation. Price is also expected to take steps to follow through on the Executive Order President Trump signed on his first day in office. That Executive Order directed federal agencies to waive, delay and defer implementation of certain aspects of the Affordable Care Act to the extent permitted by law.

A staunch opponent of the Affordable Care Act, Price proposed limiting the income tax exclusion for employer-sponsored health coverage while in Congress. He also advocated for expanding health savings accounts and providing refundable tax credits to those who purchase health insurance in the individual market. Price has voiced support for restructuring Medicare by offering vouchers to allow Medicare beneficiaries to purchase health coverage through an exchange.

During his confirmation hearings, Price was repeatedly questioned about investments he made in certain health-related companies while in Congress. Some accused Price of using his position to influence the price of stocks he owned. Ultimately though, Senate Republicans had the votes needed to confirm Price’s appointment.

Introducing the CXO: Payers’ newest addition to the C-suite

Insurance companies across America place a strong emphasis on customer satisfaction today compared 10 or 20 years ago. It makes sense. Today’s members are also consumers. High out-of-pocket costs are opening their eyes to the cost of care. New benefit designs require more engagement. And millions of Americans have shopped for coverage on the health insurance marketplace under the Affordable Care Act.

That’s why most carriers have added a Chief Experience Officer (CXO) to their staff. This relatively new position is one part executive, one part process engineer and one part diplomat. In a nutshell, they have:

  • Executive authority. The CXO is responsible for the end-to-end member experience, and their office in the C-suite grants them the authority to influence plan designs, change policies and tackle gnarly administrative issues throughout the company.
  • Re-engineering responsibilities. The typical CXO spends a significant amount of time mapping and analyzing complex processes from member enrollment to claims processing. This in-depth look at the consumer “journey” helps the CXO make improvements in consumer touchpoints. You’ll find them working behind the scenes on improved find-a-doctor tools, easier-to-read explanations of benefits, redesigned welcome kits, and more.
  • Diplomatic duties. The CXO role is both proactive and reactive. This executive works proactively with Human Resources to develop a consumer-centric corporate culture, and many convene a circle of external influencers, often called a member advisory council, to provide input and feedback. Their true diplomatic responsibilities kick in, however, when something goes haywire: They’ll be the first on-the-scene when ID cards are incorrect, the phone system breaks down or Twitter complaints threaten to draw media attention.

Adding a CXO is a classic win-win move that’s paying off for beneficiaries, for employers, and for carriers. McKinsey & Company research indicates that improving the customer experience leads to five key benefits:

  • Lower churn rates. Satisfied health insurance customers are five times more likely to renew their plan than those who are dissatisfied.
  • Innovative, trend-bending benefit designs. Member satisfaction makes it easier for carriers to convince employers to adopt innovative benefit approaches, which have the potential to decrease medical cost trends.
  • Reduced administrative costs. Research shows that satisfied customers have a better understanding of their plan and are more likely to follow the requirements. The impact? Fewer calls to customer service and fewer complaints.
  • Lower medical costs, better outcomes. Satisfied customers are more likely to be engaged in their care. For example, they’re more willing to enter a care management program and more likely to use medications properly.
  • Payers are facing new challenges via technology disruptors and providers who want to work directly with consumers. Strong member engagement helps to diffuse those influences.

What’s ahead? Forbes says CXOs will continue to focus on delivering their company’s brand promises, reorienting the business strategy to the customers’ point-of-view and testing new products from the customer-experience perspective.

The bottom line for employers? A health plan with a CXO is likely to be “friendlier” to members, which takes pressure off from employer’s benefit departments. And it could become more cost-effective, which is good news for future premiums.

Trend report: Employer health benefits

 

As the unemployment rate continues to fall, health benefits are again becoming a key differentiator to help companies become employers of choice. Staying abreast of the trends will help decision-makers in their quest to provide valued health benefits while keeping costs under control.

Here’s a look at seven trends to track in 2017 and beyond:

  • Prevalence of high-deductible health plans. In 2016, 29 percent of workers had health plans with high deductibles, according to the Kaiser Family Foundation, up from just four percent 10 years ago. This puts more financial responsibility on employees, which is triggering heightened sensitivity to cost and waste in the system.
  • Continued attention to pharmacy benefits. Drug prices are a key factor in driving up health care costs. Why? Pharmaceutical companies have implemented major price increases on existing drugs, and the Pew Charitable Trust reports that 700 new, costly specialty medications are under development, a fact that could triple Rx spending by 2020.
  • Growing engagement. As employees have more “skin in the game” with high-deductible health plans, they are more willing to become engaged in their health care choices. Expect an increased emphasis on getting the right care (but not unnecessary care) for the right price. Tools for making informed decisions and providing better cost transparency will be in the spotlight.
  • Emphasis on value versus volume. Providers’ old fee-for-service model is becoming obsolete as accountable care systems and value-based care initiatives are changing the old health care delivery paradigms. There’s an increased focus on prevention, patient-centered medical homes, outcomes and innovative provider payment models.
  • Amped up technology. Technology – from smart phones to the internet of things – is ubiquitous, a trend that’s being leveraged to deliver health care in new ways, track symptoms, diagnose ailments and even help seniors live longer in their own homes. Technology is also being used behind-the-scenes to improve communication and coordination of care among doctors, nurses and other medical staff.
  • Ongoing emphasis on wellness. There’s a shift away from financial incentives in wellness programs in favor of strategies that encourage lifestyle changes. What’s working? Employee wellness competitions, certified wellness coaches and nutrition programs designed to tackle issues like obesity, which is linked to diabetes, heart disease, stroke and some kinds of cancer. Wearable fitness trackers, like FitBits, continue to be popular, and they can be a good way to spark friendly competition between employees.
  • New care delivery models. Many patients are trading traditional doctor visits for retail health clinics or telemedicine, which is built on a model of video chats between patients and doctors. The long-term impact of these lower-cost approaches is still uncertain, but they’re already changing the way new doctors are being trained.

Although there could be seismic shifts in health care policy under a new U.S. president, it appears these health care trends are here to stay.

Medical imaging: Overrated, overpriced and overused

The medical imaging boom has revolutionized health care in the past 30 years, leading to earlier diagnoses and improved patient outcomes. It’s often essential in reaching a proper diagnosis and determining the best course of treatment. But when you “peel back the onion,” you’ll find layer upon layer of issues that warrant a closer look.

It’s a concern for insurance carriers, and it should also be a concern for employers.

When a doctor recommends a CT, MRI or PET scan, most patients automatically agree without considering the price tag … unless they’re writing the check. It’s much easier to spend someone else’s money. Especially when an insurance company pays the bill.

Too many tests, too much radiation, too much money

Medical imaging is one of the fastest growing health care sectors in the United States, contributing to the rising cost of our health care system. But it’s complicated. Research shows that high tech radiation tests are:

Overrated. Choosing Wisely, a coalition of doctors from dozens of medical fields, recommend delaying high tech medical imaging except when symptoms signal serious health issues. For example, most back pain will subside in about four weeks — with or without an MRI. One study says those who have an MRI are more likely to have surgery.

Overused. Even those whose livelihood depends on high tech imaging are calling for restraint. Image Wisely, a joint task force of radiation professionals, is dedicated to lowering the amount of radiation used and eliminating unnecessary procedures.

Overpriced. The average price of an MRI in the United States is more than double the cost in many other countries. In 2013, the average U.S. price was $1,145 compared with $481 in the Netherlands and $350 in Australia. Within geographic regions, prices also vary wildly. USA Today reports the cash price for identical MRIs near San Francisco ranged from $475 to $6,221.

Reason, not rationing

Insurance companies are highly aware of the exorbitant cost of medical imaging and potential overuse, which explains the surge in preauthorization requirements over the past few years. In fact, an entire sub-industry has formed to help insurance companies screen imaging requests and determine medical necessity.

The focus is on using evidence-based medicine and value pricing, moving away from the fee-for-service model that rewards quantity of care instead of outcomes.

An educational challenge

Addressing this issue, popular blogger MD Whistleblower notes that most people are skeptical insurance companies’ motives. But when individuals have “skin in the game,” it often opens their eyes to the wise use of medical resources.

For example, someone with rich health benefits may be quick to agree to an MRI on a painful back. On the other hand, an individual who must write a check may be willing to try exercise and physical therapy before turning to costly imaging tests.

Then there’s the hurdle of shopping for care: Finding accurate price information can be like looking for a needle in a very tall haystack. In Massachusetts, health cost transparency is the law, but transparency regulations vary from state to state. Also, there are many types of tests, so getting an accurate quote may depend on asking the doctor for specific CPT (current procedural terminology) codes.

Other factors that complicate the cost calculations are insurance companies’ negotiated rates, how much the individual has paid toward their deductible and plan design.

Equip employees to make wise choices

Convincing employees to forgo unnecessary tests can be challenging. It all boils down to engaging employees in their health care by helping them understand their coverage, raising awareness of your insurance company’s transparency tools and educating them about the dangers of overexposure and overtreatment.

Tackling 6 types of waste in American health care

Business owners are keenly focused on eliminating waste from their processes to save money. Now the health care system is waking up to the issue. Experts say there are millions of dollars — perhaps even $1 trillion — wasted in health care each year. Working to eliminate this waste is a real step toward making care more affordable for employers and individuals.

A Health Policy Brief published by the Robert Wood Johnson Foundation identified six key issues:

  1. Care delivery failures. This includes poor execution of care or ignoring best practices, such as effective preventive care or safety issues.
  2. Coordinated care failures. This refers to unnecessary hospital readmissions, avoidable complications and worsened health status for those with chronic conditions.
  3. One example is defensive medicine, in which providers order unneeded tests or procedures to guard against malpractice lawsuits. Overtreatment also includes using higher-priced services when less-expensive alternatives are equally effective and using medical interventions at the end-of-life when the patient would have preferred a different approach.
  4. Administrative complexity. This includes bureaucratic procedures and forms that create time-consuming work for physicians and their staff.
  5. Pricing failures. This type of waste could be corrected with better health care transparency. For example, magnetic resonance imaging screenings (MRIs) are several times more expensive in the United States than in other countries. Within the U.S., prices also vary significantly between facilities.
  6. Fraud and abuse. This not only includes fake medical bills and scams, but also the cost of additional inspections and regulations to catch wrongdoing.

Steps in the right direction

An article published in Harvard Business Review identifies how the U.S. can reduce waste in health care spending. It focuses on two approaches:

  • Demand-side options like consumer-directed health care plans
  • Supply-side options, which include alternative payment plans for providers

According to the research, both approaches have approximately the same financial impact on spending, and when combined they could reduce waste by 40 percent.

Hospitals and regional health care systems have also been improving internal processes to eliminate waste. Internationally recognized expert Mark Graban, the author of Lean Hospitals and Healthcare Kaizen, has identified many issues that parallel the causes of waste in manufacturing: defects, over-production, transportation, waiting, inventory, motion, over-processing and wasted human potential.

Americans can also thank the federal government for putting a renewed emphasis on waste reduction. For example, Medicare can penalize hospitals for excessive readmissions caused by underlying issues in care delivery and care coordination. In August, the Centers for Medicare and Medicaid Services (CMS) announced plans to penalize more than half of the nation’s hospitals — a total of 2,597. This penalty will total more than half a billion dollars in payments in the upcoming year.

As this issue gains momentum, expect to hear more about eliminating waste in the healthcare system. It’s an essential step toward making employer-based health care coverage, individual coverage and government-sponsored health plans, more cost-effective.

Preventive care: A minor investment with major impact

Employer health plans have covered preventive care for more than 30 years, but prevention got a proverbial shot in the arm with the Affordable Care Act. Now more services are covered than ever before, and they come with no out-of-pocket costs to the majority of employees.

That’s good news for employers. Preventive care can provide a significant return on employers’ health care investment with lower health care costs, higher productivity and improved employee morale.

Preventive care (formerly called pre-ven-ta’- tive care — the extra syllable has been dropped) refers strictly to services intended to prevent illness or screen for health conditions. Once symptoms appear, the identical service becomes diagnostic and benefits are applied differently. A common example is a colonoscopy, which is preventive for colon cancer screening but diagnostic if there is bleeding or another digestive concern.

Preventive care by the numbers

$0 is amount insured people pay for preventive care (unless they’re in a grandfathered plan).

95 cents of every medical-care dollar is spent to treat disease after it has already occurred.

7 in 10 American deaths each year result from preventable chronic diseases like diabetes and heart disease.

$81 billion in national health care expenditures could be saved with prevention and disease-management programs according to a RAND study.

10% of large employers are fully aware of all of the preventive care services they’re required to cover at no cost.

60% of employees use preventive services when their employer offers incentives for participation, according to a Midwest Business Group on Health survey.

43% of Americans (less than half!) know that the Affordable Care Act eliminated out-of-pocket expenses for preventive care.

20% of women put off or postponed preventive services in the past year due to perceived cost according to the 2013 Kaiser Women’s Health Survey.

137 million Americans have received no-cost coverage for preventive services since the health reform went into effect.

4 categories of preventive services must be covered by private plans: screenings / counseling, routine immunizations, preventive services for children and youth, preventive services for women.

26% of health plans are grandfathered, and therefore are not subject to the no-cost rules about preventative coverage.

4 expert medical and scientific bodies develop the nation’s preventive care guidelines: U.S. Preventive Services Task Force, the Advisory Committee on Immunization Practices, the Health Resources and Services Administration’s Bright Futures Project and the Health Resources and Services Administration (HRSA) and Institute of Medicine committee on women’s clinical preventive services.

Engage employees with effective communications

The easiest way to get employee buy-in about preventive care is to highlight the advantages. Use these key messages for the best results:

“It’s free” Remind employees that your plan covers free preventive services based on the employees’ age and gender. Your carrier’s website will include a complete, easy-to-understand chart of services and explanations of the difference between preventive and diagnostic care.

“You’ll be your healthiest.” Immunizations can help employees avoid the dreaded flu each year, and screenings will help catch small problems before they develop into larger health issues.

“You’ll save money.” The cost of treating disease in the early stage generally leads to better health outcomes and lower costs. For example, catching colon cancer early with a free colonoscopy increases the chance of survival to 90 percent and reduces the cost of treatment, which could exceed $50,000 in the first year, according to the National Cancer Institute.

Consumer-driven health benefits: The plans employees love to hate

The January 2017 issue of Consumer Reports features an article entitled, “How to survive a high-deductible health plan.” And a recent CNBC headline reads, “Health savings accounts may flourish under Trump.” These and similar news reports signal a move toward the ubiquity of consumer-driven plan designs.

In 2006, fewer than five percent of insured workers had a high deductible plan, but that number reached nearly 30 percent in 2016, according to the Kaiser Family Foundation. This has helped keep a lid on premiums for employers and employees alike, but the tradeoff is a health plan design that puts more out-of-pocket responsibility on the shoulders of covered employees and their families.

Looking ahead, more than four out of ten employers are likely to limit their offerings to high-deductible plans by 2020. And Americans will hear more about health savings accounts in the upcoming months because the tax-advantaged accounts are a focal point of President-elect Donald Trump’s plan to replace the Affordable Care Act.

Health savings accounts: A silver bullet?

In an ideal world, all individuals with a high deductible as defined by the Internal Revenue Service (not less than $1,300 for self-only and $2,600 for a family), would take advantage of the opportunity to contribute to a health savings account (HSA) or have access to an employer-funded health reimbursement arrangement (HRA) so they are prepared to pay for health services until reaching their deductible.

Although nearly 20 million Americans have HSAs, one report indicates that many are underutilizing their plans, putting aside less than half of the contribution limit. For 2017, the limits are $3,400 for self-only coverage, and $6,750 for family coverage, and this amount changes annually.

What’s ahead? It’s likely that HSA rules will be loosened, with higher contribution limits, more “catch-up” opportunities and other changes as outlined in House of Representatives Speaker Paul Ryan’s “A Better Way” health care policy paper.

The goal, the reality

Consumer-directed health plans, defined as a high-deductible plan paired with a savings account, give individuals more “skin in the game.” In theory, this will turn patients into true consumers—they will shop for care and use only health services that are necessary. As they become better stewards of health care dollars, there should be less overall waste in the health care system.

Unfortunately, it’s not as effective as anticipated. Lack of information and economic realities have created hurdles that are difficult to surmount.

A report from Robert Woods Johnson Foundation indicates that many people aren’t aware of price variations among providers for the same services. It also highlights the confusing nature of health care prices: The amount an individual will pay varies on where the service is provided, plan design, their deductible balance and other factors. It’s difficult, therefore, for patients to ascertain the financial impact of a given test or procedure.

Then there’s the economic factor: Nearly 30 percent of people with high deductibles are postponing care they need because they can’t afford the out-of-pocket costs, according to a 2015 report from Families USA. As a result, these individuals end up requiring more care, and costlier care, later on.

Embracing the challenge

Payers and employers can join forces to help employees understand their plans and make appropriate use of their coverage. Suggestions include:

  • Educate eligible employees about the triple-tax benefits of health savings accounts and how to use the accounts to their advantage.
  • Remind employees to use the no-cost preventive care available in all non-grandfathered plans.
  • Emphasize the importance of seeing a primary care provider for routine checkups.
  • Encourage employees to see a doctor promptly for symptoms instead of waiting until a health crisis sends them to the emergency department.
  • Promote Choosing Wisely, an initiative that helps consumers understand what tests and procedures should be questioned based on recommendations from more than 70 specialty partners.
  • Create plan-specific, easy-to-understand transparency tools, and then educate employees about how to compare the relative cost and quality of health care services.
  • Be sure employees understand their cost-sharing responsibilities, what kind of medical care won’t apply to the deductible, and their out-of-pocket limits.

As high-deductible health plans and health savings accounts become more prevalent in the future, it’s incumbent upon employers to ensure their employees are equipped to manage the complexities of their coverage.

Surgery centers: Slashing health care costs and passing on the savings

Unless you’ve needed outpatient surgery in the past few years, you may not realize the value of surgery centers, a quiet revolution in health care that’s providing convenient, less costly and safer outpatient procedures to millions of Americans each year.

The number of ambulatory surgery centers has grown to more than 5400, with more facilities on the horizon. More than half of these surgery centers are doctor-owned, although many hospital systems have also jumped on the bandwagon.

Factors driving their popularity include:

  • Outpatient surgeries. Today more than 60 percent of all U.S. surgeries are outpatient procedures. In fact, each year surgery centers perform more than 7 million procedures for Medicare beneficiaries needing same-day surgical, diagnostic and preventive procedures.
  • On average, procedures take about 30 minutes less in a surgery center, a 25 percent improvement over the mean procedure time in a hospital, according to a study published in Health Affairs.
  • Individual patients pay up to $1,000 less for procedures in surgery centers than in hospitals. Nationally, the surgery centers save billions each year for Medicare and commercial insurers.
  • Surgery centers are profitable. A Pennsylvania newspaper reported that surgery center profit margins are about 30 percent higher than hospitals. Why? They don’t need to provide costly emergency room services and technology. Plus they focus on patients with reliable payment methods: those who are commercially insured, self-paying or covered by Medicare.
  •  Consumer Reports says complications, including infections, actually appear to be less likely in outpatient surgery centers than in hospital-owned surgery centers and outpatient departments. (For elderly patients or those with underlying health issues, hospitals remain a better choice.)

Common procedures, real savings

Cataract surgery. Shoulder surgery. Knee arthroscopy. Endoscopy. Tonsillectomy. Colonoscopy. Hernia repair. These are just a few of the many procedures that are routinely performed in surgery centers across the nation.

The savings are significant. For example, in Charlotte, NC, the average price for a knee arthroscopy in a hospital outpatient department is $12,493 while the average ambulatory surgery center price is $6,118. In Charleston, West Virginia, cataract surgery ranges from $5,762 to $7,987 in hospital outpatient departments, but averages only $2,932 at a surgery center.

This cost differential saves employers and consumers billions each year. If all of the procedures currently performed in surgery centers was done in hospital owned outpatient departments instead, private health care costs would increase $37.8 billion in just one year, according to an analysis by Healthcare Bluebook and HealthSmart.

These differences haven’t gone unnoticed, and payment reform is underway with leadership from the Centers for Medicare and Medicaid Services (CMS). Beginning in January 2017, a new federal budget rule will go into effect requiring new hospital-owned surgery centers be reimbursed at the same CMS rates as independent surgery centers and doctors’ offices.

Implications for employers: Engagement and education

Plan design can prompt employees to become more engaged in the actual cost of care or enable them to disregard it. With fixed co-pays, beneficiaries have little “skin in the game.” But as high deductible health plans and larger coinsurance costs become more prevalent, patients become consumers and price information becomes more important.

Educating employees about how to find information also critical. The price of health care procedures has been a well-hidden secret, but the trend is changing. More than 30 states have passed or proposed legislation to increase price transparency. And savvy commercial health plans are providing online transparency tools for their members and even rewarding members for choosing a lower-cost provider.

Narrow networks: The good, the bad and the ugly

Up to 75 percent of plans offered on the Affordable Care Act Marketplace have narrow networks, according to Chicago-based consulting firm McKinsey & Company. This value-minded approach to plan design is also growing in popularity among employers.

Unfortunately, there’s room for improvement. Experts predict a revolt against narrow networks, similar to the HMO backlash of the 1990s, unless changes are made to improve these controversial plans.

Here’s an overview of the good, the bad and the ugly characteristics of what the Blues plans call “exclusive provider organizations products.”

The good

  • Narrow networks are helping insurers keep prices down by negotiating reduced provider reimbursement rates. This benefits the consumer — plans with an “extra-small” network, meaning they include less than 10 percent of essential community physicians, have premiums that average 6.7 percent lower than plans with much broader networks.
  • Lower costs. Theoretically, narrow networks reduce the overall cost of care by facilitating more efficient use of the health care system. This theory was put to the test by the Massachusetts Group Insurance Commission, which offered to waive three months of employee premium contributions as a reward to those who chose a narrow network plan. The bottom line? Those who switched spent 36 percent less on health care. The savings were realized through fewer specialist visits and less frequent use of hospital emergency departments for conditions that could be treated in office settings.
  • Quality of care. Insurers aim to improve health outcomes through narrow networks, and it appears to be working. A study in the State of California surprised researchers by demonstrating that Marketplace plans have networks with “comparable or even higher average quality than the networks of their commercial counterparts.”

The bad

  • Having a limited menu of providers can create hurdles. “Secret shoppers” tried to make appointments with 700 primary care doctors listed on California Marketplace plans in a 2015 study. On average, the waiting time for a physical exam was about three weeks, and even callers who pretended to have acute symptoms were told they would need to wait an average of one and a half weeks for an appointment.
  • Inaccurate information. In the same California study, the primary care provider directory was rife with inaccuracies: It included doctors who were not in the plan, wrong phone numbers, and doctors who were not primary care providers.
  • Lack of clarity. It’s difficult for Marketplace shoppers to compare the relative size of each plan’s network. The federal government promised to release a tool this fall that would help govshoppers by rating each network as “basic,” “standard” or “broad.” Although the tool was supposed to be available in 35 states, it became a reality in only four states — Maine, Ohio, Tennessee and Texas.

The ugly

  • Costly surprises. Even when patients are careful to choose in-network hospitals, they may run into problems because hospitals often contract out for emergency physicians, radiologists, anesthesiologists and other hospital-based specialists. A Modern Healthcare article tells the story of a patient who had a gastrointestinal procedure at an in-network hospital, but received a bill for $3,000 because his anesthesiologists and pathologists were not network providers. Today, only 13 states prohibit this kind of balance billing.
  • Insurers are facing legal challenges left and right. Examples include class-action lawsuits claiming customers have been deceived, and children’s hospitals suing insurers for excluding them from networks.

Looking ahead, limited access to doctors and hospitals could become the norm as insurers look for ways to lower premiums, increase membership and protect profits.