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.”
- 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.”
- 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.
- 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.