When Health Plans Drop Your Doctor: Are Narrow Networks a Bad Idea?

by Dan Diamond, California Healthline Contributing Editor

Search Covered California's website, and you'll find a list of 33 "frequently asked questions."

The 33rd and final question -- below questions like "Why should I buy health insurance?" and "I'm pregnant and do not have insurance. What health coverage is available for me?" -- is "Will patients be able to keep their same doctor when they purchase health insurance through Covered California?"

The question may be last on Covered California's list, but it's top-of-mind for many consumers. About one million Californians, and millions of other Americans, are losing their health plans through the individual market and turning to Obamacare's new insurance exchanges to shop for replacement coverage. And in many cases, it's still unclear if the family doctor will be coming with them.

The Mechanics Behind Narrow Networks

This issue began to emerge back in May when Covered California announced its low premiums to some fanfare -- a "home run" for the state, officials said at the time.

But some critics seized on news that participating insurers had achieved those lower costs, in part, by relying on narrow networks that excluded UCLA Medical Center and Cedars-Sinai Medical Center -- two of the state's most prominent, if expensive, hospitals.

Similar stories followed in other states, as exchanges released their rates and participating health care providers.

"We knew it was going to be narrow," one Missouri insurance broker told Kaiser Health News after one local briefing. But the actual list of participating hospitals "was kind of eye-opening."

The issue plays directly to one of the biggest fears sparked by the Affordable Care Act: The law will limit patient choice. But supporters say that's not the case.

"Narrow networks may seem like a bad idea," David Dranove and Craig Garthwaite blogged last month. The two Northwestern University professors acknowledged that excluding some providers from health plans offered through the exchanges runs the risk of disrupting care patterns.

But the model is "not some cruel attempt to limit patient choice foisted upon us by the insurance industry," the professors added. "Instead, these plans may provide our best opportunity for harnessing market forces to lower prices."

The simple equation: Insurers say that limiting the size of the network allows them to steer patients to high-quality facilities and doctors; participating providers, meanwhile, may agree to price cuts in exchange for new volumes. (A previous edition of "Road to Reform" took a closer look at the narrow network model.)

And narrow networks aren't necessarily a new idea, Darius Tahir points out at National Journal. In some ways, it's the same concept behind payers' attempts in the 1980s and 1990s to limit their network size, which met with criticism and helped create Any Willing Provider laws.

Could narrow networks be better perceived -- and received -- with better phrasing? Industry consultant Vince Kuraitis thinks so.

"The very term 'narrow network' creates a negative connotation and doesn't speak to potential benefits," Kuraitis comments at The Health Care Blog. But choosing to describe "the same networks as 'high-performance networks' or 'intelligent networks'... [t]he connotations here are much more positive."

Do Providers Want In? It's Complicated.

Some hospitals -- initially left out of exchange plans -- are fighting to be included.

  • Seattle Children's Hospital sued the state insurance commissioner, which helped begin a battle with a local insurer over whether the facility's rates are too high.
  • Eleven Kentucky hospitals have filed complaints; so far, the department has ordered Anthem to accept applications from three of those hospitals.

(At Kaiser Health News, Jay Hancock has an in-depth look at the battles between state officials, providers and payers over the emerging networks.)

But not all providers want to be a part of the exchange plans. Some doctors are sitting out, citing low reimbursement.

Presented with contracts that paid up to 30% less than traditional rates, "we said, this doesn't make a whole lot of sense for us," Richard Thorp, president of the California Medical Association told the Wall Street Journal.

And hospitals also are wary of participating, with many top facilities choosing to opt out of exchange plans.

Why? In part, prominent providers' doubts echo the concerns of Aetna, Cigna and other insurers that pulled out of the exchanges: The startup uncertainty and potential patient population aren't worth the risk in year one.

But hospital executives also are fearful that agreeing to price concessions to play on the exchanges will hamper their efforts to bargain in the future.

"[O]nce you've agreed to low rates for one company, how do you ever negotiate for more with that company or any other company?" Michael Green, CEO of Concord Hospital, wrote in an op-ed explaining why his hospital wouldn't participate in New Hampshire's exchange.

"If the insurers decide to move small groups along with individual to the exchange, you could find that you've put your organization in financial peril," Green wrote.

Moving Forward

Every indication is that the narrow network model will become the standard.

"I don't think there is anything about this trend that is limited to the exchange market," Sara Rosenbaum, a health policy professor at George Washington University, told Modern Healthcare.

But in the meantime, the provider fights -- and still-troubled websites -- mean that there's considerable confusion over which doctors and hospitals will be included in which plans next year.

On Covered California's website, the FAQ encourages consumers to check directories available on the site to see if their doctor is listed. But one practical challenge: That provider directory has been glitchy. Another: Providers may end up negotiating "right up to the Jan. 1, 2014 starting date," Phil Daigle of California Health Benefit Advisers writes.

Meanwhile, the dust-up over Covered California's hospitals is a sign of how quickly things can change -- and perhaps the lingering resistance to narrow networks, too.

After this summer's fuss, officials eventually ensured that Cedars-Sinai is now available through a few plans on the state's exchange. And so is UCLA, which announced the news with a banner ad: "Covered California now offers a choice U know."

Around the nation

Here's a look at what else is making news as the nation continues to race down the road to reform.

It will take both parties to save Obamacare: Austin Frakt writes at Bloomberg View about how bipartisan cooperation could allow Republicans to tweak the ACA to achieve their own policy goals.

Covered California's hidden costs: ProPublica's Charles Ornstein calls attention to the rate hikes awaiting many customers who won't receive subsidies when shopping through the exchange.

How will we know the Obamacare site is fixed? National Journal's Sam Baker reviews the indicators to watch this week and in the days to come.

Another look at the technical challenges, and failures, behind the ACA's websites: New York University professor Clay Shirky details the challenges in trying to make an ambitious web goal, like healthcare.gov, into a reality.

Jonathan Savell
Why don't the Northwestern professors understand that the best physicians are already busy, and don't want to increase patient volume, especially at a 30% discount. Physician overhead is frequently 60-70% and one cannot stay in business with this discount. Covered California could offer inexpensive narrow networks to the subsidized and both narrow and wide network plans to those paying their own way. Let people decide whether it is worth paying more for greater access. Blue Cross has listed my name on their ACA plan but has never negotiated with me, and I have no intention of accepting a discount. Anyone choosing a plan based on physicians listed on the Covered California website is playing a cruel game with their health.
Carol Frandsen
It may not be cruel to the writer or the people the writer interviewed, but its cruel to MANY, MANY of us who have lifelong doctors or doctors who are highly specialized like Alison's brother. Many family doctors have seen many of us through some difficult medical situations or personal tragedies. Oh sure, the majority of the people signing up have never had insurance, have not had it in years, or were on COBRA. Anything would be acceptable to them. But at the expense of everyone else who has to pay more, or start over again and, hopefully even FIND a doctor---well who cares---right. FYI, this whole experiment relies on the latter, the people that were cancelled. If we arent happy, if we dont participate, good luck.

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