Removing the consumer pinch from narrow provider networks in individual insurance exchanges is a matter of striking a "delicate balance" between payers and the insured, suggests a Robert Wood Johnson Foundation report.
One of the main levers insurers have to keep premiums affordable in the individual health insurance exchange market—a narrow provider network—is a double-edged sword.
On one edge, crafting a selective network of healthcare providers based on their ability to deliver high-quality services at the lowest possible cost has helped insurers offer affordable HIX policies to consumers.
On the other, narrow networks can be disruptive and inconvenient for consumers, requiring them to switch doctors and drive long distances to receive in-network services that are not provided near their homes. This is not only an inconvenience for patients, but can be a barrier to treatment.
It's up to regulators to "strike a delicate balance" between insurers and their 8 million new customers in the individual exchanges spawned by the federal Patient Protection and Affordable Care Act, according to a Robert Wood Johnson Foundation report released last week.
The potential for a consumer backlash is being expressed in New Hampshire, which is a uniquely stark case study on the impact of narrow networks. Anthem Blue Cross Blue Shield is the only commercial insurer operating on The Granite State's new health insurance exchange, and the carrier excluded 10 of the 26 NH acute care hospitals from its HIX provider network.
One of the lead authors of the RWJF report says regulators and insurers need to work closely on several fronts to craft consumer-friendly narrow networks. "It's really a multi-pronged strategy," says Sabrina Corlette JD, a senior research fellow at Georgetown University Health Policy Institute's Center on Health Insurance Reforms.
The multi-pronged strategy includes setting minimum standards for network adequacy, building up transparency and healthcare "literacy" in the new exchanges, and keeping tabs on "how people are faring," she says.
Until the new exchanges mature and establish competitive markets in every state, Corlette says regulators will have a key role to play in ensuring narrow networks deliver the health insurance products they promise. In particular, she notes, the level of access to in-network medical specialists is a prime point of contention between HIX health plans and their new customers.
While it is prohibitively expensive to offer patients unlimited choices when selecting specialists, consumer-friendly narrow networks must provide a minimal level of access to a wide range of physicians, Corlette says.
In instances when a necessary specialist is not available inside a narrow network that is striving to be consumer friendly, the health plan should bear the risk, she says. "Providers need to be available outside the network at no cost to hold the consumers harmless."
Standards
The federal Centers for Medicare & Medicaid Services have set several quantitative standards for HIX provider network adequacy. Earlier this year, CMS officials strengthened the network standards for so-called essential providers such as hospitals that serve economically disadvantaged communities.
In 2014, insurers' HIX provider networks were required to include 20 percent of all essential providers in the network's geographical area. In 2015, the standard has been raised to 30 percent.
Transparency and healthcare education efforts are fundamentally important to enable consumers, some of whom have never had health insurance before, to navigate the new exchanges, Corlette says.
"There really wasn't clear, accurate consumer information this year," she says, "whether a plan is a PPO or HMO doesn't always tell you what kind of plan you are getting, or whether you are going to be in a narrow network or not."
To help make narrow networks consumer friendly, Corlette says consumers need to be equipped with the tools to play the role of informed economic agents on the exchanges: transparency that allows comparison of products and a solid grasp of basic healthcare concepts such as deductibles.
"Consumers were basically purchasing based on price, but there needs to be work to help consumers understand what they're buying," Corlette said of individuals who bought 2014 health insurance policies on the new public exchanges. "There are ways to convey this information to consumers that allows them to make apples-to-apples comparisons, and that's still a work in progress."
She said efforts to make the federal and state HIX websites more consumer-friendly include better labeling and popup windows that remind people to check whether their doctors are in-network.
David Schultz, president and founder of Albany, NY-based Media Logic, says establishing transparency needs to be a top consumer-oriented goal for the exchanges.
"The only way that consumers can make good, informed healthcare decisions is if there is transparency in terms of price, product and quality."
"How much does it cost? What are they getting for their money? How good is it? In the case of a health insurance plan, the provider network is a critical piece of the product design and will have a major impact on the overall value," Schultz says.
He argues that health plan consumers bear a high risk when transparency is absent. "The biggest way in which a narrow network can be disadvantageous to a consumer is if they don't know what they're getting before they sign-up."
Creating informed consumers will soften the sting of narrow networks on the front end. But, at least for now, oversight is necessary on the back end to create consumer-friendly narrow networks, Corlette says.
With the PPACA requiring people to purchase health insurance, insurers bear a legal and ethical obligation to the new exchange customers, she says. "When you are requiring people to buy a product, that product has to deliver for the consumer."
On a broader point about narrow networks, Corlette said the health plan cost containment technique is drawing intense interest beyond the HIX world. "At least in the individual market, the narrow networks are spreading inside and outside the exchanges," she said. "There's not many levers left for payers to keep premiums low."
Christopher Cheney is the CMO editor at HealthLeaders.