Struggle Over HIX Provider Networks Will Get Rough

Insurers say they have to design their provider networks for the new public exchanges with cost control in mind. Critics say excluded hospitals in rural and economically disadvantaged areas of the country are at risk of financial ruin. CMS will try to have the final say this year.

Battle lines are being drawn over the crafting of commercial insurance networks for the new public health insurance exchange marketplace.

Under the banner of "high-value provider network," insurers say they have to carefully design their network of providers to contain the costs associated with serving the new exchange market. With many people getting healthcare for the first time through the public exchanges, payers are bracing for a population of patients with chronic diseases and other costly medical needs.

Creating provider networks that follow accessibility regulations while selectively choosing participating providers is key to making healthcare policies affordable, John Montgomery, MD, Humana's vice president and medical officer for Florida commercial markets, told me last week. "We really had to balance access and service area size with affordability," he said.

On Tuesday, America's Health Insurance Plans released an email highlighting praise for "high-value provider networks," with sources ranging from Health and Human Services Secretary Kathleen Sebelius to academics to analysts to news reports.

Sebelius, formerly Kansas insurance commissioner, is quoted as saying: "You have to have a network, a number of providers, ob-gyns, neurologists, pediatricians, folks who deal with patients or you can't get your product license... You will have access to specialty care needed. You will have access to hospitals. You will have access to prescription drugs, mental health services. Substance abuse will be part of plans as well as lots of preventive care without co-pays. These are real, robust insurance products, and I think people will be incredibly pleased with the prices."

'Devastating to Rural Hospitals'
Under the banner "narrow networks," critics are assailing commercial insurers who are selectively choosing their public exchange network providers and service areas. From coast-to-coast, providers left out of new exchange networks are claiming that their organizations, and in some cases their entire communities, are being redlined.

The critics are particularly concerned about provider networks that exclude hospitals in rural or economically disadvantaged areas, where transportation is a major healthcare access barrier.

"It's going to be devastating to rural hospitals," Dr. Earl Ferguson, a California cardiologist and medical director of the National Rural Accountable Care Organization, told me this week.

Ferguson said the financial sustainability of rural hospitals is at stake. "The bottom line is we need to do what's right. We've got to get on this, and we're got to show people what can be done."

A hospital CEO in rural New Hampshire told me last month that his service pricing was not a factor when the only player in the Granite State's public exchange decided to leave his facility out of its provider network. With costs outstripping revenue by 40 percent, he said any income from commercially insured patients is better than no income, adding the hospital would have accepted almost any offer to participate in the public exchange.

CMS Steps into the Fray
With the battleground set, CMS threw down the gauntlet last week and released proposed guidelines for the public exchanges for 2015.

"CMS is working to strengthen the network adequacy requirements that took effect for this year for the first time under the Affordable Care Act," a CMS spokesperson told me last week. "These are important provisions and include requirements that insurers have adequate provider networks for consumers, including access to essential community providers that serve low-income, medically underserved individuals."

In the struggle ahead, insurers will face a formidable adversary in the physician community, which is showing growing determination to fight over crucial points in the healthcare reform debate.

"Healthcare delivery has changed to a business," Ferguson told me. "We need to get back to being a profession."