Imagine you are shopping for a plan on your state’s health insurance exchange. Like most people, you are cost-conscious and select a plan with a lower premium and an out-of-pocket deductible that will not bankrupt you. However, it’s hard to figure out which doctors and hospitals are included in the plan’s network because the covered provider list is not up-to-date and tough to navigate. All the same, you need the affordable coverage and sign up for the healthcare plan. You don’t have time to dig through provider directories of six different plans.
Two weeks later, when you call your usual doctor to schedule an appointment, the receptionist informs you that your new health insurance plan doesn’t include that doctor. You are stunned. However, the physician has known you for years and agrees to waive the out-of-pocket cost this time around. When you see him about your back problem and agree that surgery is the right course of action, he gives you a list of his recommended surgeons for the procedure. When you go home and call around to schedule the surgery, you are surprised to learn that your plan does not cover most of the major hospitals in the area. It just covers one system in the next town over – one that your primary care doctor is less familiar with. To avoid paying out-of-pocket for the procedure, you go with the one that is in-network for your insurance.
Patients have been experiencing this sort of thing more often over the past fewyears as insurance plans negotiate with providers to create “narrow networks.” The basic idea is that an insurer can get lower prices if they include fewer providers in their network and guide more of their patients to those providers. While those lower prices paid to providers translate into a lower premium for consumers, the lower premium often comes at the expense of choice. Higher premiums, on the other hand, give members more choice and access to a wider array of providers.
According to survey research, consumers generally prefer plans that have lower premiums and narrower networks – at least in theory. The Kaiser Family Foundation conducted a tracking poll in February 2014 among likely exchange customers and found that 54 percent preferred narrow, cheaper networks compared with 35 percent who preferred broader networks.
Consumer satisfaction with narrow network plans is mixed. Some consumers who expect to needless healthcare are happy to have a lower premium in exchange limited choices. Others, who are sicker and rely on having good access to a wide variety of providers, might be less satisfied with such narrow networks. The real problem happens when people are unaware of how narrow their network is until they attempt to schedule a consultation or procedure and can’t – or worse, find themselves stuck with an outrageous bill they did not expect.
Since narrow networks have become the new trend, stories have poured in about unexpected bills and difficulties accessing care. Consider this story, which could happen to anyone who receives a minor gastrointestinal procedure, uncovered by Modern Healthcare earlier this year:
“Los Angeles colorectal surgeon Dr. Allen Kamrava regularly faces financial challenges related to narrow-network health plans. He recently performed a gastrointestinal procedure on a patient at a local hospital. Both he and the hospital were in-network providers for the patient’s plan. But unbeknownst to him and the patient, the anesthesiologists and pathologists involved in the procedure were not. So the patient ended up on the hook for $3,000 for those out-of-network provider services. Had the patient gone to a nearby out-of-network outpatient surgery center and paid for the entire procedure out of pocket, the total bill would have been less than $1,000.”
What can consumers do to find out whether they have a narrow network and, if so, avoid these expensive situations? It’s hard to define which health plans are narrow networks, since different states have different laws concerning “network adequacy” – and most of the laws are vaguely written. Researchers from the University of Pennsylvania have created a “t-shirt size” system to rate how narrow these networks are relative to each other. The authors of the study suggest that health insurance exchanges should include transparent network sizes for each plan alongside other basic information about the plan.
Dr. Daniel Polsky, Executive Director of the Leonard Davis Institute of Health Economics at Penn and the lead researcher on the narrow network sizing project, found that 40 percent of the plans sold on the Affordable Care Act’s health insurance exchanges had networks that could be considered “small” (less than 25 percent of eligible doctors are in the network) or “extra small” (less than 10 percent are in the network). Dr. Polsky notes, “Well-functioning narrow networks will survive only if they are made more transparent to consumers and are regulated properly to ensure network adequacy.”
Part of that regulation is the existing set of laws known as “any willing provider” laws which state that health insurance companies must allow any provider who meets certain requirements to join the plan’s provider network – and limitation based on geography or other characteristics is not allowed. Howdo narrow networks reconcile with these laws? Unfortunately for consumers, the answer varies depending on the state and the insurer.
Despite some who view “any willing provider” laws as being protective for consumers, others point out that the laws can make healthcare more expensive by limiting health insurers’ ability to negotiate lower prices with providers. “Rather than protect consumer choice, AWP laws interfere with meeting consumer and employer demand for lower-priced plans,” declared a report written by a professor at USC and sponsored by America’s Health Insurance Plans (AHIP), an industry lobbying group.
The jury is still out about whether narrow networks will be a help or a hindrance for patients – and different people in different parts of the country are bound to have different experiences. The insurance exchanges should be more transparent with shoppers about how wide or narrow the networks are so that people can make informed choices. However, until the laws are clarified and network information becomes more transparent, consumers owe it to themselves to look around to learn which providers are truly in-network before selecting a plan.
NOTE: The views expressed here are those of the author and do not necessarily represent or reflect the views of Healthcare, Inc. and HealthCare.com.