Rich Daly | March 10, 2015
The expected retreat from narrow networks in the marketplaces—where their use was broadest—could affect the extent to which the controversial cost-control technique is used elsewhere.
Mar. 10—The dominance of narrow provider networks and accompanying low payments in the government-run insurance marketplaces is not sustainable and will be reversed over the next three years, Congress’s chief scorekeeper concluded this week.
A highly anticipated Congressional Budget Office (CBO) projection concluded that insurance plans sold in the marketplaces created by the Affordable Care Act (ACA) “will not be able to sustain” the use of narrow networks and low payments, which insurers have described as a primary cost control tool. The savings role of those insurance tactics, which are deeply unpopular with providers, was underscored by CBO’s conclusion that expected reductions in their use would spur average annual premium increases of 8.5 percent in marketplace benchmark plans over the next three years.
A shift away from narrow networks would mark a major change in ACA coverage. About 48 percent of health plans sold in the ACA’s marketplaces in 2014 had narrow or ultra-narrow hospital networks, according to a report by McKinsey and Co., which defined “narrow” as excluding at least 30 percent of an area’s largest hospitals. Marketplace insurers were expected to increase their use of narrow networks in 2015, according to a Robert Wood Johnson Foundation study released in September 2014.
Narrow network plan are less common but increasing among employer-sponsored insurance plans. Of companies with more than 200 employees that offer insurance, 8 percent offered a narrow network plan in 2014, according to a Kaiser Family Foundation survey.
Hospitals, including many academic health centers, have complained that narrow network plans limit access to care for patients, especially those with rare or complex health problems. Insurers counter that the networks are effective ways to contain the growth of premiums and other patient costs.
The plans also are popular with enrollees. For example, 54 percent of enrollees in a 2014 Kaiser poll said they preferred plans with narrow networks and lower costs, while 35 percent said they preferred more costly, broader-network options. However, enrollees may not always understand that they are in a narrow network or which providers are included, such as when they are cared for at an in-network hospital by a physician who is out of their network.
Response Varied
Hospitals’ reactions to the growth of narrow network plans have ranged from lawsuits when they are excluded to the launch of their own narrow network plans.
A model law under construction by the National Association of Insurance Commissioners (NAIC) will aim to offer states guidance in regulating provider networks. The U.S. Department of Health and Human Services has raised concerns about the adequacy of marketplace plan networks, but said it will not introduce new rules until the NAIC process is finished. In the meantime, the Obama administration has required marketplace plans to increase the frequency with which they update their provider lists. That action followed consumer complaints that many lists include nonparticipating providers and providers who were not accepting new patients.
The CBO report projecting future trends among marketplace plans came shortly before the Obama administration announced that 2015 enrollments had reached nearly 11.7 million.
The report also projected 4 million fewer enrollees to sign up in the marketplaces and Medicaid over the next 10 years than CBO previously expected. That reduction was partially attributed to 2 million more retaining employer-provided coverage.
Source: HFMA