Tracey Walker | March 10, 2016
Health insurance plans will soon receive ratings based on how many doctors and hospitals they include in their networks.
That’s according to new regulations released by The Centers for Medicare and Medicaid Services (CMS): The Notice of Benefit and Payment Parameters) and its primary piece of sub-regulatory guidance for the federally-run exchanges, the 2017 Letter to Issuers in the Federally Facilitated Marketplaces. The ratings will apply to insurers intending to offer plans in the 2017 marketplaces.
“The new ranking for provider networks will go into effect in fall 2016 for 2017 qualified health plans,” says Michael S. Adelberg, senior director at FaegreBD Consulting in Washington, D.C. Adelberg has held several senior positions with CMS, where he led provider network oversight and the review and approval of health plan applications for the Medicare Advantage and the health insurance exchanges.
“Provider networks in a given county will be assessed against each other and assigned one of three designations—basic, standard, or broad—based on the number of providers in its network versus its competitors in that county,” says Adelberg. “Consumers shopping for health plans will have this ranking in front of them when they select a plan—as well as other new forms of comparative information such as a plan quality rating of one to five stars.”
CMS also is implementing new standardized options for 2017, according to Adelberg. These are plans in which CMS has predetermined the cost sharing (deductibles, copayments, and coinsurance payments for major benefit categories, such as inpatient, primary care, and drugs). According to the agency, these standardized plans draw from common and popular plan designs already in use.
“For 2017, CMS is encouraging QHP [qualified health plans] issuers to offer standardized plans, but there is no requirement to do so,” Adelberg says. “However, the agency is considering ways to highlight standardized plans on healthcare.gov, potentially giving insurers with standardized plans a competitive advantage. The agency also notes that it may require the offering of standardized plans in the future.”
Key takeaways
Because CMS proposed both of these moves in its previous draft guidance, the ranking of provider networks and the establishment of standardized plans is not surprising, according to Adelberg. These moves, along with other complementary moves in the “HHS Notice of Benefit and Payment Parameters for 2016” and the letter, are important for a number of reasons, including:
• They are a counterweight against narrowing networks, higher coinsurance and higher deductibles in the interest of holding down plan premiums. “With these and other complementary moves, CMS may be seeking to create a marketplace where more consumers choose a higher premium plan because it may be better in other ways,” Adelberg says.
• They suggest an evolution in CMS’ administration of the federally run exchanges. It is moving from a “clearinghouse” model (in which the agency sets standards and responds neutrally to all issuers that meet these standards) toward an “active purchasing” model (in which the agency seeks to proactively drive insurers toward the government’s ideas of higher value to consumers). “But these moves come at a time when the marketplace risk pool is less healthy and numerous than most projected, and ACA [Affordable Care Act] funding is truncated by the risk corridors shortfall,” says Adelberg. “Therefore, many insurers might consider this an inappropriate time for CMS to ‘turn up the heat’ on their low-premium offerings.”
What executives should do
Adelberg says executives should consider taking the following steps with respect to provider network rankings:
1. See how your network measures up. Benchmark your networks against those of your competitors to estimate how they will fare on the healthcare.gov consumer display this fall, he says. “There is already at least one research vendor offering a tool to help plans conduct this analysis.”
2. Prepare for scrutiny. If you do offer a narrow network plan, be ready to explain to consumers—and press—why that particular narrow network plan is not lower quality (i.e., use of higher value and high-volume providers, providers with ingrained referral patterns with each other, high customer satisfaction from previous year), says Adelberg.
Adelberg says executives should consider taking the following steps with respect to standardized plans:
1. Prepare for the long term. Recognize that the trend toward standardized plans and other steps toward active purchasing, absent a strategic change in direction from elected leaders, will likely continue in one form or another, says Adelberg.
2. Understand how this will change consumer preferences. Consider a consumer shopping experience in which numerous data—quality, provider network size, out of pocket cost estimates, and drug and provider continuity—drive more consumer healthcare.gov plans sections, he says. “Plan premium becomes, relatively speaking, less important as a driver of plan selection.”
The transparency movement
Due to consumer demands, the trajectory toward greater health plan transparency will continue in areas related to provider cost, quality and access, says Scott Ransom, MD, managing director, Navigant Healthcare. “This should be on the radar for managed care executives as they will continue to be central players in creating approaches to facilitate greater transparency, forcing competitive performance by providers,” he says. “The days of ‘trust me’ are being replaced by greater information transparency that can help consumers make better healthcare choices for their families.”
Ransom says health plan executives must actively pursue three things to be competitive in the rapidly changing marketplace:
1. Develop the infrastructure to support greater transparency across the goals of the healthcare Triple Aim—quality, cost and access
2. Look to use data resources to support provider improvements in the approach to care delivery leading to measurably better patient outcomes and greater value.
3. Become aware of increasing provider concerns regarding deductibles that are out of reach to many low- and middle-income patients, possibly increasing bad debt and functionally reducing care access in the most appropriate venues.
Marty Hauser, a healthcare consultant and former CEO of a provider-owned health plan, cautions that though the regulations are meant to provide consumers with more protection and information when selecting health plans, they do very little to address the issue of transparency and reporting on quality and customer satisfaction.
“Just because a plan has a large network, as we all know, it doesn’t necessarily mean the plan has contracted with the best quality providers or the providers who are recognized by their patients as providing the best customer service and care,” Hauser says. “I would rather see the government, insurance industry and professional associations come together and collaborate on consistent, measureable and meaningful transparency and consumer-friendly reporting around quality and service measures that consumers who are now facing such high deductibles can use to get the best value from their plans.”
Source: Managed Healthcare Executive