By Mark Hall and Paul B. Ginsburg
USC-Brookings Schaeffer Initiative for Health Policy, September 14, 2017
Health care reforms, including those put in place by the Affordable Care Act, are making insurers more competitive. However, in their effort to lower costs, health insurers more often are selling health plans that cover fewer hospitals, and many fewer physicians.
This narrowing of provider networks is a sign that market reforms may be improving consumer value, but network narrowing also raises a number of concerns. For example, a narrow network may have insufficient capacity to serve the number of people enrolled, or the providers may be too geographically dispersed to be reasonably accessible.
Rules dictating the adequacy of care in these networks have been in place for several decades, but state and federal regulators have begun to assess whether these rules are suited for the modern conditions.
In “A better approach to regulating provider network adequacy,” Mark Hall and Paul B. Ginsburg argue that the current set of regulations are not sufficient to ensure network adequacy without placing undue constraints on market innovation. Instead, the authors argue that a more layered approach is needed, including a form of patient-specific [or case-specific] dispute resolution.
This layered approach to network adequacy consists of the following recommended eight elements:
1. A general qualitative standard for network adequacy is needed
2. Insurers should provide reasonably up-to-date and user-friendly network directories, and network size should be more clearly labeled for consumers.
3. Some basic baseline quantitative standards should be considered that are fairly easy to administer, such as a minimally acceptable number of higher-volume providers in the major areas of primary care and specialty practice, and at least one such provider within a defined distance of most of the plan’s enrolled population.
4. Quantitative standards should be presumptive, but not conclusive.
5. If quantitative standards are adopted, consideration should be given to maximum wait times (rather than simply number and distribution of providers).
6. Regardless of the substantive adequacy standards in place, a backstop dispute resolution process is also needed to protect patients who might face inadequate access due to a restricted network.
7. Patients should be held financially harmless when a reviewer determines there are grounds to receive care out of network.
8. If network adequacy requirements might add substantially to the cost of insurance, then states should consider creating an additional dispute resolution process focused on financial implications.
The authors conclude that a robust dispute resolution process can ease the administrative burden of overseeing network adequacy. “Nevertheless, well-designed regulation of network adequacy is not easy to achieve. Because no single regulatory approach is likely to be sufficient, we need to think more in terms of a layered approach – one that thoughtfully melds together different dimensions and techniques of oversight.”
By Don McCanne, M.D.
Why do private insurers establish narrow provider networks? They claim that they contract for higher quality at lower costs, but quality has nothing to do with it. They reduce costs by granting physicians and hospitals greater numbers of patients in return for contracted lower prices. They also lower costs by reducing patient access to care as a result of failure to use the full complement of heath care resources in the community. This not only allows insurers to offer more competitive premiums and thus greater insurance sales, but it also enhances profits and shareholder returns.
Narrow networks are a business tool of for-profit, private insurers. They are detrimental for patients because they lose access to their choices in their health care professionals and institutions. They are also detrimental to care provided by dedicated primary care physicians because they reduce access for their patients to specialists and their specialized services (often without the knowledge of patients when physicians remain silent on potential health care resources that are out-of-network).
Traditional Medicare does not use narrow networks. Medicare’s mission is to enable access to care for the beneficiaries, not to obstruct access to that care. Although entrepreneurial endeavors and public service health programs may superficially appear to have similar goals, their primary targets are quite different – investor returns versus optimal health care.
These differences have been widely recognized. So what should be done about this problem? To see what the policy community recommends, skim through the eight elements listed above. With a little thought, you can immediately recognize the problem, and that is that they have not acknowledged what the real problem is.
The elements listed would hardly tweak the current system, yet they are the type of approaches that are taken when you make the assumption that we are going to leave our health care system under the control of the medical-industrial complex. The real problem is the dysfunctional health care financing system that we continue to support.
If we were to change to a well designed, single payer national health program, the narrow provider networks would be eliminated because they counter the goals of a premier performing health care system. The sooner we do that, the better.
Stay informed! Visit www.pnhp.org/qotd to sign up for daily email updates.