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More Insured, but the Choices Are Narrowing
Business Day
In
the midst of all the turmoil in health care these days, one thing is
becoming clear: No matter what kind of health plan consumers choose,
they will find fewer doctors and hospitals in their network — or pay
much more for the privilege of going to any provider they want.
These
so-called narrow networks, featuring limited groups of providers, have
made a big entrance on the newly created state insurance exchanges,
where they are a common feature in many of the plans. While the sizes of
the networks vary considerably, many plans now exclude at least some
large hospitals or doctors’ groups. Smaller networks are also becoming
more common in health care coverage offered by employers and in private
Medicare Advantage plans.
Insurers,
ranging from national behemoths like WellPoint, UnitedHealth and Aetna
to much smaller local carriers, are fully embracing the idea, saying
narrower networks are essential to controlling costs and managing care.
Major players contend they can avoid the uproar that crippled a similar
push in the 1990s.
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“We
have to break people away from the choice habit that everyone has,”
said Marcus Merz, the chief executive of PreferredOne, an insurer in
Golden Valley, Minn., that is owned by two health systems and a
physician group. “We’re all trying to break away from this fixation on
open access and broad networks.”
But
while there is evidence that consumers are willing to sacrifice some
choice in favor of lower prices, many critics, including political
opponents of the new health care law, remain wary about narrowing
networks. A concern is that insurers will limit access to specialists or
certain hospitals. “Too often, Obamacare cancels the policy you wanted
to keep and tells you what policy to buy,” Senator Lamar Alexander, a
Tennessee Republican, said in a speech in April.
Dr.
Monica Wehby, a pediatric neurosurgeon, is using the potential reaction
to narrower networks as momentum for her campaign for Senate in Oregon.
A Republican promising to repeal the Affordable Care Act, her slogan is
“Keep your doctor. Change your senator.”
Other complaints involve confusion over which providers are participating in which plans.
“The
thing you’re buying is access to the provider network,” said Lynn
Quincy, a policy expert at Consumers Union. “Right now it feels like
you’re forced to guess.”
In
response, state and federal regulators say they are more closely
monitoring the plans being offered in the coming year to be sure they
are clear and that consumers have sufficient access to hospitals and
doctors. In some cases, they are already insisting on changes.
Nonetheless,
for people who are directly picking plans in the open markets, insurers
say price is turning out to be critical. People “are weighing
affordability and breadth of network,” said Karen Ignagni, the chief
executive of America’s Health Insurance Plans, an industry trade group.
“What we’re finding is individuals are experiencing a preference for
affordability,” she said.
Minnesota would seem to be a case in point.
On
the state exchange, PreferredOne offered an inexpensive plan with a
network of 13 hospitals, but those low premiums helped the insurer grab
60 percent of the individual insurance market.
While
many insurers are including only those hospitals and doctors willing to
charge lower prices, experts say the makeup of the networks is likely
to evolve over time, focusing less directly on price and more on the
ability of providers to deliver coordinated and high-quality care.
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Although
a similar attempt to restrict choice failed in the early ‘90s, after
opposition to H.M.O.s and managed care, insurers insist these efforts
will not run into the same resistance because they are now working more
closely with providers, and customers are more concerned about costs.
“It’s a new era,” said Dr. Sam Ho, the chief medical officer for United
Healthcare.
Others
agree. “You’re going to see this as a dominant strategy,” said Jeff
Hoffman, who works closely with hospitals for Kurt Salmon, a consulting
firm.
Blue
Shield of California, for example, was able to recruit a fairly sizable
group of providers interested in discounting their rates. Just as the
plans must compete on the exchanges, “the doctors and hospitals are
competing with each other to get in,” said Juan Davila, an executive
vice president with the insurer. The next step, Mr. Davila said, is to
work with providers to develop more sophisticated networks, where the
insurer will team with those doctors and hospitals to provide better
care.
Outside
the exchanges, insurers are also promoting smaller networks for
employers as a way to reduce overall health care costs, said Larry
Boress, chief executive of the Midwest Business Group on Health. “The
larger the network is, the higher the cost,” he said.
Employers
remain concerned about the quality of the networks, said Mr. Boress,
and many are doing an analysis to see how disruptive changing the
network would be for their workers.
Nonetheless,
the bottom line is that more employers are considering smaller
networks. Many, like Walmart and General Electric, have gone so far as
to steer employees to specific hospitals for certain expensive
procedures like joint replacements.
In
2010, 24 percent of the largest employers offered smaller networks,
chosen for their low costs or quality. Last year, 27 percent offered
them and 44 percent said they were considering them, according to
Mercer, a benefits consulting firm. Some companies are experimenting
with different tiers of networks, charging workers more if they go to
the broadest network, said Joseph Kra, a Mercer consultant.
There
has been pushback, however. When United Healthcare reduced the size of
networks in some Medicare Advantage plans, consumer groups and
regulators balked. Dr. Ho, the chief medical officer, said the insurer
offered patients the opportunity to continue receiving certain
treatments, like chemotherapy, with their existing provider.
Medicare
recently announced it would require Advantage plans to give advance
notice of any significant changes to a network and might allow
beneficiaries to switch during the year if the network underwent too
much change after they had already signed up. Federal officials, who had
floated the idea of requiring exchange plans to submit their networks
for review, said they would instead focus on specific types of doctors,
like cancer specialists, to make sure people have adequate access to
care.
“We
intend to continue monitoring plans,” a Medicare spokeswoman said in a
statement, “and learn from that review, to determine if further rules
are needed in the coming years to ensure that Marketplace plans offer
quality networks to consumers.”
State
regulators are also contemplating action. In Washington State, Mike
Kreidler, the insurance regulator, issued new rules last month that set
certain minimum standards for access to a doctor and require insurers to
make clear who is in the network. “I want to make sure carriers are not
in a race to the bottom,” he said.
After much debate, New York regulators decided last month not to require health plans to offer out-of-network benefits in 2015, despite pressure from patients and doctors.
New
Hampshire regulators are also trying to weigh in on the decision by the
state’s only insurer, WellPoint, to exclude some hospitals.
In Washington, Seattle Children’s Hospital is challenging state insurance regulators because some of the plans exclude it.
Regulators are also working with insurers to make it clearer which providers are included in a network.
Despite
some of the resistance, insurers say they think people will grow
accustomed to choosing a plan based on what network it offers rather
than necessarily which insurer sells it. “The network experience becomes
the glue that holds it together,” Mark T. Bertolini, the chief
executive of Aetna, told investors earlier this year.
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