Health Plans to Docs: Curb Costs or We'll Kick You Out

Kenneth J. Terry, MA

Disclosures

May 09, 2014

In This Article

This Time, Things Are Different

Although observers see parallels between today's narrow networks and the limited HMO networks of two decades ago, they cite significant differences between the 2 eras. Back then, employers were shifting their employees into managed care plans without giving them much, if any, choice of plans, David Blumenthal notes. Today, in contrast, individuals have a fair amount of choice among both the Medicare Advantage and the exchange plans. Also, many of those buying products on the insurance exchanges have never had a regular physician before, so they don't have to switch doctors, he points out.

Paul Ginsburg agrees that there's far more choice today. As a result, he expects less consumer backlash than there was in the 1990s. And when confronted with a choice between a narrow network and higher cost, many patients will select the lower-cost plan, he points out. A recent survey of likely purchasers of ACA plans confirms his contention.[9]

Thus far, narrow networks have been not been widely offered in the group plan market. That's not surprising, because they were roundly rejected back in the early 2000s, when most people insisted on broad networks.[10]

Blumenthal says he wouldn't be surprised if the state insurance exchanges for small businesses -- which will start accepting enrollees online in November[11] -- include narrow-network plans. But it's unclear whether larger companies will use these marketplaces when they're allowed to in 2017. "The question will be whether and how larger employers will toss their employees into these markets and leave them subject to the restrictions that the markets offer, or whether those restrictions will cause them to hang back," he says.

Ginsburg doesn't believe that many employer-based plans will have narrow networks unless they're offered in the context of a private insurance exchange, which provides a menu of plans to a company's employees.

"To the degree that private exchanges take hold, that will be the way you make narrow networks available to employees, because then they clearly have a choice," he says.

Narrow networks are a response to a reimbursement system that still is overwhelmingly fee-for-service. But both public and private payers are trying to push the system toward value-based reimbursement. The most prominent vehicle for that transition is Accountable Care Organizations (ACOs), which can be set up to accept partial or full financial risk.

Some observers think that joining a capitated ACO is one way to escape the bane of narrow networks.[11]

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