Narrow Physician Networks Prevalent in Exchange Plans

Ken Terry

June 26, 2015

More than four in 10 silver health plans on the state and federal health insurance exchanges have narrow physician networks, defined as 25% or less of the physicians in the area, according to a newly released report from the Leonard David Institute of Health Economics at the University of Pennsylvania.

It is not news that insurers are using narrow networks to be competitive on the insurance exchanges established under the Affordable Care Act, but until now, the extent to which they were doing so had been quantified only for hospitals. The Leonard Davis report, funded by the Robert Wood Johnson Foundation, is the first analysis that shows how restricted patients' choices of physicians are in insurance exchange plans.

The researchers looked only at silver plans, which are the second least expensive category of insurance exchange coverage. But government data show that 65% of insurance exchange participants are enrolled in silver plans.

The dataset used in the report included 450,232 physicians participating in plans issued by 251 carriers across 355 networks. The analysis found that 41% of the networks were extra-small or small. Eleven percent of networks were extra-small, meaning they include 10% or fewer of the practicing physicians in an area. Thirty percent of the networks were small, encompassing 10% to 25% of physicians.

There were some differences among the specialties included in the exchange plans. For example, 36% of primary care physician networks were small or extra-small, and 59% of oncology networks fell into these categories.

There were also variations in network size among types of plans and among specific geographic areas. In Atlanta, Georgia, for example, health maintenance organizations' and point-of-service plans' share of local physicians ranged from 5% to 27%. The network shares also differed significantly between Atlanta and two suburbs that were about 10 miles from downtown.

Insurers can use narrow networks to lower costs by excluding high-cost providers from a network and directing patients to high-value providers, the report noted. In addition, the health plans can use the market power of networks to negotiate lower reimbursement levels with participating providers in return for greater volume.

The American College of Physicians (ACP) last year protested the growing use of overly narrow networks in Affordable Care Act and Medicare Advantage plans. The ACP cited one insurer's exchange plan in San Diego that had only a third of the primary care physicians the carrier offered in the network for its employer-based health plan. The association urged the Centers for Medicare & Medicaid Services and state insurance regulators to revise standards for assessing network adequacy.

Other abuses have cropped up in exchange plans. In Connecticut, some physicians were forced to participate in these networks at sub-Medicare rates under "all products" clauses in their insurance contracts. In Washington State, Premera Blue Cross and Regence Blue Shield failed to inform physicians whether they were included in exchange plans or not, according to the Washington State Medical Association.

The Leonard Davis report noted that it is very difficult for consumers to determine the size of the physician network in a particular exchange plan. The authors recommend that online plan directories be revamped to make that information more easily accessible. Exchange plans should also be better regulated to ensure network adequacy, they say.

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