Insurers May Cut Out More Physicians: What Are Your Options?

Leigh Page

Disclosures

August 14, 2018

In This Article

Should Doctors Pay More Attention to Narrow Networks?

The traditional markets for narrow networks are not exactly a must-have for many physicians.

Narrow plans cover one third of Medicaid recipients,[9] three quarters of the plans on the Affordable Care Act (ACA) exchanges,[10] and roughly 10% of the members of Medicare Advantage plans. (That is, about one third of Medicare beneficiaries are in Medicare Advantage,[11] and about one third of Medicare Advantage enrollees are in narrow-network plans.[12])

In contrast, narrow networks have been largely absent in employer-based insurance, which covers almost one half of Americans. (Exchange plans cover 2%-3%.) But as of last year, only 8% of employers offered narrow plans, the same level as in 2016.[13]

Employers have in the past sought to control expenses by raising deductibles rather than opt for narrow networks, But employees are souring on high-deductible plans, which force them to spend thousands of dollars out-of-pocket before their coverage kicks in.

In a recent survey of insured employees, two thirds of those who had chosen a high-deductible plan said they would drop it next year, and almost one half of all covered employees would select a narrow network plan if it provided access to quality providers.[14]

"Narrow networks are catching on with employers, especially small employers," says Jonathan Gruber, PhD, an economics professor at the Massachusetts Institute of Technology who studies the phenomenon. "You're starting to see a narrow plan as one of the options."

Remember the 2014 Backlash Against Narrow Networks?

Narrow networks have been around for decades, but they entered many people's consciousness only in 2014. Newspaper articles focused on their abuses, doctors and patients sued them, and state legislators introduced a rash of new bills designed to restrict them.

The fact that this happened in 2014 was due a convergence of two events.

On the exchanges, which started in 2014, plans needed to sell insurance to price-sensitive consumers who often were previously uninsured, so they did not have a regular doctor they wanted to keep. ACA restrictions barred plans from lowering costs by cutting benefits, and the ACA's vague rules on network adequacy made excluding providers the logical way to cut costs.[15]

At around the same time, narrow networks run by Medicare Advantage plans needed to cut costs because the ACA directed a 6.5% cut in federal funding to Medicare Advantage plans.[16] In late 2013, UnitedHealthcare, a major Medicare Advantage insurer, began cutting about 35,000 doctors across the country, representing 10% of its national provider network.[17]

In Connecticut alone, UnitedHealthcare terminated 2250 doctors from its Medicare Advantage plan, representing 22.5% of all practicing doctors in the state, according to data from the Fairfield County Medical Association. The county association sued UnitedHealthcare, claiming that the dismissals violated several provisions of doctors' contracts with UnitedHealthcare.

After 2 years of litigation, a federal judge allowed the purged physicians to individually arbitrate their cases with UnitedHealthcare, at the physicians' own expense.

"Dozens, if not hundreds, of physicians went into arbitration," says Mark Thompson, chief executive of the county association. These doctors were not allowed to discuss the outcomes of their cases, but "afterward, there were a lot of physicians walking around with smiles on their faces," he says.

On the other hand, some physicians apparently lost some cases, and many of those who won and were reinstated in network found out it was for the short-term. When these physicians' contracts expired, UnitedHealthcare had the option of not signing them up again, Thompson says.

The standard advice for physicians excluded from networks is to ask the plan for the reasons why they were excluded and challenge those reasons, on the basis of specific data. However, UnitedHealthcare refused to say why the physicians were dismissed, which made it very difficult to challenge the plan's decision.

Even when UnitedHealthcare officials were asked in court why they had dismissed the doctors, "they said they were not going to answer that question," Thompson says. "And the judge accepted that answer."

Even though UnitedHealthcare seemed to win in the long term, the media attention around the case was harmful for the company. Since then, Thomson thinks narrow plans have learned to be more discreet about cutting out doctors – removing a few at a time rather than all at once.

When Anthem dropped Connecticut providers from its Medicare Advantage narrow network in 2018, 156 physicians were dismissed, and many of those were not in Fairfield County, Thompson reports. His members decided not to file a lawsuit on behalf of such a small number of physicians.

Meanwhile, Medicare Advantage plans now are under less pressure to drastically cut physicians. The Trump administration has awarded Medicare Advantage plans pay increases of 2.95% in 2018 and 3.4% for 2019.[18] Medicare Advantage plans may not be carrying out big purges anymore, but neither, by all appearances, are they loosening their grip on tight narrow networks.

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