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

Leigh Page


August 14, 2018

In This Article

Legislation Has Had Mixed Results

The media attention on narrow networks in 2014 spawned a variety of bills in state legislatures covering such problems as surprise medical bills, inaccurate directories, network adequacy, and physicians' access to networks.

Surprise medical bills, a problem created by narrow networks, happen when one provider is in-network and another is out-of-network. When surgery is performed, an in-network surgeon's bill would be covered, but not an out-of-network anesthesiologist's bill.

California's law on surprise medical bills, passed in 2017, requires plans to cover out-of-network physicians' bills when the health facility where they work is in-network.[24]

The New Jersey version, passed in June 2018, requires the plan and doctors to go into arbitration to come up with an amount the insurers will pay. However, the state medical society opposed the New Jersey bill, because it was concerned that the amount the doctor is due would be knocked down significantly in arbitration.[25]

In the case of inaccurate directories, a major problem across the country, California, Georgia, New York, and Pennsylvania require restitution for consumers who relied on inaccurate directories when enrolling in plans or seeking care.[26]

Network adequacy, addressed in the ACA, is now left to the states. The Trump administration ceded regulation to the states in its final rules on exchange plans in 2017, according to a report by the Brookings Institution.[27] However, the report notes that almost half of states have no adequacy standards, and the standards that do exist do not set specific limits.

A new model act on network adequacy, issued in 2015 by the National Association of Insurance Commissioners, extends network adequacy to subspecialties.[28] Rogers says the Mohs Society lobbied to get it included, but few, if any states have passed the provision.

Many physicians would like to abolish narrow networks altogether and require plans to accept "any willing provider" who meets the plan's clinical standards.

Many states passed any willing provider (AWP) laws when HMOs introduced restrictive networks in the 1990s, and AWP laws of one kind or another are still on the books in 26 states, including Illinois, Texas, Virginia, and New Jersey.[29] In 2014, in the middle of the narrow network backlash, voters in South Dakota made their state the 27th with an AWP law.

However, Thompson points out that state regulations, including AWP laws, don't apply to Medicaid, Medicare Advantage, or large employers' self-insured plans, which cover about one half of insured people.

The federal Medicare and Medicaid programs are exempt from state regulations, and self-insured plans are exempted under the Employee Retirement Income Security Act (ERISA). For example, the New Jersey bill, owing to ERISA, is only expected to affect about 30% of residents with employer-based insurance.[30]

The Next Step: Exclusive Narrow Networks

The next stage in the evolution of narrow networks involves insurers' exclusive contracts with one health system. This totally changes the dynamic. When insurers contract with health systems, they no longer evaluate physicians for the network, and purges are not necessary.

An example of this arrangement is the BlueCare Direct HMO in Illinois, a narrow network established in 2015 as an exclusive partnership between Blue Cross Blue Shield of Illinois and Advocate Health Care, the largest health system in Illinois.[31] (The offering is classified as an HMO for regulatory purposes, but it does not use gatekeepers or usually require approvals for referrals, as HMOs do.)

Unlike a typical scanty narrow network, BlueCare has a robust network that includes all the specialists in the Advocate system. Every physician in the system is automatically part of the network, rather than being individually evaluated.

This sort of protection of physicians within a group is already an aspect of traditional narrow networks. That's how Chen, the solo ophthalmologist, got entry into five narrow networks. Even Rogers, the Mohs surgeon, is in UnitedHealthcare's narrow network because he is part of a larger dermatology group.

Rather than being identified as too expensive, Rogers says his higher costs are mixed in with the lower costs of general dermatologists in his group. Rogers' group practice might be excluded if it let costs get too high, but if other dermatology groups hadn't signed up, the plan might still retain the group because it needed to fill out its network.

In exclusive provider networks such as BlueCare, however, the provider network has to be committed to savings. Blue Cross pays Advocate a fixed fee to cover patients in the plan, and Advocate gets to keep any savings. This is also the basic approach of ACOs, which are contracting narrow networks with payers, too. (It comes as no surprise that the Advocate arrangement was based on an ACO.)

Similar cobranded arrangements are being offered by narrow networks on the exchanges. In 2016, the number of such arrangements on the exchanges increased by 13%, according to McKinsey & Co.[4]

Such arrangements can also include several different health systems, as is the case for Vivity, a narrow network in California launched by Anthem Blue Cross in 2015. Vivity has seven different health systems that share profits and losses, as well as clinical and claims data. Patients can even be referred to specialists in another member health system.[32]


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