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

Leigh Page


August 14, 2018

In This Article

Networks Choose Doctors Based on Clinical Performance

Some narrow networks are not just slashing expenses but are also selecting doctors based on clinical performance, according to a consultant for health plans who asked not to be identified because he was talking about his clients' strategies.

But he says plans offer a variety of conflicting clinical performance standards, and that can be confusing for physicians. "Every health plan is doing physician selection differently," the consultant says. "If you alter your practice for one plan, you can't assume that it will help you with another plan."

For example, one plan may be monitoring whether primary care physicians' patients are coming back for an appointment every 6 months, he says, whereas another plan might be interested in a particular outcome for patients. And a third plan might focus on getting patients enrolled in healthy living interventions, such as weight-loss programs, he adds.

"Everyone is still pretty new at this," the consultant says. "There's a lot of trial and error going on."

Some narrow plans have abandoned the drive for cheaper premiums and are actually raising their premiums in a quest for higher quality.

Oscar Health, a New York-based health insurance company founded in 2012, raised its rates when it went narrow in 2016, in an effort to improve quality. The company reported that about two thirds of members stayed with the insurer despite the higher rates.[33]

Oscar has joined the trend toward partnerships with providers, forging exclusive contracts in certain markets, such as the Cleveland Clinic in Ohio, Tenet in Dallas, and Mount Sinai and Montefiore in New York City.

In another permutation of narrow partnerships, some large employers have been partnering with prestige outlets, such as Mayo Clinic, Geisinger Health System, and Cleveland Clinic, to handle expensive procedures like hip replacements, cancer care, and heart surgery. Employees needing care are flown to these providers, with all expenses paid by the company.

Walmart, the largest private employer in the country, with about 1.5 million workers, has been forging such relationships for several years through its Centers of Excellence (COE) program.

Recently, Walmart executives were shocked to learn that many of its employees were being referred to its COE providers unnecessarily. For example, physicians at the COEs determined that 30% of patients sent to them for spinal procedures did not need them.[34]

At a conference this May, Walmart executives said they were planning to use the data on unnecessary referrals to form "optimized networks," which would presumably weed out physicians who referred too many patients for unnecessary care.

"We are going to build optimized networks and drive utilization to the highest value providers," a Walmart executive said, according to a report on the meeting.[35] A Walmart spokesperson contacted by Medscape since then said the company had as yet nothing more to say about this proposal.

The Situation Today

Narrow networks have become a fixture in the low-cost insurance market. They have disrupted physicians' practices and provided scanty coverage in some cases, but regulations and lawsuits have generally failed to limit their cost-slashing strategies so far.

Now narrow networks are poised to enter higher-cost markets that really matter to physicians. Because employers want long-term results, narrow plans may behave better there. There are already signs that some plans are more concerned about clinical performance and not just cutting costs.

If narrow networks actually do enter the employer market in large numbers, will they be successful there? Physicians such as Chen, the Arizona ophthalmologist, have their doubts. Patients who have had the same doctors for many years, he says, will want to keep them.

In the other hand, many employees may be seduced by the potential savings of narrow networks. In a 2016 survey, buyers of individual insurance were almost evenly split between those who might join a narrow network and those who would rather keep their physician. Whereas 21% said the most important factor in plan selection was keeping their preferred doctors, 24% said it was having the lowest premium.[36]

Meanwhile, some narrow networks are moving away from the expense-slashing strategies of the low-cost plans and adopting a value-based approach. Plans are partnering with health systems to share savings using value-based approaches.

These new partnerships erase the need for plans to weed out individual physicians, which has caused a lot of angst in the medical community, particularly among specialists. In these new arrangements, anyone who is part of the system is automatically part of the network. In this scenario, network adequacy is no longer a problem, as long as the system is big enough.

Are narrow networks entering an era of peaceful coexistence with physicians? Some say that's unlikely; at this point, it's too early to tell.


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