Carriers Defend Use of Narrow Networks as Fair, Market-Driven Options for Consumers

Reprinted from HEALTH PLAN WEEK, the most reliable source of objective business, financial and regulatory news of the health insurance industry. By Patrick Connole, Managing Editor March 24, 2014 Volume 24 Issue 10 Health insurers are on the defensive over the way some provider networks for public exchanges are designed, leading to criticism that consumers buying coverage on the new marketplaces don’t have access to out-of-network care. States such as New York are pondering changes to exchange rules this month that would mandate out-of-network coverage, and the federal government on March 14 confirmed that CMS plans to increase monitoring of network adequacy in general and inclusion of providers for low-income populations in particular. Against this backdrop, industry sources say there is an Alice in Wonderland-like quality about the scrutiny of provider networks on exchanges since they say consumer choice is the foundation of the new marketplaces. After all, they contend, narrow networks are in place to help make “affordable” coverage possible, notably for those previously uninsured. Carriers in many markets set up narrow networks with providers who agree to lower reimbursement in exchange for more volume. In some cases, however, these plans have left academic medical centers and other specialists out, which has raised the hackles of some consumers and triggered regulatory reviews. Industry sources in New York say it is not clear what if anything will happen with proposals to mandate out-of-network coverage. The issue is part of budget negotiations and has been mentioned by the state exchange as a possibility for the 2015 plan year. At the federal level, CMS on March 14 released the “CMS 2015 Call Letter to Issuers in the Federally-facilitated Marketplaces,” which included measures that would require issuers to submit network adequacy data to the agency as part of the review process for participating in public marketplaces. CMS will review this data and assess network adequacy for 2015, as well as help refine the network adequacy review process for future benefit years, including continuing to develop a process for collecting provider network data. The review, according to market sources, will help to ensure that qualified health plan networks are sufficient in number and types of providers, so that all services will be accessible to enrollees without unreasonable delay in compliance with applicable regulations. There is also a broader effort to monitor network adequacy, for example, through CMS’s tracking of complaints by consumers. The agency also said starting in 2015 issuers on federal exchanges would have to offer provider networks that include 30% of the essential community providers (ECPs) in their service region, compared with the 20% threshold in place for 2014. As one insurance industry executive tells HPW, speaking anonymously, “if we don’t have the ability to offer a range of products at various price points with a full range of benefits, any limitation on that is something that we don’t want to do. It would be like telling Wal-Mart you can only sell toilet paper if it meets this standard.” And, the source adds, it is not like closed networks were born with the reform law; the concept has been around since the start of HMOs and is also part of the many accountable care organizations sprouting up all over the country. “It is a supply and demand market, even in the health insurance world, and the extent to which regulation limits consumer options and our options to meet consumer demand would just be unfortunate,” the source adds. And to put in dollar-and-cent terms, the New York State Conference of Blue Cross and Blue Shield Plans (NYSCOP) tells HPW that if the state decides to force out-of-network coverage for exchange products, premiums would rise nearly 30% as a result. NYSCOP is a partnership of Rochester, N.Y.-based Excellus Blue Cross Blue Shield and New York City-based Empire BlueCross BlueShield, a unit of WellPoint, Inc. Stakeholders Fear Consumerism May Lose out For some industry players, the idea that narrow networks or out-of-network practices are being questioned is a big drag on market development. “What it is, is a killer for the hope of price competition,” Mark Rust, office managing partner for law firm Barnes & Thornburg LLP in Chicago, tells HPW. “Because one of the key factors in introducing price competition as the health care delivery world evolves is going to be narrow networks. And the proof of that is the degree to which plans on the exchange quickly went to narrow networks to try to deliver to the market a more bare-boned cost product.” States like California, New Hampshire, New York and Washington, among others, are considering more requirements for 2015 to broaden exchange networks or make out-of-network coverage possible, even if as an add-on rider enrollees can purchase in order to keep their favorite providers. Rust, however, thinks the issue has the potential to seep into private exchanges as well, where consumer-driven health plans are starting to thrive. “The move to do that is completely counterproductive to the hope that the exchanges and the markets will help to push down price,” he says. Public exchanges will have a comparatively small slice of the insurance sector, so “where this has its greatest potential impact across society is in the considered move by employers from a defined benefit health plan to a defined contribution,” Rust adds. He explains that if employees are being given more power over their insurance purchasing via exchanges and defined contribution, they need all care and price options on the table for consideration. The message from employer-sponsored health plans to employees is that “‘it’s a defined contribution and that you can make your own choice with the amount we contribute to you. And there are several plans that you can choose from; the only thing is some of them don’t have the university hospitals or you can add some of your additional money and you can have broad networks.’ When this happens you’re going to have consumers saying, hmmm. How much do I really use the university hospitals anyway?” Rust says. Exchanges Attract Fresh Concerns On the other side of the issue are specialist providers who say the attention to network adequacy is nothing new, but that with the advent of public exchanges, it is something that has to be monitored anew. Kirsten Sloan, senior director of policy for the American Cancer Society Cancer Action Network, tells HPW that insurers also should be transparent, so people with special needs, such as those who are living with cancer, know if their own providers are included in the exchange network. “Transparency right up front is very important,” she says. For a long time, the most vital issue for cancer patient advocates was getting covered, so with guaranteed issue in place under the reform law, pre-existing conditions are no longer a barrier to getting insured care. But now, provider networks are a priority issue. “Any time a managed care plan or FFS system has a network of providers that they contract with, we want to make sure they are broad enough to encompass specialists,” including oncologists and other cancer-related care providers, Sloan says. The reaction of consumers on exchanges to what may be a new concept of provider networks is part of human nature, says one academic. Mark Hall, professor of law and public health at Wake Forest University, tells HPW it comes down to the fact that some people don’t understand the importance of network access until they get a serious condition. “The scenario is that they are reasonably healthy and something bad happens and then they have buyer’s remorse,” he says. http://aishealth.com/archive/nhpw032414-02?utm_source=Real%20Magnet&utm_medium=Email&utm_campaign=36379527