Experience. Integrity. Advocacy.
Experience. Integrity. Advocacy.

The Problems and Benefits of Narrow Networks


Narrow insurance networks that have flourished under the Patient Protection and Affordable Care Act (ACA) have patients, providers, and policy makers all crying foul.

At the heart of the problem of narrow networks is limited patient access to providers. Generally, narrow networks contract with few than 70 percent of an area’s hospitals, according to Stephen Kinsley, senior director of managed care with Surgical Care Affiliates, as quoted in a recent ASC Review article. Patients who sign up for health coverage under state or federal exchanges may find more limited access to providers than under similar plans by the same payers they purchased before the ACA. Although exchange plans aren’t the only ones developing narrower networks. Increasingly, employer-sponsored plans and private exchange or non-exchange market plans also are limiting access for patients.

Under the narrow networks, patients may be forced to choose new doctors, or in some instances, may end up footing their entire medical bill out of pocket because a provider they thought was in network was not, and their plan offers no out-of-network coverage. In other cases, a surgeon and hospital may be in network, but the anesthesiologist or radiologist is out of network. This could lead to differing fee schedules, deductibles, co-pays, or no coverage at all.

According to Julie Appleby of Kaiser Health News (KHN), insurance regulators and agents are fielding multiple complaints related to narrow networks, while lawmakers are weighing options to ensure access to care. “For plans being submitted for sale next year, the federal Department of Health and Human Services (HHS) said it will more closely scrutinize whether networks are adequate,” Appleby reports in her USA Today article.

Payers say that narrow networks are a logical response to the challenging environment of healthcare reform. “The new federal health law doesn’t let them to reject enrollees with health problems or charge them more just because they are sick,” Appleby writes. “So they are using the few tools left to them—contracting with smaller groups of hospitals and doctors willing to accept lower reimbursements; requiring referrals for specialty care; and limiting coverage outside those networks.”

Consumers are choosing these plans, too. Narrow networks usually mean lower premiums, which is appealing to uninsured or underinsured Americans shopping for coverage on the exchanges. But the newly insured often don’t understand the implications of narrow networks, or in some cases, didn’t have a choice.

This feeling of victimization has led to more than just a public outcry. In California, a class action lawsuit has been brought against Anthem Blue Cross, claiming the insurance giant “misled ‘millions of enrollees’ about whether their doctors and hospitals were participating in its new plans, and failed to disclose that many policies wouldn’t cover care outside its approved network,” Appleby reported in her KHN article ”Lawsuit Accuses Anthem Blue Cross Of ‘Fraudulent’ Enrollment Practices.”

But are narrow networks all bad? At least some experts say “no.” According to David Dranove and Craig Garthwaite of The Healthcare Blog, in the current healthcare climate, narrow networks are an important tool for cost containment.

“Make no mistake, restrictive networks are essential to cost containment. Through narrow networks, insurers can negotiate lower prices. More importantly, they can direct enrollees to providers who have lower overall costs and higher quality,” write Dranove and Garthwaite.

To truly be successful, though, narrow networks need at least five elements, says Vanessa Pawlak, Senior Manager, and Matthew Fadel, Senior Consultant, Ernst & Young LLP. In their July 09, 2014, Becker’s Hospital Review article ”Narrow Networks Help Create Value in a More Regulated Healthcare Landscape,” they say narrow networks in the current system need to have “a defined population to manage,” “an IT infrastructure capable of population health management,” “an incentive-based payment model,” “provider–health plan alignment,” and “consumer choice and transparency.”

Both state and federal insurance regulators are working to address consumer worries through tougher standards defining “narrowness.” According to The New York Times article, “To Prevent Surprise Bills, New Health Law Rules Could Widen Insurer Networks,” new standards for exchange plans would be similar to those used for Medicare Advantage plans to determine if the network is sufficiently broad in it’s number of doctors and hospitals.

Also, according to the article by Robert Pear, “The National Association of Insurance Commissioners, representing state officials, is updating its 18-year-old model law to add new consumer protections, after finding that some insurers tried to cut costs by excluding children’s hospitals and academic medical centers. Cancer treatment centers say they, too, have been excluded from many health plan networks.”

For many people, the issue of narrow networks centers on transparency and education, helping people make informed decisions about their coverage choices, and giving them the information they need to use the coverage they purchase.

“You can’t have a free market if people cannot get access to information,” said Brian Webber, the National Association of Insurance Commissioners’ manager of health policy and legislation in Alicia Caramenico’s July 21, 2014, Fiercehealth Payer article “Narrow networks: Striking the right balance.”


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Charity Singleton Craig

Charity Singleton Craig is a freelance writer and editor who provides communications and marketing services for CIPROMS. She is responsible for creating, editing, and managing all content, design, and interaction on the company website and social media channels in order to promote CIPROMS as a thought leader in healthcare billing and management.

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