Health plans offered through the Affordable Care Act’s public exchanges are taking some heat from enrollees as they discover their provider networks are skimpy — a concern benefit brokers and agents assisting consumers on the marketplaces have feared since the beginning of enrollment.

In California, for example, a law firm tried to drum up plaintiffs to sue Blue Shield of California for overly limiting the size of the network for one of its plans. In one case in the nation’s most populous state, a disgruntled policyholder had foot surgery with his regular provider, only to discover later the surgeon wasn’t covered by his new Blue Shield exchange plan.

See related: Narrow networks could mean desperate calls to brokers

A consumer survey conducted by McKinsey & Co. in April found 26% of people who purchased plans with limited networks are unaware of what type of plan they are, in fact, in. This could be due to large numbers of consumers, despite the availability of brokers and agents in every state, making decisions without consulting an insurance professional.

The foot surgery patient told the Wall Street Journal that he owes “several thousand dollars I wasn’t planning on paying.” Blue Shield’s response is that enrollees “should be as informed as possible about the product they select.”

While it’s reasonable to hope that enrollees will do their own research as consumers, many health plans are now adding hospitals and physicians to their plans. The reason, they report, is that hospitals and physicians that had originally stayed on the public exchange sidelines are overcoming their reluctance — either because they have determined it can be profitable or out of fear their patient base will otherwise erode.

Adding providers

During the 12-month period ending in April, Blue Shield of California added 36,000 physicians (up 70%) and 254 hospitals (up 19%) to its standard exchange offering. Its provider roster remains narrower than its standard, non-exchange based product. Anthem Blue Cross and Health Net have made similar moves.

Despite enrollee pushback, smaller networks do achieve economies, according to a nationwide analysis to McKinsey. The consulting firm used the following categorization scheme:

  • “Tiered” networks that put different hospitals into different plan tiers with co-pay amounts varying accordingly,
  • “Broad” networks cover at least 70% in the their service area,
  • “Narrow” networks cover 31-70%, and
  • “Ultra-narrow” networks have 30% of less.

Smaller network, lower rate hike

Looking at the latest rates from some 20,818 on-exchange products, McKinsey, in its report — called Hospital networks: Updated national view of configurations — observed:

  • Exchange products with broad networks raised their rates between 13% and 17% more than narrow or ultra-narrow networks,
  • 70% of the lowest-priced products are narrow, ultra-narrow or tiered products,
  • Broad network-based exchange products are available to nearly 90% of people with access to an exchange, and
  • The breadth of a plan’s network is not correlated to a plan’s “performance” as measured by the U.S. Centers for Medicare and Medicaid Services encompassing outcomes, patient experience and clinical process.

Stolz is a freelance writer based in Rockville, Md.

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