Narrow-network restrictions help health insurance carriers participating in public exchanges limit their exposure to adverse selection and better manage the cost of patient care, but theyre also an annoyance for health care exchange enrollees who want unencumbered access to doctors and hospitals.
Land of Lincoln Health, one of 22 consumer-operated and oriented plans, or CO-OPs, serving 23 states in the emerging online marketplace, is pursuing an innovative solution it considers an antidote to this approach.
It also could represent a key market differentiator for CO-OPs, all but one reporting financial losses through the third quarter of last year based on an A.M. Best Company analysis. CO-OPs have been under growing pressure to become self-sustaining when federal funding runs out, especially following the recent liquidation of CoOportunity Health, whose plans operated in Iowa and Nebraska.
Jason Montrie, who heads up Land of Lincoln Health, describes this strategy as a preferred partner or private label network that leverages all the assets of a particular provider community. We actually call these plans the name of the hospital system, he says, listing as examples the Centegra Plan, Swedish Covenant Plan and Presence Plan.
While patient care revolves around a specific group of hospitals and doctors to keep services affordable, enrollees in the Illinois CO-OP still have access to a broader network if theyre willing to pay more. Land of Lincoln Health was able to slash the price of its plans for 2015 by 20% compared with the previous year through a partnership with eight providers that also saw a huge spike in enrollment to more than 50,000 consumers from 3,800, according to The New York Times.
Clare Krusing, a spokeswoman for Americas Health Insurance Plans, says the intent of preferred-partner networks syncs up with commercial carrier objectives. Health plans provide a wide-range of coverage options, including a variety of provider network sizes, so consumers can pick the network of doctors and hospitals that best fit their health and financial needs, she says.
Nearly half of all health care exchange plans in 2015 operate on narrow networks, while about one-fifth are classified as ultra-narrow, notes the McKinsey Center for U.S. Health System Reform. The data also found that 70% of the lowest-cost options had narrow hospital networks.
The research mirrors a new study funded by the Robert Wood Johnson Foundation for the University of Pennsylvanias Leonard Davis Institute of Health Economics, which also found that narrow networks covered fewer than 25% of area physicians. Another key finding was a variation in the smallest networks when viewed within the context of physician specialty: 59% for oncology, 36% for primary care and 23% for internal medicine. The researchers recommended network ratings system based on t-shirt sizes (e.g., x-small, small, medium, large) to more easily identify how physicians fit into the larger scope of an individuals coverage.
Kathy Hempstead, who directs coverage issues at the Robert Wood Johnson Foundation, laments that consumers lack usable information about provider networks and must be able to see the forest as well as the trees when they make a plan choice and these data are a first step in giving them the full picture of which physicians are covered under specific plans.
Montrie is sanguine about other nonprofit health plans created under the Affordable Care Act that frequently share best practices using the preferred-partner model to improve access to care and improve health outcomes. The CO-OP community definitely is looking at our network and product architecture as something that may have a long life, he says, adding that hell be giving a presentation on the topic at a meeting of CO-OP executives.
Referencing employer-provided plans in the open market as the fastest-growing part of our business, Montrie believes preferred-partner networks allow employees to pick the plan thats most appropriate for them and their family. People are going to be demanding that they choose their plan in a different way than just being assigned a narrow network plan from their employers, he observes.
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