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Narrow network plans will play an increasingly significant role in healthcare, but there are still some wildcards that could impact their success.
Narrow network plans will play an increasingly significant role in the healthcare landscape in the future. However, there are still some wild cards that could impact how successful these plans will be in 2015.
By definition, narrow network health plans offer consumers a trade-off. Consumer get a lower plan premium and health plans have more control over the providers from whom plan members can obtain care. “The challenge for health plans is to somehow communicate to plan members that the term ‘narrow network’ does not mean a lower quality of care or less access,” says David Smith, director of payer services with Leavitt Partners in Chicago. “Plans will have to make sure that these are high performance networks that deliver a better experience to members due to better patient management.”
Early results from narrow network plans are encouraging. A study published by the National Bureau of Economic Research found that individuals enrolled in a narrow network plan in Massachusetts spent 40% less on medical care. These savings came from both fewer services used and the price paid for those services. Although these individuals made more visits to primary care physicians, the savings came from fewer emergency room visits, less hospital care and less spending on specialists.
To attract individuals to these plans, transparency will also be crucial. Narrow network plans “have to be offered in a context where the consumer can choose a narrow network plan and believe that they are getting something in return for sacrificing some of the choice of provider,” says Paul Ginsburg, PhD, Norman Topping Chair in Medicine and Public Policy at the Schaefer Center for Health Policy and Economics at the University of Southern California. That means making sure consumers have all available information necessary, including exactly which providers are in the plan, to make an informed choice. Few things will undermine the narrow network faster than members signing up thinking their chosen providers are in the network only to find otherwise when they seek care.
The providers chosen for these networks will not necessarily be the least expensive. “Insurers have more tools available to make good decisions about which providers to invite into their narrow network plans,” says Ginsburg. “Provider cost is being assessed not just by looking at unit prices but by looking through claims data for the overall cost experience of different providers.” Narrow network plans are also likely to find ways to tie physician pay to quality metrics, while also introducing other risk- and account- ability-based measures.
As more people purchase health insurance through an exchange, Smith projects tremendous growth in narrow network plans with more co-branding between payers and hospital systems. “There will be a high prevalence of narrow networks over the next several years,” he says. “Everything that’s happening from an economic perspective and the ascendance of the consumer will continue to drive this.”