NARROWING NETWORKS [Indianapolis Business Journal (IN)]
|By Wall, J K|
With health insurance premiums continuing to outstrip inflation, some health insurers and hospital systems are considering bringing back an old strategy: limiting patient access to a "narrow" network of doctors and hospitals.
That idea, common in the heyday of health maintenance organization health plans, has been out of vogue in
"Just as everybody else is, we're looking at this as an opportunity," said
Narrow networks hold some promise for reducing provider prices or helping reduce patients' need for health care or some of both.
Networks of hospitals and doctors are the critical foundation of health plans. To be in a health plan's network, doctors and hospitals must agree to pre-set discounts off their charges. Typically, the health insurer that secures the biggest discounts can offer the lowest prices to its customers.
There are two main ways to build a narrow network. One is to cut out the highest-cost providers, thereby ensuring that patients see only low- and moderate-cost providers. The other is to make one hospital system cost more to plan members than the others do, steering them to cheaper providers.
Also, there are two main ways to achieve a lower price for customers: convincing a group of doctors and hospitals to discount their prices even more than usual in exchange for access to a captive group of patients, or urging hospitals to do a better job of helping patients avoid expensive hospital procedures - then sharing any savings between the hospitals and the insurance plan.
WellPoint's unit in
The shift is significant because HMO restrictions sparked backlash that led to broad provider networks - something Anthem has excelled at more than any other insurer in
Anthem is focused now on using narrow networks as the basis for the health plans it will offer through the state-run health insurance exchange, which is scheduled to start in 2014.
Many expect price to be the key driver of buying decisions in the exchange. And narrow networks pose less of a challenge for individual buyers, because they won't be forced by an employer into a health plan that does not include the doctor or hospital they want.
Lee said Anthem, based on research of narrow networks in other markets, thinks the upfront price will need to be at least 10 percent cheaper than broad network plans in order to attract a meaningful mass of customers.
"If it's less than 10 percent, as we've done some research, then most consumers are not interested in reducing their choice," Lee said.
Anthem's main rival in
For example, UnitedHealthcare launched a product called Core in 2010 in
"UnitedHealthcare is currently exploring the strategy in central
Not everyone is confident there will be a market for health plans based on narrow networks.
In the three years
Premiums for family coverage in IU's narrow network plan total
"It's a little early to tell," said
"Employers feel that need to have access, without any penalty, to the tertiary providers," Perry said, using industry jargon for large, specialized hospitals. "You're going to have very limited market opportunity" for a narrow network plan.
That's her read on the
The idea is to give hospitals and doctors incentives to work together to provide care rather than making patients navigate the complexities and maddening gaps in the health care system. The hope is that better coordinated care will catch health problems and treat them inexpensively before they erupt and lead to expensive hospitalization.
"If we have the ability to go back to physician-driven, patient-centric models of care, that means you don't need every provider in the network," Perry said. "That was the underpinning of the HMOs."
It's that goal that is driving
"But the real improvement is to have a network of providers working together, in collaboration with the employer and the employees," he said, adding, "At the end of the day, we all have to work together to lower the health care spend."
Fischer expressed confidence that Community, which has been trying to convert itself into a low-cost, high-volume provider, can show it's a system that employers and insurers want to work with - not one they want to cut out.
That might be less true for the city's larger hospital systems -
For example, Anthem's Blue Access PPO plan typically pays at least
Typical payments are only slightly higher at
But at St. Vincent hospitals, a C-section delivery costs at least
On other procedures, however,
In other cities, insurers have tried to cut out hospital systems affiliated with a medical school. For example,
"The private sector has limited interest in paying for the social missions of academic medical centers," Grover said.
Part of the fees at teaching hospitals help cover the training of new doctors.
Also, a lot of research centers and specialized clinics, such as geriatric mental health centers or pediatric neurology departments, lose money.
"Everybody appreciates it, but people don't necessarily want to pay for it," he said.
The example in
Parker, the president of IU Health Plans, acknowledged that as a possibility. But
But Slabosky still has doubts about narrow networks working in
Reluctance to curb employees' choices will still make doing narrow networks in
It's more likely to see them crop up in cities with just two major hospital systems, such as
"In these two-hospital towns, the hospitals might be more willing to do something on a limited network, and the employers might be receptive," Slabosky said. "In
Insurers form health plans based on a network of hospitals and doctors, which agree to discount their prices to get access to the insurer's customers.
In recent history, most insurers have built broad networks with as many choices of doctors and hospitals as possible. Now they're trying to build narrow networks with fewer care givers, to achieve lower prices.
How to build a narrow network
Option 1: Cut out the highest-cost hospitals and doctors to ensure that patients visit only low- and moderate-cost providers.
How: The insurer covers most of its patients' bills at Hospital A, which is in the narrow network, but pays nothing at all if patients visit Hospital B, which is out of network.
Option 2: Put hospital systems into payment tiers, making one hospital system cost more to patients than another hospital system does.
How: Make a patient who visits Hospital A, which is in network, pay a co-pay of
How to reduce costs in a narrow network
Option 1: Create a plan that steers patients from Hospital B to Hospital A, using the incentives at left. Then ask Hospital A for a larger-than-usual discount to be in the plan.
Option 2: Steer a group of patients to Hospital A, using the incentives at left, and give Hospital A a target cost to treat those patients. Count on Hospital A to work to keep those patients healthier and out of the hospital. Share savings from fewer hospitalizations between the insurance plan and Hospital A. If Hospital A fails to save money, it covers some or all of the losses.
|Copyright:||(c) 2012 IBJ Corporation|