‘Narrow networks’ that limit choice likely to endure on individual market

Oct. 02--A year ago, individual health plan shoppers were facing 50 percent premium hikes and significant limits on their choice of doctors and hospitals after an insurer shut down one of the biggest health plans in Minnesota's market.

When regulators release 2018 health plan details on Monday, indications are that the market will have settled down significantly, with relatively moderate premium increases and a steady lineup of insurers.

But when it comes to networks -- the list of doctors and hospitals that subscribers can visit with the smallest out-of-pocket costs -- the limitations that have vexed consumers are likely to endure, albeit with some changes.

"I don't expect the old networks that include almost all doctors and hospitals to come back anytime soon, because that doesn't work to hold down premiums," said Jim Schowalter, chief executive of the Minnesota Council of Health Plans, a trade group for insurers.

Health plans that include what are called "narrow networks" have emerged as a prominent cost-control tool for insurers in individual markets, a small slice of the health insurance world that primarily covers people under age 65 who are self-employed or don't receive job-based benefits.

In Minnesota, about 170,000 people buy individual health plans. The market has been rocked since 2014 with changes brought by the federal Affordable Care Act (ACA), which also provides subsidies for many through new health insurance exchanges like MNsure.

Insurers can make exceptions, but the network rules generally steer patients toward one health care system near where they live, such as Allina for shoppers in the Twin Cities or Mayo Clinic for those in Rochester.

In 2018, a new Minnesota law could expand network options in some rural counties. One health plan says it will offer a broader network option to consumers buying in the Twin Cities. But the changes likely won't help people like Pat Reis, 55, of Minneapolis, who in January lost in-network access to the Mayo Clinic.

"As big a hassle as it is to drive to Rochester," Reis said, "I would still travel to doctors at Mayo Clinic if I had a choice."

There's no set definition for what constitutes a narrow network health plan. All insurance policies sold under the ACA are regulated to make sure they meet standards for what's called "network adequacy," yet complaints persist.

Consumers with the coverage are free to obtain out-of-network care, but they might be asked to pay thousands of dollars, or even tens of thousands, more for the privilege.

Compared with much of the nation, Minnesota is the land of narrow networks. About 21 percent of all health plans sold on ACA exchanges this year have a narrow network of doctors and hospitals, according to researchers at the University of Pennsylvania. In Minnesota, 45 percent of networks in the individual market are narrow this year, they say.

They defined networks as narrow when the ratio of in-network physicians to the total number of eligible doctors in the area is less than 25 percent; they found only nine states had a greater share of narrow plans than Minnesota.

Narrow networks aren't all bad, said Daniel Polsky, a health economist at the University of Pennsylvania who conducted the study. Premiums can be lower with the health plans because health care providers can work with insurers to better coordinate care for efficiency, so there's less waste in care.

Beyond the premium savings, though, consumers don't typically prefer the plans because "they limit choice of providers and carry greater risks of being saddled with an out-of-network bill," Polsky said via e-mail. "This can be particularly problematic for patients seeking very specialized care because there may not be adequate in-network choices available."

In Minnesota, network anxiety stemmed from a decision last year by Eagan-based Blue Cross and Blue Shield of Minnesota. For 2017, the insurer dropped what had been the only broad-network health plan in the individual market that included in-network access statewide to the Mayo Clinic.

'Held on as long as we could'

Scott Keefer, vice president for public affairs at Blue Cross, said the insurer would like to offer a variety of bigger and smaller networks but runs the risk of attracting a disproportionate share of patients with expensive health conditions when other health plans don't offer a broad network, too.

"There was no competition for open-access plans," Keefer said. "My position would be, we held on as long as we could [as] an outlier in the market."

Insurers have long suggested the Mayo Clinic in Rochester is unusually expensive and therefore tough to include in a low-premium health plan. They point to data from Minnesota Community Measurement, a Minneapolis-based nonprofit, that reported Mayo Clinic in Rochester for 2015 had the highest cost of care in Minnesota after factoring both the prices charged and the frequency with which patients used services.

Mayo Clinic disputes the findings, saying the group's methodology has several problems, including a failure to fully adjust for the unusual patient population treated at the world-renowned medical center -- a group that disproportionately includes patients seeking treatments ranging from organ transplants to specialized cancer care. The clinic says the care it provides can be expensive, but it represents a better deal in the long run after factoring in avoided treatment costs down the road plus better outcomes for patients.

As the argument over payment rates at Mayo continues, insurers for the first time in 2018 will operate under a new law that requires them to offer at least one individual health plan with a provider network that includes in-network access to more than one health care provider system. The requirement builds on existing rules assuring patients have access to primary care providers within either 30 miles or 30 minutes, and 60 miles or 60 minutes for specialists.

The hope was to make sure that consumers in greater Minnesota, in particular, would have a better chance at finding both their primary and specialty health care providers in the same health plan network, said Sen. Michelle Benson, R-Ham Lake.

"I think it will make a marginal difference," Benson said.

But Sen. Tony Lourey, DFL-Kerrick, questioned the law's impact, especially since insurance companies still can seek waivers to such network adequacy rules. The law is not likely to bring back statewide access to Mayo Clinic on an in-network basis, said Schowalter of the trade group for insurers. "I think the change will be on a county-by-county basis, not statewide," he said.

Minnetonka-based Medica said it plans to sell health plans in the Twin Cities and two counties in northeast Minnesota that include a broader network of doctors and hospitals. Insurance agents say it might make a difference for some consumers, but they note that the network doesn't include open access to Mayo Clinic in Rochester and has other limits.

"People are still feeling a lot of pain with networks," said Heidi Mathson, executive director of the Minnesota Association of Health Underwriters, a trade group for insurance agents. "They're feeling very, very limited in their options, and I think they're still going to feel that way next year."

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