So-called "narrow provider networks," which limit covered health providers in health plans, do not appear to be crossing over rapidly from the Affordable Care Act's health exchanges into employment-based health plans, according to a new analysis by the nonpartisan
"Narrow networks," which have grown in the individual market exchanges under the Affordable Care Act (ACA), are characterized by offering considerably fewer health providers than is typical in the group market and in which providers are included primarily based on price discounting.
"Narrow networks are receiving renewed attention, because of their increasing prominence in the ACA's individual marketplace health exchanges," said
To measure what is happening with narrow networks in employer health plans, the researchers conducted a literature review, interviews with HR directors at 11 large employers, and field research by health policy experts in 11 states. Among the major findings:
Despite the increasing prominence of narrow networks in the ACA individual (nongroup)marketplace exchanges, this renewed interest so far has not translated strongly toemployers. For example, in 2016, only 7 percent of employers with health plans offered anarrow network. Also, in 2014, employers ranked narrow networks the least effectiveamong several strategies to manage health insurance costs.
Reasons employers give for their subdued interest include absence of track recordshowing sustained (year-over-year) savings; concern about antagonizing workers; spottyavailability of narrow networks, especially in rural areas; greater interest currently inother cost-savings strategies; and reluctance to adopt substantial changes in benefitstructures until the future of the ACA's so-called "
There are signs that employers' interest in narrow networks may grow in the near future. More than a third of employers with 5,000 or more workers now offer some type of alternative network, including tiered or "high-performance" networks. Field reports indicate increasing adoption of narrow networks by both large and small employers, particularly in urban markets around the country.
Where narrow networks are offered, their adoption could be increased by giving workers stronger financial incentives to consider them. Offering workers a fixed ("defined") contribution that does not vary by choice of plan is one way to confer such incentives, and private exchanges are a way to offer workers a broader range of choice. Currently, however, neither defined contributions nor private exchanges are widely used by employers.