By Allison Bell – January 6, 2014 •
“PPACA started to phase in limits on how insurers could use annual benefits limits, medical underwriting and plan benefits choices to hold rates down. Insurers reacted by creating narrow, ultra-low-cost networks; narrow networks made up of providers with high quality scores (LOW FEES); and big networks (High Fees) aimed at the Cadillac plan market.”
Editor’s Note: Translation – ACA limits insurers to pre-defined “metal” plans that leave no room for cost shifting. So, how do carriers compete now? By paying providers less. Narrow networks are SBPPO’s – composed of providers who charge less than others – (type in “sbppo” in search box on this blog for information on SBPPO’s).
ACA provides high octane fuel for Cost Plus / Reference Based Pricing schemes.
Health insurers are making more use of provider network design as an offensive weapon. Companies like Aetna and UnitedHealth were already offering bigger and smaller network options before 2010, when the Patient Protection and Affordable Care Act (PPACA) became law.
PPACA started to phase in limits on how insurers could use annual benefits limits, medical underwriting and plan benefits choices to hold rates down. Insurers reacted by creating narrow, ultra-low-cost networks; narrow networks made up of providers with high quality scores; and big networks aimed at the Cadillac plan market.
Meanwhile, many PPACA exchange plan enrollment sites have had trouble displaying anything more detailed than photos of happy customers, and insurers have been struggling to update their provider directories to reflect rapid network changes.
Even the experts are finding it difficult. Dr. Robert Gottlieb, a health policy specialist at the American Enterprise Institute, told a House Ways and Means subcommittee in December that an institute research team looked hard for exchange plan provider directories for a project and had a tough time finding them online or anywhere else.
In the middle of this kind of confusion, how can agents and brokers keep the network decisions made today from leading to long, disturbing calls from angry customers’ attorneys a year from now?
1. Cling to your errors and omissions (E&O) insurance advisors.
When you sell health insurance, you want to see your customers exercising, eating properly and getting the recommended blood pressure screenings.
When you use E&O insurance to protect your health insurance business, you should be reading anything your E&O advisors send out about PPACA risk management, including anything about what you should and should not tell customers and prospects about the doctors and hospitals that are, aren’t, might or might not be in a plan’s network.
See also: 15 compliance best practices for 2014
Your marketing instincts may scream that the way to get ahead is to present yourself as a local provider network specialist. You may be the broker in your area who really knows which networks offer the best pediatricians and the best OB/GYNs.
But — as Swiss Re Corporate Solutions says in an E&O manual it prepared for an Independent Insurance Agents & Brokers of America convention — claims of expertise can affect the standard of care a court applies to an agent or broker.
If you voluntarily undertake a duty not required by your state, “you may be responsible for fulfilling all of the obligations associated with that duty for every customer,” Swiss Re warns.
If you decide you do want to accept the E&O risks involved with being a provider network specialist, you may want to limit that risk by developing standard procedures for talking about networks with customers, standard disclaimers for emphasizing your inability to promise which providers will be in a given network in the future, and standard procedures for documenting those conversations.
2. Understand the history of provider network fashions.
Americans go back and forth between wanting the most generous possible health coverage and something they can afford.
“Staff model” health maintenance organizations (HMOs) that owned their own hospitals and employed their own doctors tried to hold costs down in the 1980s by making HMO enrollees use the HMOs’ own employee doctors.
The staff model HMO approach backfired. Consumers complained about bad doctors and long waits for appointments.
In the 1990s, HMOs tried to keep networks small in what they hoped was a kinder, gentler way, by paying a fixed sum per patient to the primary care doctors in large group practices. The primary care providers were supposed to pay for specialist and hospital care with the capitation payments and make their money by preventing unnecessary use of care.
The patients once again complained about bad doctors and long waits for appointments, and the group practices went broke.
Insurers began to put together provider networks that included just about all of the hospitals in a community that were good about throwing out rusty scalpels, just about all of the primary care doctors who seemed to have medical degrees, and many of the specialists.
Aetna began moving the pendulum back around 2003 by publicizing a small effort to set up small networks of top-quality doctors in some markets.
Gde Merkl, a McKinsey consultant, noted in an analysis of early trends in PPACA public exchange filings that, in one exchange market, the exchange carriers are now using narrow network designs to cut premiums by as much as 24 percent.
“Although more restrictive features appear to be a way to meet consumer demand for low price points, it is yet unclear how consumers will actually respond to these features over the long term,” Merkl wrote in the analysis.
At press time, PPACA critics were beginning to wake up to the idea that network adequacy might be an issue they could use to attack PPACA. For example, Rep. Darrell Issa, R-Calif., chairman of the House Oversight & Government Reform Committee, announced that he was sending letters to big insurers to ask them about the state of their provider networks.
On the other end of the spectrum, Dr. Don McCanne, a staffer at Physicians for a National Health Program, used stories about narrow exchange plan networks as evidence that the country would be better off with a government-run, “single payer” health finance system.
But it might be useful for agents and brokers to remember that network size preferences were oscillating wildly decades before anyone had trouble knowing how to pronounce PPACA.
But Chiang-Hua Chang and colleagues looked at hospitalization and mortality rates in an article in the Journal of the American Medical Association around the same time and found that, even after they adjusted for factors such as income, Medicare enrollees in communities with more primary care doctors seemed to do noticeably better in terms of decreasing both the hospitalization rates and the mortality rates.
4. Pay attention to what everyone is saying about network adequacy.
State agencies, the National Association of Insurance Commissioners (NAIC) and health care quality groups have been trying to come up with workable network standards since the days of the staff model HMOs, and many states now have standards that apply solely or mainly to HMOs.
In Tennessee, for example, an HMO is supposed to minimize the number of enrollees who have to drive more than 30 minutes to get to a primary care physician. California requires plans to update their provider directories every three months. In Texas, both HMOs and preferred provider organization plans must update their provider directories quarterly, according to Sally McCarty and Max Farris of the Georgetown University Health Policy Institute.
McCarty and Farris published a helpful paper on the current state of network adequacy rules in August 2013, which was distributed by the Robert Wood Johnson Foundation.
The researchers reported that PPACA itself requires the “qualified health plans” sold through the PPACA exchanges to offer a “sufficient choice of providers,” and the “essential community providers” that typically serve poor people, but the law does not set the same kinds of numerical standards that states like Tennessee and Texas have set.
The NAIC recommended standards in a Managed Care Plan Network Adequacy Model Act adopted in 1996. Like PPACA, the NAIC model leaves out specific quantitative standards for provider access. The National Committee for Quality Assurance, an accreditation group, has suggested that network adequacy standards should address provider quality, not just quantity.
5. Look at the insurers’ own provider directories.
Jeff Ungvary, president of Strategic Wellness & Insurance Management Services Inc., said he thinks brokers should also talk about the ramifications of network decisions when helping customers choose health coverage.
When he helps midsize employers analyze networks, he gets a list of the enrollees’ primary care doctors and specialists, then checks to see how many are in the current health plan network and how many would be in other networks the employer is considering.
At one employer, for example, the employees were using 136 doctors, and 18 of the doctors were not in any of the networks under consideration.
When an employer compares the percentage of the listed doctors who would be in-network in Plan A and in Plan B, some employers will choose the cheaper network, and some will choose the bigger network, Ungvary said.
Some have suggested that the exchange plans may now have especially narrow networks. Ungvary said he thinks that, even if the new, narrow networks are often too small for many enrollees to keep their doctors, they are still larger than the staff model HMO networks of the 1980s.
“Realistically, people will still be able to get care,” Ungvary said.
See also: Does PPACA make silver networks narrow?
6. Listen to the customers
Some employers have to make the cost of coverage the top consideration. Others can offer richer plans.
Some want to see information about provider networks displayed in a clear way, and then make their own choices. Others want brokers or consultants to make the choices.
The goal for producers is to understand what roles they are willing to play, to manage the risks associated with those roles, and to make sure someone is paying them to assume the responsibility they’re assuming.